Q&A WITH ALIA: PROTECT WHAT YOU’VE BUILT. WHY ESTATE PLANNING MATTERS.
Estate planning is often something people put on their “someday” to-dos, incorrectly assuming it’s only for the wealthy or those with significant assets.
The truth is, estate planning is for everyone.
Think of it as creating a roadmap for your future. A thoughtful estate plan covers more than just your assets. It also addresses guardianship, health care wishes and strategies to help manage taxes.
Estate planning is an important part of a comprehensive financial plan. Today, Alia owner Lindsey Rhea discusses the value of having a current plan in place.
How can Alia help with my estate plan?
Lindsey: While we don’t provide estate planning services directly, we play an active role in helping clients through the process. We work closely with trusted estate planning attorneys and are happy to make introductions and referrals when needed.
Many times, we’ll attend estate planning meetings alongside our clients to help ensure their financial plan and estate plan work together. Once the attorney has prepared or updated the documents, we’ll review them with the client to determine whether beneficiary designations, account ownership or other financial details should be updated. We also provide guidance on assets held outside of our firm to help make sure everything is aligned with the client’s overall estate plan.
How often should people review and/or update their estate plans?
Lindsey: In most cases, we recommend reviewing your estate plan after any major life event, such as getting married, welcoming a child or going through a divorce. Even if nothing major has changed, it’s a good idea to revisit your plan at least every five years to make sure it still reflects your wishes and accounts for any changes in estate planning laws. Again, this would be something that’s done directly with their estate planning attorney.
TAKEAWAY: It’s a good idea to revisit your plan at least every 5 years.
Are there estate planning strategies that reduce taxes?
Lindsey: Current estate tax laws have changed the planning landscape. Because the federal estate tax exemption is so high, many families no longer need the complex tax-saving strategies that were common in the past.
That said, estate planning is still incredibly important.
There are still effective strategies that can help preserve wealth, reduce taxes in certain situations, and ensure your assets are distributed according to your wishes. The right approach depends on your goals and financial situation.
The key is having a plan that’s tailored to your unique circumstances and reviewed regularly as life changes.
Which assets are best to leave to family members and which should be handled differently?
Lindsey: If charitable giving is part of a client’s estate plan, we can help identify the most tax-efficient way to make those gifts. Certain assets are often better suited for charitable giving than others.
For example, leaving a traditional IRA to a charity can be more tax-efficient than leaving it to children or other heirs. Because qualified charities generally don’t pay income tax on inherited IRA assets, those funds can have a greater impact.
Other assets that receive more favorable tax treatment when inherited may be better reserved for family members. We work with clients and their estate planning attorneys to help ensure charitable goals are met in a way that also makes good financial sense.
What are the benefits of including charitable gifts in a will or trust?
Lindsey: If giving back is important to you, make sure your wishes are clearly spelled out in your will or trust. Being specific about the charitable organizations or causes you want to support helps ensure that your values are honored and can prevent confusion or unnecessary stress for your loved ones. The kindest, most loving thing you can do for loved ones is to be clear about where you want your assets and possessions to go and the charities you want to support in the future.
What are the biggest risks or gaps you see in people’s estate plans?
Lindsey: One of the biggest mistakes I see, regardless of age, is treating estate planning as a one-and-done task. Many people either haven't created an estate plan or haven’t updated it in years, even though their family, finances or estate planning laws may have changed.
That’s why we encourage clients to review their estate plan after major life events and at least every five years. We also recommend reviewing beneficiary designations annually, since those designations often determine how assets are distributed and can easily become outdated.
As your life evolves and your wealth grows, your estate plan should evolve too. We make these reviews part of our annual planning process to help ensure every piece of your financial plan continues to work together.
Make sure your estate plan and financial plan are working together. Schedule a conversation with Alia today to review your current estate plan or for help in getting one started.
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