financial advisor in estate planning
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Estate planning involves determining how an individual’s assets will be preserved, managed, and distributed after death. It aims to maximize the value of the estate by minimizing taxes and other expenses. Estate planning ensures the orderly transfer of assets to beneficiaries and charitable organizations. A key member of an estate planning team is a financial advisor.

Financial advisors help clients make sound financial decisions during their lifetimes. Their role continues after a client dies. A financial advisor provides specific services throughout the estate planning process.

Understanding the Client’s Personal Situation

A financial advisor will have an in-depth understanding of the client’s financial situation, goals, and concerns. The advisor knows about assets, debts, income sources, tax issues, and family dynamics. This insight assists the financial advisor in making appropriate estate planning recommendations.

For example, the advisor may suggest special trusts to provide for a disabled child or to control distributions to younger heirs. The advisor can recommend ways to leave assets to charity while maximizing inheritance for the family. A financial advisor helps tailor an estate plan to the client’s unique circumstances.

Calculating the Estate Value

To create a viable estate plan, the value of the estate must be calculated. This is a key role of the financial advisor. Determining the total value includes retirement accounts, real estate, investments, cash accounts, personal property, and proceeds from life insurance policies. The financial advisor considers jointly owned assets, potential inheritances, and planned gifts to charities and individuals.

Once the advisor calculates the current estate value, projected future values can be estimated based on assumptions about asset growth, taxes, and inflation. These projections allow the advisor to recommend strategies to preserve the estate over time. The financial advisor works with an estate planning attorney to incorporate these strategies into the estate plan.

Recommending Tax Reduction Strategies

An experienced financial advisor is very knowledgeable about estate taxes at the federal and state levels. Taxes substantially reduce the size of large estates. A financial advisor suggests strategies such as gifting assets to heirs or setting up irrevocable trusts to reduce estate taxes. The advisor can recommend which assets should be placed in trust and which assets should be gifted. For example, rapidly appreciating assets like real estate or growth stocks are ideal for gifting.

The financial advisor also looks for ways to minimize capital gains taxes that heirs will pay on inherited assets. By strategically distributing assets to beneficiaries in lower tax brackets, more of the estate is preserved.

Coordinating the Estate Planning Team

An estate plan requires the coordination of several professionals – attorneys, accountants, insurance agents, trustees, and financial advisors. The financial advisor typically takes the lead in pulling the team together.

The financial advisor works with the estate planning attorney to develop an integrated strategy. The advisor also helps the accountant prepare estate tax projections and returns. Life insurance needs are determined with the insurance agent. The advisor makes sure all team members have current information to create a seamless estate plan.

Implementing the Estate Plan

After the estate plan is created, the financial advisor plays a key role in implementing the plan. The advisor works with trustees and the attorney to fund trusts according to the estate documents. Retirement accounts and property may need to be retitled or transferred to trusts.

The financial advisor assists the executor in filing tax returns and estate tax returns after the client’s death. Ongoing communication with beneficiaries about distributions and assets is an important implementation task of the financial advisor.

Adapting the Plan Over Time

An estate plan must evolve over the years as circumstances change. The financial advisor periodically reviews the plan with the client and makes recommendations for updating the plan. Strategies may need modification due to changes in tax laws, asset values, beneficiary needs, and the client’s intentions. The advisor ensures the estate plan adapts to changing conditions over the client’s lifetime.

In summary, a financial advisor provides continuity over the entire estate planning process. The advisor’s understanding of the client’s financial affairs and goals allows the creation of an estate plan aligned with the client’s wishes. Ongoing involvement of the financial advisor is key to successful implementation and future adaptation of the estate plan.


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