As individuals, most of us need to plan for our future. Having a carefully thought out estate plan is an excellent way to ensure you’ve secured your future for yourself and your family. As a high-net-worth individual, you have to be even more aware of your estate plan. This not only ensures peace of mind, but also helps you preserve the wealth you’ve earned over the years.
Understanding each and every aspect of your estate plan is essential to the overall process. An estate plan ensures your wealth is distributed in the best way possible and according to your wishes, whether that is among family members or to charitable organizations. Transferring wealth is easy and can be accomplished on your schedule. With the use of trusts and other tools you can leave the road map as to who gets what and when.
Here are some common estate planning mistakes that high net worth individuals should avoid:
Not keeping family members informed
The main objective for most high-net-worth individuals to plan their estate well in advance is to provide for their family once they have passed. Keeping that in mind, if you fail to keep your family members in the loop about your estate plans, it’s going to cause considerable discord, which could result in major disputes and enmity.
If you’re choosing a particular person or persons to take on a significant role after you, you need to make sure they are informed of their position in the estate. Encourage them to share how they feel about your plans, whether or not they are ready to take on the responsibility.
Have an open conversation about your estate plan with your immediate family as well. Allowing them to air their opinions on it can avoid the issue of a potential litigation in future.
Failing to include family asset distribution
While family makes up a major part of estate planning and its process, your plan has to focus on how the wealth you’ve earned over the years must be passed down. This includes asset distribution. You could be strategic with your asset management plans to reduce tax obligations as much as possible as well. Having a professional help you out will ensure your asset distribution is done in the best way possible.
If you happen to own a business, you need to decide how its assets are going to be distributed to the surviving members of the family. Not so much the assets, but who is going to run the company and how are they suppose to run the company and are they required to share with other family members. This can be done on the basis of how much contribution and input each member has in the business or any which way you like.
Planning parts of your estate independently of one another
High-net-worth individuals often work with a number of financial advisors for their estate plan. Each advisor is assigned a subset of the estate. Delegating this task can be risky, especially if the advisors aren’t coordinating with each other or if they aren’t on the same page. Consistent oversight of your plan is essential so that it meets your goals.
Have your estate in Santa Barbara planned by our professionals at Canberra Company. Our estate planning experts have years of experience working with high-net-worth individuals in the area. We also offer financial planning services as well as college planning services. Schedule an appointment with us at (805) 962-1040.