Wealth Transfers: 5 Unexpected Obstacles To Plan for Before It’s Too Late

Wealth Transfers: 5 Unexpected Obstacles To Plan for Before It’s Too Late

Heather Taylor   Wed, May 31, 2023

Are you planning to leave an inheritance or transfer your wealth? It’s important to avoid making mistakes that may create serious issues and complications for your family.

Lack of Preparation

One of the most common mistakes in transferring wealth is a lack of preparation.

Julie Virta, senior financial advisor at Vanguard, said many individuals push legacy planning off due to difficult emotions that might arise from envisioning your own death. However, continuing to push this planning off each day can deter the proper execution of your goals and wishes. This is especially true if you die before your plan is in place.

Virta recommends creating a legacy plan as soon as possible. A legacy plan should be established with a financial advisor, an estate planning lawyer and a tax expert.

Failure to Communicate

It is not enough to create a legacy plan. This plan must be communicated with all beneficiaries and relevant stakeholders. Communication sets expectations about the inheritance and clearly defines the roles of those involved, Virta said. If there isn’t any clear communication, it can easily cause confusion or even a rift or conflict among all involved in the wealth transfer.

To facilitate clear communication, Virta recommends setting up regular meetings with your partner, family and other beneficiaries. These meetings can help ensure all are aligned on your financial situation, long-term goals and preparations for the unexpected.

Not Looping in Beneficiaries

Some beneficiaries might not know much about the current state of your finances. If they are completely in the dark, Virta said, it can be good to make them privy to your existing accounts and to introduce them to your financial advisor and any other professionals you work alongside.

Remember: Those transferring wealth are allowed to share information at the level of detail where they’re most comfortable.

Not Considering Tax Implications

The value of an inheritance can significantly be impacted by taxes.

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