Estate Planning & Your Financial Future - How Estate Planning Can Help You Budget & Build Generational Wealth

For many of us, estate planning isn’t solely about protecting the peace of mind of our loved ones but rather protecting them financially as well in the event we are unable to provide for them anymore. This is true particularly for our future generations as one of our biggest fears is that we will not be able to impart enough financial knowledge onto our children before we leave thus not gearing them for success. According to a study done by the Williams Group, up to 90% of affluent & upper-class families tend to lose their familial wealth by the third generation. This is mainly due to the fact that two-thirds of individuals won’t disclose their financial information to their children nor educate them on their family’s finances in order to promote mindful spending. Additionally, this can lead to future generations being fiscally irresponsible with their family funds and while last-minute conversations may work, more often than not, they lead to emotional turmoil & rash decisions.

This is where estate planning comes in. While the main focus of an estate plan is to secure your assets & bequeath them to your loved ones accordingly, there are financial instruments and policies that can be added on to prevent the mistakes of financial mismanagement as well as proper education for your future generations. One of the most helpful tools for securing your financial legacy is a wealth transfer plan which allows you to work out the finer details that may be overlooked in a simple conversation about posthumous finances & financial planning. In order to fully have an effective wealth transfer plan, however, you should be mindful of the following:

Create a well thought out plan with an attorney that you trust

Financial planning requests and documents should be carefully discussed with your estate planning attorney and should include detailed instructions on how the finances should be managed & dispersed (i.e.: through a trust, checking/savings account, etc.). You can also use this initial meeting as an opportunity to explain your requests and interests in order to prevent confusion among your heirs.

Optionally, when you plan, you start with a snapshot of where you are in life now. There is no better way to see your current values than by seeing how you spend your money.  Reviewing financial statements is an important part of the process, but it's important to see the whole picture including where your money is really going and setting goals for the future. A helpful tool that we recommend is YNAB’s budget assessment tools which you can access here:

Review your plan to reflect your best interests

After the initial documents have been drafted, it is important that you remember that your assets and financial legacy may change with time &  changes in circumstances such as death & divorce can lead to large familial disagreements if your documents aren’t kept up to date.

We recommend that you invite your estate planning attorney & financial advisor to meet with you & review/update your documents every 2-3 years so that you and your loved ones can build a strong relationship with them & ensure that your best wishes are carried out.

Organize Your Documents

Upon completion of the initial wealth transfer plan, it is important that you organize all of the necessary supporting documents as well. Tax statements, insurance policies, military & employment records as well as any medical directories & advanced healthcare directives should be available for your loved ones and easy to access across all relevant parties.

Having a wealth transfer plan & financial instruments in your estate plan allows you to communicate many things to your loved ones that you leave behind but most importantly it allows you to educate them on the family finances that lead to you building generational wealth. With estate taxes & probate court posing a threat to a significant portion of your assets causing potential family conflict due to short-sighted planning, it is important that you stay ahead of the issues so that you and your loved ones need not worry if unforeseen circumstances arise. If you are unsure how to get started, we invite you to book a free consultation call with us today where we can help you determine the steps you need to take to secure your family’s generational wealth for you & the future of your loved ones.