In many ways, all of us are on the same journey through life. We all seek significance; we all desire to benefit the world in some way; we all want to provide for and care for those people who are most important in our lives. As we go through life, though, each of us travels a slightly different path; no two people share exactly the same priorities, values, and goals.
Those who are fortunate enough to have significant financial estates have an even greater responsibility; they are in the position of exercising stewardship over assets and opportunities that affect not only their own lives, but the lives of their families—sometimes, over several generations. For those in this position, it is vital that their planning take into account the shape and direction of the legacy they wish to leave behind. This task requires ongoing oversight and careful development over time.
We have written extensively about the importance of good estate planning, including the use of well-designed wills and trusts, for ensuring that financial legacies are preserved and maintained according to the wishes of the founder. In this article, we’ll summarize some of the most important points and provide reminders of matters that should be considered in order to preserve and protect a financial legacy.
A Will, a Trust, or Both?
As we have mentioned before, everyone has an estate plan. Even if you’ve never drafted a will, your state has a plan that it will put into effect upon your death. Of course, that “default” plan might not be the one you would choose. In other words, the only way to exert some measure of control over what happens to your estate upon your passing is to have a properly designed will or, in some cases, a trust, that directs the disposition of your property in the way you would wish. For some, a simple will is enough. But sometimes a trust can be a better choice, depending on the specific circumstances of your family’s needs and the makeup of your estate. Discussing this with a qualified estate planning professional is perhaps the best way to gain clarity about what is best for your particular situation.
Talking It Over
No matter the form or complexity of your estate plan, one of the most important elements is communication. By openly sharing your goals and intentions with your children and other beneficiaries, you greatly increase the odds of them being capable stewards when the time comes. Not only that, but you’ll also have more peace of mind, knowing that you’ve done all you can to prepare the future recipients for the responsibilities that come with managing a significant bequest. Communicating in this way is also the best method for imparting your own values and aspirations, preparing the next generation to continue shaping the legacy according to the core principles you’ve established.
Preparing for the Inevitable—and the Unexpected
No one enjoys contemplating their own passing or that of a loved one, but part of responsible estate planning is providing for the death of one of the spouses. Often, premature death can trigger unexpected consequences that place the surviving spouse in a difficult financial position. For that reason, it’s important to consider the nature of the shared assets, how they are titled, and other aspects of ownership. Here again, advance estate planning can sometimes help to minimize the financial effects of an unexpected passing.
What about Blended Families?
According to recent statistics, roughly 40% of American married couples are in a blended family, due either to death or divorce. The fact is that blended families have special needs with respect to estate planning. A parent may wish to bequeath specific assets to biological children and reserve other bequests to the stepchildren. One of the spouses may have legally stipulated obligations due to a previous divorce that should be considered. In other words, blended families can present some specialized problems that require specialized solutions in order to handle the financial legacy in a way that is fair to all concerned.
Your Digital Estate
Though many may not realize it, almost all of us nowadays have a digital estate. If you have an online banking app, a credit card account with loyalty points, or even a social media profile, you have a digital estate. And obviously, those who invest in cryptocurrency or other similar didgital assets also have a digital estate. Not only that, but your digital estate requires some advance planning in order to be properly handled after your passing. So, as part of your estate planning, you should:
- Stipulate who should have access to your email account(s);
- Provide to your spouse, heirs, or executor a complete list of online logins and passwords;
- Document your intentions for your digital assets (who should have access; what uses are authorized, etc.);
- Name a digital executor (can be the same as the executor of your will or a trustee);
- Store digital media securely.
Review Your Gifting Strategy
Especially for those with significant estates, it’s important to periodically review your gifting strategy as you purposefully maintain the size of your taxable estate below the threshold for inheritance taxes. Though recent legislation has maintained the current lifetime exclusion for estates below $15 million ($30 million for married couples), it’s important to remember that laws can change. Also, your family circumstances may change, which can also trigger the need to review your gifting plans. If you are employing an annual gifting strategy, it’s vital to make sure your gifts remain below the annual exclusion amount ($19,000 per recipient/donor in 2025) so that you don’t compromise the amount of your lifetime exclusion.
At Mathis Wealth Management, we recognize the special responsibilities of those with significant estates. We want to provide our clients with all the information they need to shape their financial legacies in the way that is best for their families and their core priorities. If we can provide helpful information or guidance, please contact us soon.
