Estate planning and wealth transfer must be done meaningfully

The traditional estate planning process in Minnesota and elsewhere involves initially the creation of a set of documents, which include wills, trusts, powers of attorney and medical directives. However, these must be coordinated with the process of transferring wealth in a meaningful and informed manner. Estate planning does not work well if the principles of wealth transfer are not considered and applied.

To transfer wealth intelligently one must communicate with those who will receive it. Discussions with heirs during life can be invaluable in teaching them the purpose and complexity of wealth transfer and how they will use that wealth to forge a life in the future. The family dynamics cannot be ignored when a benefactor sets up his estate planning designs.

The estate planning documents should be reviewed and redone every five to 10 years. The wealth transfer process is a value-driven exercise in maximizing the impact of the transfer to each heir. The nature of one bequest to an heir may differ considerably from the characteristics transferred to another.

It is also good to keep in mind that wealth can be transferred during life as well as upon one’s death. For example, living trusts are tools used to transfer wealth during life. If done correctly and with the assistance of an experienced estate planning attorney, this can turn out to be an extremely useful tool for asset preservation.

In addition, wealth can be passed during life by making gifts, which are allowed up to $14,000 maximum to any one person without having to file a gift tax return. There is a lifetime exclusion of $5,450,000. Lifetime gifts are best tailored to the needs of each recipient, instead of applying strings or trying to mold the individual heirs away from their own personal potential. The myriad of choices available for estate planning in Minnesota can make one’s estate planning decisions highly tailored to the needs of the heirs.   

Source:, “Personal finance column: Estate planning done properly“, Danielle Howard, Oct. 31, 2016

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