Executive Estate Planning: 5 Simple Tips

September 01, 2017

Estate planning is an often overlooked but crucial aspect of successful executive financial planning. An efficiently executed estate plan should mitigate taxes, address your unique needs and accomplish your legacy goals. With so many of the basics often overlooked, today we will be covering 5 executive estate planning tips for you to consider in your own personal financial planning.

1. Don't name your estate as beneficiary of your 401k/IRA/retirement accounts

The big benefit to these plans is the ability to defer income taxes to the point of distribution. In most cases, it is beneficial to stretch that deferral as long as possible. If the estate is listed as beneficiary, it is likely that the full amount of the account will be required to be withdrawn prior to the end of the year following the year of passing. If instead a spouse or another person is listed as beneficiary, the distributions may be deferred over a substantially longer time period resulting in the increased benefit of deferral.

2. Don't name your estate as beneficiary of your insurances or other benefits

Life insurance proceeds pass by contract, which means they can bypass your will/trusts and most importantly probate. By sending the proceeds back into your estate, they must be processed through probate, delaying the distribution timeline during a period in which liquidity may be needed.

Also, by naming your estate as beneficiary, those proceeds will be included in your taxable estate. Likely, you will want the proceeds to move estate tax free which can be accomplished by utilizing a properly structured and funded irrevocable life insurance trust. The trust will own your insurance policies and distribute the proceeds, thereby keeping it out of your taxable estate.

3. Your Equity Compensation Plan May Not Have The Possibility of Beneficiaries

Many employees and executives of publicly traded companies make the mistake of thinking that the beneficiaries they listed for their employer benefits also applies to their equity compensation holdings. This is not normally the case. Check with your employer to determine if it is possible to add a beneficiary and if so, determine who or what is listed on your holdings. Then consult with your estate planning advisor or legal consultant to ensure you have the right beneficiary based on your plans.

4. Tax Efficient Charitable Giving

There are many different ways to give to charity, each with their own tax benefits. Employees and executives of publicly traded companies often find themselves in a charitable advantage with appreciated stock to utilize in their gifting strategies. Ensure you are gifting, both during and after life, in the most efficient way for your needs.

5. Don't Forget Your Powers of Attorney and Living Will/Health Care Powers

The failure to plan for your own incapacity can result in the expense and inconvenience of obtaining a court appointed conservator at an extremely trying time. By utilizing a Power of Attorney, you are able to designate who you want to handle your financial affairs rather than a court deciding for you. Typically, most families design these to only come into effect with your request or incapacity. Additionally, a Living Will &Health Care Power will provide your written decisions regarding life prolonging measures in the event of a coma, terminal illness or similar. These documents allow you to choose who you want to make these decisions and gain control over the care you want to receive. It is also a benefit to your loved ones to have your wishes, in writing, so they can rest easier knowing they followed your plan.

Executive estate planning is not always the most exciting topic but can often be the linchpin in a comprehensive plan. The greatest of intentions and achievements can be crumpled through a failure to execute so it is critical to establish your legal structure and review the structure with changing life or legal events.

If you would like to privately discuss your personal executive estate planning, including ways to manage your legacy while mitigating taxes and risks, please contact our team today.


Tim Golas
Spurstone Executive Wealth Solutions