You’ve probably passed on pieces of wisdom to your children, but have you considered how you’ll pass on your wealth? Now that you’re reaching a certain age, you may be wondering how you’ll pass on family heirlooms, property, or the wealth you’ve built over many years. Proper legacy planning could be one of the greatest gifts you give your loved ones. However, you may be delaying the process of creating an estate plan because you’re thinking, “Where do I start?”

There are complicated tax laws regarding estate planning, not to mention all the changing laws that are hard to keep track of. With the Biden administration eyeing a “wealth tax” in a recent tax plan proposal,[1] it could be more important than ever to have a comprehensive plan for the transfer of your estate to your loved ones.[2] Here are the basics to get you started.

Important Legal Documents

  • Will. One of the most common mistakes with a will is not keeping it updated. You need to get out and review your will at least every five years, or if there has been a major life event in your family (a marriage, a divorce, a birth, or a death).It is important to be aware of what a will does and does not cover. Anything where you’ve named a beneficiary, i.e. retirement accounts or life insurance policy, won’t be covered in a will. The beneficiary designation supersedes the will unless you leave the asset to your estate. Additionally, any joint assets are automatically passed on to the joint owner at your death.
  • Powers of Attorney. Powers of Attorney help take care of you while you are alive. There are two types of Powers of Attorney: Medical and Financial. The Medical POA is for someone to make your healthcare decisions when you cannot. The Financial POA is for someone to make your financial decisions, manage your affairs and administer your finances when you cannot.
  • Living Will or Advanced Medical Directive. The living will is not a will. It is an advanced medical directive. I call it death with dignity. If you are incapacitated and have no hope for recovery, this provides instructions on how you want to pass on.
  • Trust. Do you need a trust while you are alive, or do you just need your legal documents to create a trust upon death? Choosing one or the other is a function of control, taxation, or other reasons that make forming a trust prior to death a better option for you. If you don’t have an attorney, we can recommend one.

Don’t Forget About Taxes

It’s also important to consider how your wealth will be taxed when it’s passed on to your loved ones. Capital Assets like stock, real estate and other investments may receive a setup in basis so that beneficiaries pay less in capital gains tax. In addition, a partial or full Roth conversion can potentially help minimize taxes for heirs. Another tax minimization strategy is having a life insurance policy set up to distribute to your beneficiaries potentially tax-free depending on the structure of the policy.


The SECURE Act is a comprehensive piece of legislation that could have a major impact on your estate plan. A key takeaway from this legislation is that it eliminates the “Stretch IRA” strategy that has commonly been used to transfer wealth to beneficiaries in legacy planning. Instead of being able to take distributions when they want, most non-spouse beneficiaries must empty inherited accounts within ten years. We can help you understand how you’re affected by this new rule and how you can revise your estate plan.

This conversation only scratches the surface. With changing rules and regulations that can get in the way of giving your beneficiaries the gift of proper legacy planning, it’s more important than ever to consult with a financial advisor. Talk to us and we can help you navigate these obstacles tailored to your unique needs and financial goals.