I certainly believe that estate planning is important for every single person and family, but business executives should have a particular interest in creating a comprehensive estate plan. This is because your assets aren’t necessarily tangible; your wealth may be tied up in equity such as a stock option compensation plan, RSUs, or RSAs. This form of wealth can be tricky to transfer to your beneficiaries after your death without being heavily taxed by the IRS.
Additionally, you may have accumulated a variety of other assets, such as multiple pieces of real estate, private equity, or any number of taxable investment accounts. Creating an estate plan that maximizes your assets while dispersing your wealth to the next generation can be complicated, but it’s worth it.
What Is Estate Planning?
Estate planning is the process of creating a plan in advance to distribute your assets and wealth after you die. It can also include documents such as Power of Attorney, Guardianship of minor children, and a Healthcare Directive in case you are incapacitated and need medical decisions made on your behalf.
People create estate plans for many reasons, depending on the assets they’ve accumulated and what they want to happen to those assets after their passing. One of the most common estate planning documents is a will – with good reason. If you die without a will in Minnesota, you will have no control over who inherits your estate. That’s why many executives hire a Minnesota estate planning lawyer to help them create this important document and the rest of their estate plan.
Top Five Estate Planning Documents for Executives
No two executives will need the exact same estate plan, but I can say with certainty that you should create these documents as a “bare minimum”:
- Power of Attorney for Property
- Power of Attorney for Healthcare
- Updated Beneficiaries
- Revocable Trust
You can create these documents on your own, but it’s in your best interest to work with an Edina estate planning attorney. They’ll be able to help you easily draft these documents so they’ll stand up to estate laws and help you organize the tax strategies you need for your plan to work out.
Don’t Neglect to Consider Taxes
When you’re creating your estate plan, don’t forget to consider how taxes will affect your assets. Estates are often taxed at a high rate. Even if your plan takes estate taxes into account, you may face additional taxes as you transfer your assets to your family members.
One of the most common taxes is the generation-skipping transfer tax (GST). This tax is applied in addition to either gift tax (if you’re still living) or estate tax (when you pass away). This tax was originally instituted in 1976 to stop families from circumventing the estate tax for multiple generations by giving funds to grandchildren or great-grandchildren. It applies to any recipient who is two or more generations younger than you.
One way around the GST is to use 529 plans. If you’re interested in giving money to your grandkids, you can fund a 529 for each child and use a five-year multiple of the current gift tax exemption to make a lump-sum contribution. Depending on the plan you use, this can also provide a state income tax deduction for you.
If you’re concerned about estate taxes eating into your accumulated wealth, a Minnesota estate planning attorney can advise you on the best course of action.
Estate Planning for Executives with MN Estate Planning Lawyer
Regardless of what phase of life you are in, it is important to have a will or estate plan that reflects your wishes. You don’t want all you have achieved as an executive in Edina, Minnesota to go to waste. I would be delighted to talk with you about the legacy you want to pass on to your children and grandchildren, and I have the estate planning experience in Minnesota to make sure your wishes will be carried out.