photo credit: LinkedIn

Key Takeaways

• Estate planning helps protect family assets and ensures your wishes are legally documented.
• Essential documents include a will, power of attorney, and healthcare directives.
• Trusts can provide flexibility, privacy, and potential tax advantages for beneficiaries.
• Recording debts and assets prevents disputes among heirs and simplifies estate distribution.
• Gifting and charitable donations can reduce estate taxes and support long-term legacy goals.

Roger Graham Financial Advisor is the founder, CEO, and chief investment officer of Braintrust Capital, a registered investment advisor based in San Antonio, Texas. Drawing on more than 25 years in portfolio management and client advisory roles at firms such as Wells Fargo Advisors, Morgan Stanley, and UBS Financial Services, he provides coordinated strategies for growing, protecting, and transferring wealth. At Braintrust Capital, he and his team deliver estate planning, retirement and college planning, business succession strategies, and multi-asset portfolio management on an independent, fee-only basis.

His background includes private equity asset management and economic development consulting, where he co-authored plans to revitalize distressed neighborhoods. He earned an economics degree from Santa Clara University and a juris doctor from the University of Michigan, with executive education at Yale and the University of Chicago. These experiences inform his neutral perspective on the basic steps in estate planning.

Basic Steps in Estate Planning

Protecting family assets involves estate planning strategies that document personal assets and provide for contingencies such as sudden illness, incapacitation, or death. While many people believe they don’t possess sufficient assets to necessitate an estate plan, a surprising number do.

An estate plan encompasses all assets, including real estate, vehicles, art, jewelry, collectibles, and other tangible personal property. Beyond cash positions held in financial accounts, it includes the transferable portions of portfolios, such as annuities, life insurance, stocks, and bonds. Intangible investments included 401 (k) plans and IRAs, as well as assets held in trust.

Recording and documenting assets and distribution preferences helps avoid legal issues that may arise among heirs. When creating an inventory, specify the status of each item, such as ‘solely held’ or ‘jointly owned’. Spouses and partners should talk through their preferences, as well as their own.

One foundational estate planning document is the last will and testament. It names an executor, whether a loved one or a professional such as a financial advisor or attorney, who carries out one’s wishes. Lacking this, state courts will consider that one has died intestate, which may lead to distributions that don’t match intentions. For example, intestacy law in most states involves distributing property to closely related relatives. Lacking a spouse or children, the assets typically go to more distant relatives.

Those with children under the age of 18 will also want to name a guardian in their will. This trusted person takes over care of the minor in case of necessity, and may also manage assets on behalf of the children until they reach the designated age to receive such funds.

Another aspect of the estate plan involves planning for one’s potential ill health or incapacitation through selecting an agent who can make financial and medical decisions on one’s behalf. Common ways of arranging this are through the assignment of financial power of attorney and health care power of attorney. The attorney-in-fact undertakes financial decisions on behalf of those unable to communicate their wishes, and the healthcare agent does the same on the medical side.

An estate plan also includes a list of debts, which often include mortgage debts, credit card balances, and other unexpected expenses, such as medical bills. Estate funds usually pay them, with the remaining balance distributed to family members and other beneficiaries.

Setting up a trust is another essential part of the equation. It resembles a will, but offers a more streamlined and flexible approach to distributing assets. There are two basic types: revocable and irrevocable. With a revocable living trust, one can amend the documents while still alive, thereby avoiding the accrual of asset protection and tax benefits during one’s lifetime. After one’s passing, the trust becomes irrevocable, which makes it challenging to revoke or amend.

By contrast, the irrevocable trust is not easily changed while one is alive, but it offers tax liability advantages while protecting assets from future creditors’ claims. The funds transfer to the surviving beneficiaries upon one’s passing.

Finally, individuals should plan for possible estate taxes levied after their death. Some individuals follow a strategy of gifting assets to loved ones as a means of reducing the ultimate estate size and minimizing the tax burden. Philanthropy, which involves making contributions to select charities or foundations, is another pathway for reducing future estate taxes.

About Roger Graham Financial Advisor

Roger Graham is the founder, CEO, and chief investment officer of Braintrust Capital in San Antonio. With more than 25 years of experience, he provides estate planning, retirement and college planning, business succession strategies, and multi-asset portfolio management on a fee-only basis. His prior roles include senior vice president and portfolio manager at Wells Fargo Advisors and vice president at UBS Financial Services.

He holds an economics degree from Santa Clara University and a JD from the University of Michigan, with executive education at Yale and the University of Chicago. He is active in local community and church leadership.

FAQs

Why is estate planning important?

It ensures that your assets are distributed according to your wishes and reduces legal disputes.

What documents should be included in an estate plan?

A will, power of attorney, healthcare directives, and trusts are key components.

What is the difference between a revocable and irrevocable trust?

A revocable trust can be changed during your lifetime, while an irrevocable trust offers tax and asset protection benefits but is harder to modify.

Who should I choose as my executor?

Choose someone responsible, such as a trusted family member, attorney, or financial advisor.

Can estate planning help reduce taxes?

Yes. Strategic gifting and charitable donations can help minimize estate tax obligations.