Estate Planning and Wealth Transfer: Two Concepts, One Goal

As one gets older and accumulates more assets, it becomes increasingly more important to create a delineated estate plan and secure the future of the portfolio. Unfortunately, less than half of adult citizens (approximately 45%, according to the most recent estimation from Forbes) have these documents prepared in the event of their untimely death.

Why Estate Planning is Important

Passing away without a will or trust set up is a recipe for confusion and frustration on the part of your heirs. While every state has specific bylaws set up to govern what happens to newly-unpossessed assets, there is no guarantee that the results will be in line with your personal wishes. Even if circumstances work out favorably and living relatives acquire the property that was meant for them, getting to that point requires time, attorney fees, and massive frustration. The best solution is to make sure the documents are present and in order before they are needed.

Estate Plan vs. Wealth Transfer

After talking to an estate planning professional and setting up the correct paperwork, the process is not entirely finished. A wealth transfer plan is an entirely distinct — and less-discussed — concept. However, it’s no less important than a traditional estate plan. On average, 70% of family wealth is lost by the second generation, and 90% by the third. Rather than just deciding “who gets what,” a wealth transfer plan prepares heirs for the prospect of inheritance, creates better understanding of the family’s assets, and encourages good financial practice to shepherd your assets even after you are gone.

What a Wealth Transfer Plan Entails

Created with the input of financial and legal counsel, a wealth transfer plan is a set of legally-binding protocols and instructions on how inherited assets are allowed to be used — no matter who owns them. The primary goal is to maintain harmony among family members and prevent rash or ill-advised decisions. It also clearly communicates goals for the family’s portfolio, lays out methods of transfer (tax-free gifts vs. tax-deductible donations, for example), and introduces heirs to approved advisors that they can rely on after your passing.

Estate Planning with Cohen & Burnett

Cohen & Burnett P.C. is a renowned Washington, D.C estate planning and estate administration law firm. For more information on our specialized tax services, please contact us or visit our homepage today!



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