Senior Financial Advisor
Let's face it. Nobody wants to spend time planning for when they're gone.
But what happens if you don't? Without a plan in place, you don't get to choose who gets everything you've worked for your whole life. If you want to be the one making those decisions, then you need an estate plan.
To begin, determine exactly what your assets are and their value. Take an inventory and share it with your family and others who should know, like attorneys or your financial advisor.
Next, determine which documents you'll need. Many of my clients already have a will, which is simply a set of instructions explaining how your property should be distributed after you die.
And since not all assets are distributed through a will, be sure to review your beneficiary information on insurance policies and retirement plans periodically to make sure everything is up to date.
One often-overlooked estate planning tool is a trust—they're definitely not only for the extremely wealthy. Trusts offer more control and privacy than wills, and they can help to make your estate plan more flexible. Different types of trusts are available to suit a variety of situations.
An estate plan isn't something you can set and forget. Over time, you want to make sure your intentions haven't changed and you've included the right people. Has there been a marriage or divorce? A birth? A change to your financial situation?
When tax laws change, I review my client's portfolio to see how it might be affected. During our next consultation, I can then suggest they work with their tax specialist to take advantage of new benefits or protect against additional taxes.
Armed with an effective tax strategy, you can avoid making costly mistakes that could eat into your estate. Your strategy could include:
This chart shows which states levy state estate taxes and which states levy inheritance taxes.
State estate taxes
In addition to the federal estate tax, 12 U.S. states and the District of Columbia also levy their own estate tax. These states are Washington, Oregon, Minnesota, Illinois, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, and Hawaii.
Inheritance tax
If you inherit property, you may have to pay a separate inheritance tax, which is imposed by the following six states: Iowa, Kentucky, Nebraska, Pennsylvania, New Jersey, and Maryland.
Maryland levies both of these taxes.
One of the most sensitive topics I discuss with my clients is what will happen if they become incapacitated—temporarily or permanently. It's important to have a plan in place so your financial and medical wishes are carried out. Clear, honest conversations now are important for everyone and help provide peace of mind. Consider having a few directives in place, including a living will, a power of attorney, and a health care proxy.
Estate plans are about more than just money. They give you the power to control what happens when you're gone so you can live the life you want today.
Working with Vanguard Personal Advisor Services gives you anytime access to advisors who are fiduciaries—always acting in your best interests. You'll also receive a financial plan that's focused on your goals, and helps to withstand market volatility and economic shifts.
Working with Vanguard Personal Advisor Services gives you anytime access to advisors who are fiduciaries—always acting in your best interests. You'll also receive a financial plan that's focused on your goals, and helps to withstand market volatility and economic shifts.
All investing is subject to risk, including the possible loss of the money you invest.
When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.
This information is intended to be educational and is not tailored to the investment needs of any specific investor.
Vanguard does not provide legal or tax advice. This information is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Vanguard cannot guarantee that this information is accurate, complete, or timely. Vanguard makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax positions taken in reliance on, such information. We recommend that you consult a tax or financial advisor about your individual situation.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
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