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Estate Planning-The Importance of Having a Plan



The importance of an estate plan

Estate planning is one of the most important topics to cover with a financial professional. The process of creating a plan for the distribution of assets at death can encompass:

  • Limiting income and estate tax liabilities

  • Determining who receives the assets — and when and how they’re received

  • Facilitating timely payment of estate obligations and taxes

  • Limiting costs of administration

Estate planning should be considered if you own property; it’s not just for the wealthy or those with complex situations. There are consequences of failing to plan—for example, if you pass away without a will, the State will use intestacy laws to determine the distribution of property. Unfortunately, this might not align with your intent. A proper plan can provide you a level of certainty and help safeguard your assets for the benefit of your heirs.


Beginning the process

When implementing strategies for saving, you may want to consider these 3 steps with a financial professional to develop an effective plan for yourself:

  1. Identify estate transfer needs and goals – In this step, you should get an idea of where you are and where you want to go. The biggest considerations here are identifying beneficiaries, clearly understanding tax obligations, looking at estate assets, and knowing where to find liquidity in the estate. It’s also important in this step to consider future income, expenses, debts and needs.

  2. Develop strategies to reduce costs – Taxes are the largest potential expense your estate may have. These can include the federal gift tax, federal estate tax, generation-skipping transfer tax, state death and inheritance taxes, federal income taxes, and estate administration expenses. There are exclusions, deductions, and transfers that you should be aware of to minimize this burden. A financial professional can help you navigate these strategies.

  3. Pay for remaining expenses – This is where having the proper liquidity to pay estate expenses helps ensure your beneficiaries receive what you intend. Liquidity is the estate’s ability to pay taxes and other costs that arise after death (usually in the form of cash or cash alternatives). If your portfolio consists largely of real estate or business interests, the estate may be forced to sell a portion to pay for expenses when they are due. Knowing this, estate liquidity will likely be a primary objective for you and your financial professional. Having the right tools to meet the liquidity need is crucial. Annuities and life insurance with the right strategy behind them can accomplish this goal.

Key Takeaways:

  • Estate planning can be difficult to talk about—a 2021 Gallup poll showed that 64% of American adults working with a financial advisor have never discussed their estate plans with that advisor.

  • A distribution of assets plan can help ease your anxiety and broach the difficult subject of legacy planning with a trusted financial professional.

  • Familiarizing yourself with the 2 main types of trusts and how they are utilized can prepare you for conversations with your financial professional.

If you’ve put off estate planning due to the difficult nature of the topic, you are not alone. According to a 2021 Gallup poll, 64% of American adults working with a financial advisor have never discussed their estate plans with that advisor.


A common roadblock to having these conversations is the idea that estate planning is complex and possibly uncomfortable to talk about. It’s easy to think of estate planning as just wills, trusts and advanced directives, but it’s so much more. There are other tactics and techniques that can make a big difference in your legacy planning objectives, so it’s worth the effort to start the conversation with a financial professional as soon as you can.


Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Longleaf Wealth Management Group, LLC and LPL Financial are separate entities.

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