Estate planning is a general term. The exact anatomy of an actual estate plan is not going to be identical for everyone. There are those who need a traditional estate plan because they have relatively basic concerns. On the other hand, people who are in more complicated positions will benefit from legacy wealth planning.
Financial Position
To a large extent, those who are in possession of a significant store of wealth will need to consider legacy wealth planning. Those who are of more modest means would generally benefit from a traditional estate plan.
This is not to say that traditional estate plans don’t vary on a case-by-case basis. People who are not especially wealthy may have differing concerns and objectives. However, one could address these concerns while still staying within the traditional realm.
Legacy Wealth Planning in Long Island NY
One thing that would separate a traditional estate plan from a legacy wealth plan would be the deployment of tax efficiency strategies.
In the United States there is a federal estate tax. It carries a maximum rate of 40 percent. In 2013 there is a $5.25 million exclusion. The portion of your estate that exceeds $5.25 million would potentially be subject to this tax.
Those who are exposed would want to look for avenues that provide estate tax efficiency. Positioning your assets in a tax efficient manner would be part of a legacy wealth plan.
Protecting assets from creditors and claimants can also be part of the plan when you are interested in wealth preservation for the benefit of succeeding generations.
Many people who are in possession of significant wealth have a desire to give something back to charitable causes. Because of this, legacy wealth planning often involves the creation of charitable giving vehicles.
Traditional Estate Planning
Since the vast majority of people do not have assets that exceed $5.25 million in value, a traditional estate plan will not include tax efficiency strategies. The overarching goal will be to transfer assets to the heirs in a timely and efficient manner with no particular concerns about taxation.
In addition, asset protection may not be a priority when a traditional estate plan is being created. While it is true that anyone can be the target of a lawsuit, preparing for such a contingency may not be a priority for many.
Incapacity Planning
Incapacity planning is going to be important for those who are engaged in both types of planning. People often become unable to make their own decisions when they reach an advanced age. This is accounted for by the inclusion of durable powers of attorney.
With these documents you name agents who are empowered to act in your behalf in the event of your incapacitation.
Those who create revocable living trusts can account for possible future incapacity by naming a disability or successor trustee.
Mark S. Eghrari, Estate Planning Attorney
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