Wills Estates Lawyer Discusses Strategies for Wealth Transfer

A massive change is expected as over $4 trillion in wealth moves from one generation to the next in North America and the UK, with Canadians seeing about C$400 billion of this shift.

This big change means people and families must seriously consider and plan how they will pass on their wealth. Even though many intend to do this, only about 25% have a detailed plan.

A wills & estates lawyer helps to close the gap between what people intend to do and what they actually achieve in planning. In fact, there are effective ways to transfer wealth successfully. Today, you’ll learn the key strategies that cover the practical and inspirational parts of estate plan and estate administration. 

Estate planning lawyers specialize in providing estate services and business succession planning to assist clients with their estate planning needs, including to obtain court approval when necessary.

What is Wealth Transfer? 

Wealth transfer is about smartly moving assets from one generation to the next—a key part of good financial planning. It also means making careful choices to ensure assets move smoothly from one person to another and keeping and passing on financial legacies. 

Some people see it as complicated and only for wealthy people, but it’s important in building a solid plan. Working with a financial consultant who knows how to manage finances can give valuable advice on making the most of these opportunities to pass wealth on to the next generation.

Understanding how this change works is important for managing finances well, whether it’s passing on family businesses, property, or money. This shift shows why it’s important to have good financial planning services covering things like estate and capital gains taxes.  

What to Know When Preparing for Wealth Transfer

Wealth transfer involves planning how your assets (money, property, investments) will be distributed after you pass away. Here are some key things to consider:

Beneficiaries Who do you want to inherit your wealth? Consider spouses, children, grandchildren, charities, or even friends.
Assets Make a comprehensive list of everything you own, including bank accounts, real estate, stocks, and retirement funds.
Goals Do you want to minimize taxes for your beneficiaries? Ensure a smooth and conflict-free distribution.
Family Situation Are there any dependents, blended families, or potential inheritance disputes?

 

 

Strategies for Wealth Transfer

There are several ways to transfer your wealth, each with its own advantages and considerations. Here’s a breakdown of the most common strategies:

Wills

A will is a legal paper where you say what you want to happen with your belongings and who should look after your kids after your death. If you don’t have a will, your wishes might not happen like you wanted. 

What Does it Cover? 

A will lets you specify who gets your possessions, such as money, property, and special items. You can also specify who should get your business or investments and when they should get them. You can even give some of your assets to a charity or organization you care about.

But some things, like life insurance payouts and certain investment accounts with named beneficiaries, might not be covered by your will. If the people you’ve chosen as beneficiaries aren’t alive when you pass away, those assets will go back to your estate and be distributed according to your will or by a court.

Types of Wills 

  • Holographic Wills. These are handwritten wills made by the willmaker, but they’re not witnessed. They’re used when there’s no time to find witnesses, like during an emergency. 
  • Oral Wills. Oral wills are when someone says what they want to happen to their stuff in front of witnesses. But because there’s no written record, most courts don’t accept them.
  • Pour-Over Wills. A pour-over will is used with a trust. It ensures that when you die, your assets go into the trust.
  • Mutual Wills. A mutual will is when a couple makes a will together. After one person dies, the other person has to follow the rules in the will. Mutual wills are often used to ensure that the dead person’s kids get their possessions instead of a new spouse. 

Trusts 

Trusts are versatile estate planning tools that offer numerous benefits, including asset protection, probate avoidance, and flexibility in asset distribution In a trust, the trustor gives the trustee the right to manage their property or money for someone else (the beneficiary).

Trusts are made to protect the trustor’s assets and ensure they’re given out as they want. They can also make things easier by reducing paperwork and sometimes lowering taxes. Trusts can also be used like a company where people invest money. 

Categories 

  • Living or Testamentary. Also called an inter-vivos trust, it’s a document where someone’s things are put into a trust for them to use while they’re alive. A trustee is named to foresee the trust and give the stuff to the beneficiaries when the person dies.
  • Revocable or Irrevocable. Revocable trusts can be modified or stopped by the person who made them while they’re alive. As the name suggests, an irrevocable trust can’t be changed once it’s made.
  • Funded or Unfunded. A funded trust puts possessions into it while the person is alive. An unfunded trust is just a document without any belongings in it. Unfunded trusts might get things  into them after the person dies or stays empty.

Beneficiary Designations

Many assets, like retirement accounts, life insurance policies, and payable-on-death (POD) accounts, allow beneficiary designations. By designating beneficiaries, clients can bypass the probate process and ensure that assets are transferred directly to intended recipients. 

Regularly reviewing and updating beneficiary designations is advisable to reflect changes in life circumstances, such as marriage, divorce, or children’s birth. 

How Does it Work?

You can opt to designate your estate as the beneficiary. Whatever you’ve designated (like a retirement account or life insurance) becomes part of your estate and will be given out according to your will. You can also choose how your assets are divided among your beneficiaries. 

  • “Per capita” means everything is divided equally among them when you pass away. 
  • Per stirpes” means if someone you’ve chosen passes away before you, their share goes to their children. 

For example, if you’ve picked your son and daughter to each get half of something, and one of them dies before you, their share goes to their kids.

Choosing a Wealth Transfer Strategy

All three strategies are good in their own way. But which is the best approach for your needs? Here’s a quick comparison guide. 

Feature Wills  Trusts Beneficiary Designation
Control over Distribution Limited High Limited
Probate Avoidance No Possible for assets in trust Yes
Ease of Setup Easy Complex Easy
Tax Benefits Limited Potential benefits  None
Cost Relatively inexpensive More expensive Inexpensive

Know that this table is just a starting point, and the best strategy for you will depend on your specific circumstances. So, it’s advisable to consult a wills & estates lawyer for complete guidance. 

The Role of Estate Planning Lawyers in Wealth Transfer 

A wills & estate lawyer plays a major role in guiding clients through the complexities of wealth transfer. Here’s how:

  • Legal Expertise. Wills and Estate Lawyers possess specialized knowledge of estate planning laws and regulations. They leverage this expertise to draft legal documents that accurately reflect clients’ wishes and comply with applicable laws.
  • Customized Solutions. Every client’s unique situation requires solutions for their specific needs and objectives. Wills & estate lawyers work closely with clients to understand their goals and develop customized estate plans that align with their wishes.
  • Dealing with Complexities. Estate planning involves legal, financial, and familial challenges. Wills and estate lawyers provide invaluable guidance, helping clients navigate complex issues such as tax planning, asset protection, and probate avoidance.
  • Document Drafting and Review. Drafting and reviewing estate planning documents require precision and attention to detail. Wills and estate lawyers ensure that documents such as wills, trusts, and powers of attorney (POA) accurately reflect clients’ intentions and comply with legal requirements.

Family members dealing with the complexities of real estate law require specialized legal services, especially in matters related to probate and estate administration.

The estate administration process can be daunting without knowledgeable guidance from attorneys specializing in this area.

Families can confidently navigate the estate administration process’s complexities by establishing attorney representation agreements.

This is particularly necessary when implementing a complex estate plan to secure the family’s future. An attorney can provide invaluable support and protect the family’s interests throughout the legal proceedings.

Get Legal Guidance For Your Wealth Transfer 

Effective wealth transfer requires careful planning, meticulous attention to detail, and the guidance of a knowledgeable wills and estates lawyer. Understanding key considerations, leveraging appropriate strategies, estate litigation, and seeking professional advice are important to deal with the complexities of wealth transfer effectively. Working with an estate planning lawyer can help preserve your legacy for future generations. 

 

Frequently Asked Questions

 

Who can vary a will? 

Wills variation allows a surviving spouse or child, including adult children, of a deceased person who made a will to ask the court to change the will. In British Columbia, both natural and adopted children, including adult children, have the right to apply to the court to change the deceased person’s will.

How do I ensure that my trust is properly funded?

To ensure that the trust is funded properly, you must transfer ownership of assets into the trust’s name. This may involve changing titles, deeds, or beneficiary designations to make the trust the owner of the assets. Regularly reviewing and updating the funding of your trust is important to ensure that it remains effective.

What is the role of a trustee in a trust?

A trustee is responsible for foreseeing the assets held in a trust and ensuring they are distributed according to the trust document’s terms. The trustee has a duty to act in the best interests of the beneficiaries.

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