From a business turning into an overnight success or receiving an unexpected inheritance, sudden wealth can be a life-altering experience.
It also brings a host of new responsibilities and considerations. To preserve your newfound prosperity and pass it on effectively, crafting an estate plan is important.
1. Safeguard your legacy
When unexpected wealth arrives, it is easy to feel overwhelmed by the immediate financial opportunities it presents. However, overlooking the importance of safeguarding your legacy can have far-reaching consequences. An estate plan allows you to articulate your wishes for the distribution of your assets after your passing. By doing so, you can ensure that your wealth goes toward your chosen beneficiaries, whether they are family members, friends or charitable organizations.
2. Minimize tax liabilities
Taxes are an inevitable part of life, but an estate plan can help you minimize the tax burden on your heirs. Through strategic planning, you can make use of various tax-saving techniques that can protect a significant portion of your assets. This proactive approach can prevent the government from claiming an excessive share of your hard-earned wealth, leaving more for your loved ones.
3. Maintain privacy
Without a proper estate plan, your financial affairs may become a matter of public record. This lack of privacy can expose your assets and beneficiaries to unwanted attention and scrutiny. With an estate plan, you can maintain a greater level of privacy, protecting your family from the potential risks associated with public disclosure.
According to a recent survey, only 34% of adult Americans have an estate plan. While putting it off is never a good idea, gaining newfound wealth makes creating an estate plan even more important.