Alaskans are known for living it up during summer months by packing in all sorts of adrenaline riddled activities like flying planes, whitewater rafting, going on backpacking trips, or in my case chucking myself over jumps on horseback. While all these activities (among many others) are what makes Alaska great, it’s a given that these activities are dangerous and in the unfortunate circumstances may result in injury or death. It’s not the most glamorous topic to consider, but estate planning is critical to your legacy.
One misconception I’ve heard is that estate planning is only about ensuring a smooth transition of assets: when, in reality, it’s a critical component of your comprehensive financial plan. Another I’ve come across is that estate planning also isn’t solely for the ultra-high net worth individuals, no matter your asset level we advocate for having a will and having your beneficiaries set on your accounts so that your assets go where you’d like them to, and loved ones are able to follow your wishes.
The estate planning process offers an opportunity to protect your legacy, optimize your financial future, and secure the well-being of your loved ones. Let’s explore some highlights of comprehensive estate planning and provide valuable insights to help you navigate this crucial process. These should give you some ideas on what might apply to your situation.
Crafting a Comprehensive Estate Plan
- Will and Trust: Consider developing a legally sound will that clearly outlines your wishes for asset distribution. You also may consider establishing a trust, which provides benefits like privacy from probate, asset protection, and the ability to manage assets during your lifetime and beyond. Working closely with an experienced estate planning attorney can help ensure your documents align with Alaska’s specific laws and regulations, too.
- Healthcare Directives: Preparing advanced healthcare directives, such as a durable power of attorney for healthcare and a living will, grant decision-making authority and instructions for medical care should you become incapacitated. It’s important to select trusted individuals to act as healthcare agents who can make healthcare decisions on your behalf and hold your best interest at heart.
Maximizing Tax Efficiency
- Estate Tax Planning: Although Alaska does not impose a state-level estate tax, federal estate tax laws still apply to us. Working with an experienced estate planning attorney and financial advisor to develop strategies that minimize estate taxes, such as gifting strategies, charitable giving, or establishing trusts designed to assuage estate tax liabilities is an effective way of maximizing tax efficiencies available to your unique circumstances.
- Income Tax Planning: Consider leveraging tax-efficient strategies to minimize income tax obligations for your beneficiaries. You can also evaluate options such as beneficiary designations, Roth conversions, and tax-efficient investment vehicles to optimize the distribution of assets and potentially reduce tax burdens.
Protecting Assets and Wealth Preservation
- Asset Protection Strategies: Explore options for protecting your assets from potential risks and creditors. Utilizing trusts, family limited partnerships, or other legal tools to safeguard your wealth can also help protect your assets. Again, an experienced estate planning attorney can guide you on the best strategies that align with Alaska’s laws and your specific needs.
Financial Legacy Planning
- Charitable Giving: Consider incorporating philanthropic goals and charitable giving into your estate planning. Explore options like establishing a donor-advised fund (something AWA is great at!), creating a charitable trust, or designating specific charitable beneficiaries to help meet your charitable goals. This allows you to leave a lasting impact while potentially benefiting from tax advantages.
- Education Funding: Include provisions in your estate plan for funding education expenses for your children, grandchildren, or other beneficiaries. Exploring options like 529 college savings plans, education trusts, or custodial accounts to ensure financial support for their educational pursuits can help you meet those goals.
Regular Review of Your Estate Plan
Updating: Estate planning, much like financial planning, is an ongoing process that requires regular review and updating. Life events, changes in laws, or shifts in financial circumstances warrant periodic reviews of your estate plan. Stay proactive by regularly updating beneficiary designations, account titling, and ensuring your estate planning documents reflect your current wishes and financial goals.
Comprehensive estate planning for Alaskans goes well beyond asset distribution; it’s an integral part of optimizing your financial future and protecting your loved ones. By crafting a comprehensive estate plan, maximizing tax efficiency, protecting assets, and incorporating financial legacy planning, you can secure your legacy, and preserve your wealth. Connect with your advisor if you have any questions about your existing estate plan, and we can help point you in the right direction to ensure you and yours are cared for.
Katelynn Toth
Associate Financial Advisor
6/26/23
Commentary: The opinions expressed are those of Alaska Wealth Advisors Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed.
Adviser Disclosure: Alaska Wealth Advisors is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Alaska Wealth Advisors’ investment advisory services can be found in its Form ADV Part 2, which is available upon request.
