December 16, 2020
Smoothing the Handover
What’s your wealth transfer plan?

The transfer of wealth to the next generation is one of those topics no one likes to talk about. It’s no wonder Estate Planning ranks as one of the least liked topics for our clients. While we all know death is inevitable, planning for that reality is something most people avoid. As a result, we see too many high-earning clients neglect taking the necessary steps to ensure a smooth transfer of wealth to the next generation.

What’s so surprising is that the individuals and families we work with are typically extremely good with their finances. They work hard, save well, invest wisely, and are often generous charitable givers. And yet they still have a tendency to push wealth transfer—also called Estate Planning—to the bottom of their to-do lists. That’s a big mistake. Without an Estate Plan, the state, not you, determines who will receive your assets, based primarily on their legal relationship to you. Plus, making that determination requires the expensive process of probate, which reduces the value of your estate, sometimes significantly.

If you have been putting off Estate Planning for another day, make it a priority now to get on track toward a smarter, more tax-efficient transfer of wealth. Just a little basic planning now can help ensure that, when your time comes, your assets will go to the people and causes you choose, and that the transfer will happen in the most cost- and tax-efficient way. While the specifics of your plan will depend on the complexity of your estate, how you wish your assets to be distributed, and many other factors, this simple to-do list is a great place to start:

  • Check your beneficiaries.
    Your beneficiaries are the individuals or entities (such as a family trust or a charity) that you designate to receive your assets after your death. Your assets include your savings, investments, and properties, as well as future income streams, such as a transferrable pension or life insurance proceeds. Failing to name beneficiaries can put your wealth at risk of improper distribution, and failing to update beneficiaries after major life events can put your assets in the wrong hands (for example, an ex-spouse or even an ex-son or daughter-in-law) following your death. Review the beneficiaries on every account you hold, including 401(k)s, SEP-IRAs, and Keoghs, as well as all non-tax-advantaged investment accounts.

    Once you have verified your beneficiaries and made any necessary updates, be careful not to ‘set it and forget it’—an oversight that can cause a host of complications when the time comes to transfer your wealth to your surviving spouse, to your children, or to a trust or charity. Add this review to your calendar and take just a few minutes every year to confirm your beneficiaries and ensure your hard-earned money ends up where you want it, even after you’re gone.

    Schwab, where the majority of our client accounts are held, makes this process easy. All it takes is a phone call to their team at 800-515-2157. If you need assistance, we’re happy to help.

  • Draft a will.
    A will is a legally enforceable document that provides instructions for transferring your property following your death. This includes how your assets should be handled and, importantly, who should raise your minor children. Note, however, that a will requires probate if the total value of your ‘probate estate’—meaning the amount of assets that can only be transferred using this process—is $166,250 or more (in California, as of 2020) and you have no trust in place. A long, expensive, and public process, probate is required to transfer property into the name of the living beneficiary. While a will is certainly a good starting point (especially if you have no plan at all in place), if your assets exceed the estate value cap and you want to avoid probate, the better option is a trust.
  • Create a trust.
    Though a trust is more complex to create and involves working with an attorney, it is the most appropriate planning tool for anyone with a higher level of assets and properties. A trust has all the financial power of a will but, unlike a will, a trust enables the person you name as trustee to transfer your property to your heirs without the need for probate. A good estate attorney will create a trust based on your specific needs, and then re-title your assets and place them into the trust.

    Note that a trust only applies to assets that are ‘owned’ by the trust. Retirement accounts are owned by individuals, not trusts, so these are automatically passed to the beneficiaries on file with the account custodian, regardless of the value. (Another reason to check your beneficiaries on these accounts first!) If you’re ready to move forward with creating a trust, we are happy to recommend an estate attorney that our team has worked with in the past and who has earned our confidence.

As you might expect, the greater your net worth, the more complicated and nuanced the process of Estate Planning can be. But don’t let that deter you. A well-designed Estate Plan is critical to efficiently transferring your wealth when the time comes. Doing it now—and doing it right—will smooth the path ahead for your heirs and, ultimately, protect your assets and your legacy.


Efficiently transferring your financial wealth is just one aspect of thoughtful end-of-life planning. In Transitions: Death, grief, and the path to joy, Sandra Dick discusses the importance of planning for the inevitable, and shares 5 simple steps to prepare for death, dying, and the grief that comes with both.


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