Estate Planning Basics: Protecting Your Legacy

Estate planning enables members of the Black community who have experienced systemic barriers to generational wealth to protect their legacy and help secure their family’s future.

JPMorgan Chase’s seasoned team of wealth managers helps clients understand estate planning basics. They also help clients manage their financial assets to maximize returns, pass them on to future generations, and close the racial wealth gap.

Wills and trusts direct how your assets are distributed after your passing in different ways. An estate attorney can help draft these legal documents and advise you about inheritance tax implications, long-term care directives, probate proceedings, and more.

This estate planning guide explores key aspects of estate planning that help close the generational wealth gap and allow your heirs to benefit from and carry on your legacy.

What Is Estate Planning?

Estate planning directs how your assets are transferred to your beneficiaries upon your passing. You can also use the process to organize your financial affairs, so your loved ones don’t have to navigate through an overwhelming situation during a difficult time.

Estate planning also addresses your future healthcare needs, including carrying out your wishes if you become incapacitated.

An estate attorney can help you with the following aspects of estate planning:

• Preparing a last will and testament
• Creating trust documents
• Establishing financial and health care powers of attorney
• Drafting an advanced directive
• Creating a living will
• Making funeral arrangements
• Determining succession for a family business
• Appointing a guardian for surviving minor children
• Detailing the division of personal property
• Directing how to title assets

Estate Planning Checklist

There are crucial steps to take to create a solid estate plan, regardless of the size or complexity of your estate.

You should carefully consider how you want your family to manage you and your assets if you become incapacitated or pass away.

Completing the following estate planning checklist can help ensure your heirs can carry their inherited assets and your legacy forward and close the generational wealth gap.

• Take account of your assets. Know the location and value of important documents, including investment and retirement accounts, insurance policies, deeds, and safety deposit boxes.
• Designate primary and contingent beneficiaries on retirement accounts and insurance policies. These assets are not subject to directions in a will. You need to designate them for each account via a beneficiary or transfer-on-death form. Also, review titles and understand how jointly owned property or assets will pass automatically to the joint owner upon your passing.
• Create and sign a valid will that follows your state’s guidelines. Without a will, the state will decide how to distribute (and to whom) your assets will transfer. If you have minor children, appoint a guardian for them in your will.
• Appoint someone to handle financial and medical decisions on your behalf if you are incapacitated. This involves drafting financial power of attorney and healthcare proxy documents. You should discuss your wishes with family members or the person you choose to make decisions if you are unable to do so. You can also convey your wishes to healthcare providers via a living will.
• Make a list of essential contacts. Include your attorney, financial planner, and accountant, as well as the family members who will be involved with your estate. Also, provide their contact information for whoever handles your estate. Discussing your estate plan and what your wishes are with loved ones while you are living eliminates questions and reduces stress upon your passing.

Wills and Trusts – What Is the Difference?

Wills and trusts are both popular estate planning tools. But what is the difference between them?

Key Facts about Wills

A will takes effect after your death and dictates how your assets are transferred. It also identifies your heirs and names the person or persons responsible for carrying out its terms.

A 2022 Consumer Reports survey of 2,224 U.S. adults found that 77% percent of Black respondents didn’t have a will. Establishing one breaks this negative trend.

Key points of a will include:

• A will is the only place you can appoint a legal guardian of minor children upon your death.
• A will only governs assets you solely own that are not designated to a beneficiary or held by tenants in common.
• A will won’t typically control life insurance policies, transfer on death (TOD) accounts, retirement accounts, or investment accounts that name a beneficiary, or any accounts with rights of survivorship.
• If you own assets in your name only or as a tenant in common, your will may be subject to probate. In this case, the personal representative you appoint in your will must work with the probate court in your state to ensure they approve the will, and any creditor claims are settled. Probate costs can get high. So, setting up your estate plan to avoid probate proceedings will eliminate these expenses.

Key Facts About Trusts

A revocable trust (aka living trust) is a legal document that describes how your assets will be distributed after your passing. It also names trustees to carry out its terms.

Key points of a revocable trust include:

• A revocable trust becomes effective after you fund it, allowing you to manage your assets during your lifetime.
• You are the trustee while you are alive.
• To “fund” the trust, you transfer your assets, including financial accounts, real estate, and personal property like art, jewelry, and furniture, to the trust.
• You can also designate the trust as the beneficiary of life insurance policies or other beneficiary accounts.
• You can name a successor trustee to manage the trust if you become incapable of doing so.
• Assets in the revocable trust avoid probate.
• You still need a will to name guardians for minor children.
• You can make changes to a revocable trust while you are alive.

By comparison, irrevocable trusts can’t be modified or terminated without the grantor’s beneficiary or court order permission. Irrevocable trusts can also reduce taxes and shield assets that you transfer to the trust for ownership from creditors.

Covering Estate Planning Basics Protects Your Legacy

Remember, estate planning isn’t merely passing on assets. It is creating a solid financial foundation for the next generation to benefit from while overcoming systemic barriers.

JPMorgan wealth management advisors and a seasoned estate lawyer can help you build an estate plan that also improves your heirs’ financial literacy, provides financial guidance, and explores how to close existing generational wealth gaps.

Contact JPMorgan to discuss your estate planning strategy today.