Estate Planning Basics

Legacy is a significant aspect of any financial strategy. It’s important to consider what happens to everything you’ve accumulated—and may continue to accumulate—throughout your lifetime. But far too often, we’ve seen this as something overlooked. Even as recently as 2023, barely one-third of Americans had wills. The phrase “estate planning” can seem daunting and maybe even expensive, but it doesn’t have to be.

Often, the lack of an estate strategy (even a will) is for a seemingly valid reason: People don’t know how to get started. Or they believe it’s a complicated process. Or they don’t think they have enough assets to need one.

Benefits of an Estate Strategy

An estate strategy is about much more than just who will get your money or who will get your possessions. It’s also about creating an approach for your assets when you can no longer guide the process. It can also help…

• Manage complexities associated with your estate.
• Provide a backup decision-maker in case you become incapacitated.
• Define who you want your beneficiaries to be.
• Define family members you don’t want to be beneficiaries.
• Detailing custody or guardianship of dependents.
• Have an approach to what happens to any pets you have.
• Help manage family infighting after you’re gone.
• Guide your beneficiaries, and create a structure for your children.
• Put an outline in place for any scenario where you’re unable to make decisions.

Whether you’re newly married, starting a family, or nearing retirement, estate planning should be something on your mind. But even if you’re early on in your career and haven’t hit any of these milestones, considering an estate strategy can be important.

Components of an Estate Plan

Creating an estate strategy is about preparing for the expected—what will happen when you pass—but it’s also about the unexpected. What will happen if you’re in a sudden accident or medical emergency? It’s also about more than your financial assets. Often, people don’t prioritize estate planning because they think they don’t have enough financial assets for it to make sense or they don’t know where to start.

Some elements of an estate strategy can include a(n)…

• Last Will & Testament: This document defines your wishes after you pass. This includes naming your executor or a personal representative who would represent your estate before the probate court and outlining what you’d like to happen to any minors or anyone else requiring guardianship (like someone with special needs). A will also describes how you want your property and other assets to be distributed.
• Financial Power of Attorney: This assigns to someone the right to make financial decisions for you, like signing documents or making financial transactions, should you become incapacitated or otherwise unable to do so yourself.
• Advance Health Care Directive: This empowers the person you designate to make decisions about your medical treatment, including end-of-life care. In addition, this document often specifies what care and decisions you wish for in certain medical situations.
• Adding a Trust to your strategy: A trust is an agreement with a set of rules that the creator of the trust (you) puts in place for the person you designate to oversee the trust (the trustee), including how you want your property and possessions to be divided and who you want in charge of that process. Using a trust involves a complex set of tax rules and regulations. A professional who is familiar with the relevant rules and regulations can provide guidance on how a trust could work with your estate.

Another reason why people put off creating an estate strategy is because they think it’s an intensive or complicated process, but it doesn’t have to be. Remember, just creating the most basic estate documents can be hugely beneficial for you and your family.

Potential Upcoming Estate Tax Law Changes

There’s a ticking clock that you should take advantage of. It was part of the 2017 Tax Cuts and Jobs Act (TCJA), and right now, it may be one of the most important levers you can pull.

The TCJA doubled the lifetime estate, gift, and generation-skipping transfer tax. In 2024, the exemption amount is $13.61 million per individual and $27.22 million for married couples at the federal level. Unless Congress changes this law, the exemption will revert back to its 2017 level, adjusted for inflation (which is about half these amounts). The TCJA exemption amounts can be captured only through use for taxable gifts (or transfers at death) before December 31, 2025.

According to Forbes, as we’re in the advent of the Great Wealth Transfer — with more than $84 trillion expected to pass to younger generations in the coming decades — the clock is ticking to develop a strategy that can incorporate the TCJA’s features.

How can you take advantage of the law now before it may expire? Start your estate planning now.

It’s never too soon to start

Estate management is about helping your loved ones after you’re gone or too ill to make your own decisions. Give yourself, and them, the gift of clarity.

If you don’t already have a foundational estate strategy in place, now is the time to consider creating one. This process doesn’t have to be complicated. We’d be happy to speak with you and help you figure out the best strategy for you and your loved ones.

CAM Disclosure

M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. 

This blog has been provided solely for informational purposes and does not represent investment advice. Nor does it provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy.

Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.