In general, a financial plan can be simplified into three basic phases: accumulation, preservation, and distribution. The first phase, accumulation, is where you accumulate wealth, through earning power and your investments. The second phase, preservation, involves keeping track of your progress and implementing strategies that minimize your tax burdens when distribution begins. The third phase, distribution, is when you begin to receive income from your financial vehicles. At this point you are likely easing into partial or full retirement.

But there is a fourth phase that many individuals do not consider or pay much thought to: Wealth Transfer. This final phase often goes overlooked because consumers generally are more focused on securing income for their own retirement rather than passing wealth to heirs and beneficiaries. With growing inflation, tax considerations, and longer life expectancies, this is understandable. But wealth transfer can be a hallmark of your financial plan–a way to leave a financial legacy and support your concerns, even in your death.

What is Wealth Transfer?

Wealth Transfer is simply the exchange of accumulated wealth to beneficiaries. The wealth transfer planning process involves designating your beneficiaries and positioning your assets so that your recipients receive the most possible.

Efficient wealth transfer can involve many areas of financial planning, such as estate planning and tax structuring. One common concern regarding wealth transfers is how much accumulated wealth is eaten by taxes before it is passed along to the next generation. Because of high estate taxation, your beneficiaries could see a substantial reduction of value, depending on the situation and asset mix. This is why it is very important to consult with a trusted financial advisor.

Should You Consider Wealth Transfer?

The short answer is yes. Wealth transfer is not only for those with large assets and estates; it is for anyone who has collected wealth or intends to. The process can be as simple as designating beneficiaries on assets with death benefits or it may involve several maximization strategies and legal mechanisms such as wills and trusts. Wealth transfer planning can be begin early, when you are still developing your overall financial plan, or it can be something you initiate just before or during retirement. Either way, you should consider the needs of those you leave behind and what impact you can have.

Don’t let wealth transfer be an afterthought. Not only can you provide income to your heirs, you can also bequeath your assets to organizations and charities.

Wealth Transfer Planning can sometimes be complex and involve many variables. At HMH Financial Services we are here to guide through the Wealth Transfer Planning process and make sure that your money transcends generations. Please contact us with any questions about your specific situation.

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