Trilogy Financial, a privately-held financial planning firm with more than $2 billion in client assets, utilizes a combination of our latest technology and broad perspective to help you advance your tomorrows.

Transferring Wealth

Here’s a sad but true fact: We are not immortal. Not me, not you...none of us. We can say this with 100 percent certainty: the end of our days is a guaranteed eventuality. Some day.

None of us knows exactly when our last day will come. People are certainly living longer than they used to. One day, it will be completely normal to live in a world filled with centenarians.

But individually, we don’t know our expiration date and this uncertainty creates unique challenges for our financial plans. Will we leave enough to make our kids rich, or will we spend our last dollar as we draw our last breath? Our clients often jokingly talk about choosing cremation and letting the check to the funeral home bounce.

All joking aside, planning for our wealth transfer—or estate planning—is not fun to talk about, and yet it’s one of the most emotionally taxing conversations for people to have with anyone. It is also one of the most procrastinated activities in life for obvious reasons. But it’s essential. In many states, dying unprepared can literally take hundreds of thousands of dollars to resolve.

Most people don’t think they have enough money to even warrant a discussion about estate planning or transferring wealth; they believe it’s better suited for the Rockefellers, the Gates or the Buffets. To the contrary, it’s suited for anyone who cares where their assets go after they die. Because no matter how little you have (or think you have), if you don’t have an estate plan in place, the government will be more than happy to direct your money as they see fit.

Estate planning goes hand in hand with financial planning. People tend to get serious about estate planning only after they have kids. The onset of retirement can also awaken the need for some proper estate planning work. Facing their golden years, they come to the realization that life doesn’t last forever, and they want to make sure that their hard-earned cash goes where they want it to go. A properly drafted estate plan allows the wealth of your estate to transfer in a very efficient manner. The major inefficiencies come from probate and estate taxes. Let’s briefly examine both

Whether you have a modest or a large estate, a wealth transfer goal should be to avoid probate. Probate is the state’s legal process to determine the validity of your will. And if you don’t have a will, the probate court imposes the state’s scheme for distribution on your assets. It’s the state’s ‘best guess’ as to where you want your stuff to go when you die. But even if you write a will, it’s merely an instruction letter to the court on how to conduct your probate. It doesn’t avoid the probate process. And the probate process, in many states, is unnecessarily expensive.

Estate taxes are a different kettle of fish. Many states have modest estate taxes. The Federal government has seen wild swings in the estate tax laws since the beginning of the Bush administration in 2001. Under the current laws every person has a 5.43 million dollar exemption from estate taxes when they die. And unlike probate, the taxes are usually calculated on the net estate (meaning total assets minus total liabilities). However, almost ALL your assets are subject to the estate tax. So things that can usually avoid probate, like IRAs (and other qualified retirement plans) are subject to the tax. In spite of what you read on the internet, it generally takes a good estate planning attorney to understand the effect of state and federal estate taxes on your wealth, and properly plan to handle, or hopefully avoid, those taxes.

Questions to Consider:
  • What are your preferences about how your wealth (great or small) passes to your heirs?
  • What would you like to do to help your beneficiaries avoid the disagreements and costs that probate can sometimes cause?
  • What have you done to transfer your wealth in the most tax efficient way possible?
  • Do you work with a financial advisor and estate attorney are acting in tandem? How do they communicate with each other?
  • How would major shifts (either longer or shorter) in your life expectancy affect your financial and estate plan?

All information herein has been prepared solely for informational purposes and is not an offer to buy, sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Advisory services provided by TrilogyCapital, Inc, a Registered Investment Adviser. Separate advisory and securities services may be provided by National Planning Corporation (NPC), a SEC Registered Investment Adviser and broker-dealer. Member FINRA and SIPC. Certain registered representative with NPC are doing business under the name of Trilogy Financial. TrilogyCapital, Inc. and Trilogy Financial are affiliated by common ownership and are separate and unrelated to NPC. Please consult with your representative to confirm, on which company's behalf services are being provided. Registered Representatives of NPC may transact securities business in a particular state only if first registered, excluded or exempted from Broker-Dealer, agent or Investment Adviser Representative requirements. In addition, follow-up conversations or meetings with individuals in a particular state that involve either the effecting or attempting to affect transactions in securities or the rendering of personalized investment advice for compensation will not be made absent compliance with state Broker-Dealer, agent or Investment Adviser Representative registration requirements or an applicable exemption or exclusion. Content is for general purposes only and is not an offer to buy or sell any security. NPC does not provide tax or legal advice. NPC Privacy Policy.