The Golden Rule of Estate Planning:
Your Spouse Comes First
Tens of trillions of dollars are expected to change hands in the United States over the next few decades as the swell of Baby Boomers transfer their wealth to the next generation.
A new report from RBC Wealth Management-U.S. – Until Death Do Us Part…Then Everything Can Change – helps demystify some of the complexities of estate planning by identifying potential pitfalls that families face when transferring assets. The report also explores a key aspect of estate planning for married couples: the role of the surviving spouse in managing and maintaining family wealth for future generations.
“No one likes to think about death, much less build a plan around what will happen when they are gone,” said Ward Ring, director of the Wealth Consulting Group at RBC Wealth Management-U.S. “But by taking some time to develop a well-thought-out estate plan, you can ensure that the nest egg you’ve built over the course of a lifetime passes on to your children and grandchildren as you had envisioned.”
According to a recent study from the Center on Wealth and Philanthropy at Boston College, an estimated $59 trillion - divided among heirs, charities, estate taxes and estate closing costs - will be transferred from 93.6 million American estates between 2007 and 2061.
Until Death Do Us Part…Then Everything Can Change, features a hypothetical family – John and Mary Smith, John’s two adult children and three grandchildren – and the approach they take to various estate-planning scenarios. It covers the different ways the Smiths could leave assets to the surviving spouse, as well as to children, grandchildren, or other family members. The report also explores the incorporation of charitable giving into an estate plan.
In addition to complex scenarios, Until Death Do Us Part…Then Everything Can Change offers a number of practical tips for estate-planning first-timers, including:
• Appoint a Power of Attorney/Create a Health Care Directive – These two actions will ensure that you have someone acting on your behalf with regard to financial matters and medical decisions should you become unable to make those decisions for yourself.
• Prepare a Family Inventory – By creating a comprehensive list of information regarding your financial life (location of financial documents, names and contact information for accountants, attorneys, financial advisors, assets and property owned, pension information, etc.) you help to ensure your wishes are followed.
• Introduce Your Spouse to Your Advisors – If your wealth, legal, tax and other advisors only have a relationship with you, consider an informal meet-and-greet with your spouse, and possibly other family members. This will allow your surviving spouse and other family members to continue working with advisors who know your history.
• Create or Update Your Wealth Management Plan – A current wealth management plan is critical to ensuring that your life goals will be met. Involving the family in the financial planning process can mean better understanding of one another’s needs, goals and concerns. But don’t just put the plan up on a shelf and forget about it. As circumstances change, it is important to review and adjust.
• Choose the Right Executor – An executor is the individual or institution appointed to administer an estate. A common practice is for each spouse to consider the other as their respective executor. Alternatives include family members, including children, professionals such as a family lawyer, or a trust company.
• Communicate, Communicate, Communicate – If your spouse will be the first heir of your estate, and potentially your executor, it is important that you have open and regular discussions about your intentions, goals and plans.
“The transfer of wealth is a complicated process that is best not left to chance,” Ring said. “The more time and thought you put into planning on the front end, the smoother the process will be and the more likely your wishes are met.”
About RBC Wealth Management – U.S.
In the United States, RBC Wealth Management operates as a division of RBC Capital Markets, LLC. Founded in 1909, RBC Capital Markets, LLC. is a member of the New York Stock Exchange, the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation, and other major securities exchanges. RBC Wealth Management has $270 billion in total client assets with 1,900 financial advisors operating in 200 locations in 41 states.
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