Transferring assets? Don’t just show them the money

Written by investments  |  07. March 2008

By Edward Reilly CRPC, CMFC Most of us spend so much time focusing on accumulating assets to meet our long-term goals that we give little thought to what will happen to the assets we may have available to pass on to heirs or others. In some circles, these are known as "residual assets" - money and property that is left at the end of life. It is also considered part of estate planning. But today, estate planning can take on a more significant dimension - leaving not just money, but a legacy as well. We are in the early stages of what is considered the largest transfer of wealth in history, taking place across multiple generations. By some estimates, more than $40 trillion will be transferred over a 55-year period ending in 2052. Given that death can never be accurately predicted, every adult (or couple) with assets of any kind should ideally have at least a current, simple will. But as you become older and accumulate more assets, a simple will is only the beginning of the process. If you have not conducted a more thorough review of your estate planning needs, it may be time to take a closer look. While it is an easy issue to put on the back burner, the decisions you make regarding your legacy might be the most lasting of any of the financial choices you must make. The financial stakes There is plenty that can go wrong if you fail to have a valid will and other legal documents in place to deal with the disposition of any assets you may have at death. One of the great myths is that if your assets don't add up to much, you don't have any estate planning concerns. This may be true insofar as estate taxes are concerned (though as the laws are laid out now, there will be less protection from the risk of estate taxes after 2010). Taxes are only one concern. Without a will, trusts and other measures, it is possible that your "residual assets" will never end up with the appropriate family members or other intended beneficiaries. Lacking your clear directives, laid out in writing and properly certified, it is possible that family members could become involved in a legal tussle over your estate. If you don't have a will, now is a good time to put one together. If your will is more than two years old, you should review it to make sure everything included is current. It may be best for you to consult with an attorney for help. Trusts can play a part A will deals with the disposition of assets upon your death. But the process of transferring assets can begin sooner with trusts. You can establish trusts while you are living in order to share your wealth with family members, charitable organizations or others. Trusts tend to be more complex than wills, and professional legal help is recommended. Nevertheless, they can be an effective way to pass on your legacy while you are still living. A living trust can be used to manage your assets before and after your death. It also can specify ways both the assets and any income generated by the trust are distributed after your death. One of the attractions of establishing a trust is to avoid probate, a court procedure that comes into play even with a will. This way, none of the provisions laid out in a trust become a matter of public record. It also is beneficial in situations where property is held in more than one state, thereby avoiding court proceedings in multiple locations. Consult with your financial advisor tax professional and attorney to determine whether there will be value in considering the establishment of a trust. Leaving a lasting impression Beyond dealing with property and financial assets, estate planning can also be wrapped around your personal values. If you are concerned about efficiently transferring your assets, legacy planning could become a valuable part of your approach. The idea with legacy planning is to make sure your values live on with children, grandchildren and any other people or organizations that stand to benefit from your generosity. This begins with a discussion of your values. Think about how much you value your family. But your values may also center on other aspects of your life that may be very important to you, such as education, faith, the environment, the arts, medical research or other causes that are near and dear to you. If you are truly concerned about leaving a lasting legacy that can make a meaningful difference to people or organizations that are important to you, this type of values discussion is important. The end result can be a wealth transfer strategy that not only ensures efficient distribution of your assets, but one that also keeps the value of your most cherished memories alive for generations. Edward Reilly CRPC, CMFC Chartered Retirement Planning Counselor Advanced Financial Advisor Ameriprise Financial Services, Inc. 333 Earle Ovington Blvd., Suite 1010 | Mitchel Field, NY 11553 Office: 516.228.0100 | Fax: 516.228.0101 edward.p.reilly@ampf.com ---------- Edward Reilly is a comprehensive financial planner for Ameriprise Financial. He graduated from Siena College in upstate New York with a degree in finance and international business. Ed helps his clients with retirement planning, as well as other areas, including investment planning, estate planning and college education planning. He currently works in Garden City and resides in Bethpage. Ed enjoys playing hockey and beach volleyball in his spare time, as well as watching the Mets and Islanders. This communication is published in the United States for residents of New York; and this advisor is licensed in the states of New York, New Jersey, Connecticut and Florida. This column is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation. Consult with qualified tax and legal advisors concerning your own situation. Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA & SIPC. 2007 Ameriprise Financial, Inc. All rights reserved.

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