7/30/2024 Estate Planning Family Wealth Retirement Planning Tax Planning

You – Yes, You – Should Have a Plan for Your Wealth

In a world that’s constantly changing, how can you make sure your money is working for you right now? Even if you feel confident that you may not outspend your money, there are still essential questions to consider:

You may file an annual tax return, but have you developed an efficient tax planning strategy that minimizes your tax liabilities?
Maybe you’ve considered how you want to transfer your wealth after you pass, but have you started preparing your heirs for their future inheritances?
You likely have your favorite charities to support every year, but are you structuring those contributions in a way that maximizes tax benefits?

Here are eight reasons everyone should have a plan:

Recognize that assets are just one piece of the puzzle.

While staying cognizant of your assets is key, you may also have liabilities like mortgages, auto loans and credit card debt that are necessary to account for within your wealth plan as well. Even if you don’t have those liabilities, it’s still essential to understand and manage your total risk profile, which could include factors like investment risks and potential changes in income. By crafting a wealth plan with your advisor, you can consider how to protect your estate with strategies like long-term care insurance and life insurance.
Gain a consolidated, 360-degree view of your finances.

While drafting your wealth plan, your advisor can provide you with a Net Worth Balance Sheet – a report that captures your assets and investments held inside and outside of Baird along with any outstanding liabilities. By having this full picture of your wealth, you can uncover potential risks, understand your liquidity and assess your financial flexibility. Plus, this can help you comprehensively view your asset mix, calculate your RMDs and avoid wash sale rules. Down the road, your Net Worth Balance Sheet can provide a complete picture of your estate to be used by other partners like your attorney and your heirs.
Master your portfolio mix.

Once you understand your total asset mix, creating a wealth plan can help you assess nuances in your portfolio such as stock or business concentrations and determine the level of risk you’re carrying. Additionally, it allows you to identify opportunities for diversification and growth, which gives your advisor a chance to recommend specific planning strategies that will work for you. Plus, your Financial Advisor can also help you plan and create a defense strategy for potential future market volatility.
Secure your legacy.

After your estate planning attorney has drafted your estate plan, it’s beneficial to share it with a Financial Advisor – they can put it in the context of your overall wealth plan by breaking down how your wealth will transfer and ensuring your current accounts are reflective of those wishes.

Remember, your estate plan isn’t a set-it-and-forget-it type of document. It’s essential that you revisit your estate plan after milestone events, like the birth of a grandchild or a loss of a loved one, to ensure your documents are up-to-date and that your current situation still matches your original wishes.
Optimize your wealth transfer.

Aside from consistently revisiting the intentions of your legacy plan, you can also work with your advisor to determine which parts of your estate will be taxable to your heirs once you ultimately transfer your wealth. With this information, your advisor can create a plan to pass your assets as efficiently as possible to your heirs. For example, you may want to put surplus assets into tax-saving investments or charities to reduce your overall tax liability, while supporting causes that are meaningful to you.
Amplify your tax savings.

Even if you plan for your taxes year to year, you could still be missing out on an opportunity to be even more tax-efficient with your money. Your Financial Advisor can connect with your tax and accounting professionals to create a wealth plan focused on tax efficiency.
Create a retirement budget.

If you feel you’re bound to a tight budget – even though deep down, you know you’re financially comfortable – you’re not alone. It’s not uncommon for retirees who, after years of being in a saving mindset, have anxiety around spending their hard-earned money. By proactively meeting with your advisor about your retirement budget, together you can complete a cash flow analysis and create a plan that gives you confidence in your spending and allows you to enjoy your retirement comfortably.
Test your plan’s resilience.

Though it’s difficult to think about, planning for potential mishaps in your retirement plan is necessary. Your advisor can help you adapt your plan should there be changes in your life or in the market. While there’s always a risk of losing money on an investment or having expensive insurance needs, your advisor can help you find ways to mitigate these challenges. Based on your unique circumstances, your advisor can help you develop a risk-management strategy that’s appropriate for you.

Working consistently with someone who has the resources, expertise and passion for helping you stay accountable to your plan may reap many benefits. Whether it’s identifying more tax-efficient investment strategies, creating asset diversification in your portfolio or even talking about changes in your personal health, your advisor can help you tailor your wealth plan specifically to work how you and your family need it to. Even if you feel confident in your estate and investments now, take the opportunity to work with an advisor so they can continue to serve as a resource for your heirs in the future. Your Baird Financial Advisor is here to discuss all aspects of your wealth plan and work to prepare you adequately for the future you’ve envisioned.

The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.

While Baird does not offer tax or legal advice, our Financial Advisors regularly work with clients’ attorneys and tax professionals to help ensure that all phases of wealth management are addressed. Please consult your legal or tax professional for specific information

You – Yes, You – Should Have a Plan for Your Wealth

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