estate planning iowa

Estate Planning with Johnson Wealth and Income Management

Estate planning is an essential part of wealth management, and it involves organizing and distributing your assets after death. While it may not be the most compelling topic, it’s crucial to get organized now to help ensure that loved ones are cared for after you pass away.

In this blog, we’ll delve into the importance of estate planning and how Johnson Wealth and Income Management can assist you in creating a comprehensive estate plan. So, buckle up and get ready to learn everything you need to know about creating an estate plan and how it can provide peace of mind knowing your loved ones will be financially secure when you’re no longer around to support them.

What is Estate Planning?

Effective estate planning can help you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and help ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.

The Importance of Estate Planning

Estate planning should be an essential step in everyone’s overall retirement plan. Besides making sure your assets get to the people you want, planning your estate can help minimize income, gift, and estate taxes, too.  Despite being a crucial element of a comprehensive financial plan, many Americans overlook estate planning, some due to the recent economic turmoil faced by the U.S. and the world. A recent survey showed that 1 out of 4 Americans recognized the need for estate planning due to inflation, yet only 34% had taken the necessary steps to create one.

Another reason why Americans shy away from creating an estate plan is they think it’s just for the rich. However, “Estate” refers to ANY asset/possession, from your car to your wedding ring.

Control Over Asset Distribution

One of the most important grounds for estate planning is having control over your assets’ distribution. By creating an estate plan, you can help ensure your assets are distributed according to your wishes. You may want to leave certain assets to specific family members, friends, or charities. You can also set conditions on how and when your inheritance will be. 

Without a proper estate plan, your assets may be distributed according to state laws, which may not align with your wishes. Control over asset distribution is crucial if you have grandchildren or family members with special needs who may require ongoing support, such as living with a disability. 

Minimizing Taxes

Estate planning is a good resource for helping to minimize taxes and help ensure that your heirs receive the maximum amount of your assets. One of the most significant tax implications of estate planning is the estate tax. Estate Taxes are levied on the transfer of property at death. Without an estate plan, your estate could be subject to federal estate taxes of up to 40%, significantly reducing what your heirs receive.

However, with proper estate planning, you can help minimize your tax burden and ensure that your assets are distributed according to your wishes. Some strategies include gifting investments during your lifetime, setting up trusts, and taking advantage of tax exemptions. Setting up trusts can help minimize estate taxes by removing assets from your estate while helping you to maintain control over them.

In addition to trusts, taking advantage of tax exemptions and deductions can help reduce your overall tax burden. For example, you can deduct charitable contributions from your estate taxes. You can also take advantage of the estate tax exemption, which allows you to gift $17,000 per donee.

Annual Exclusion per Donee for Year of Gift

Year of Gift Annual Exclusion per Donee
2011 through 2012 $13,000
2013 through 2017 $14,000
2018 through 2021 $15,000
2022 $16,000
2023 $17,000

Source: Internation Revenue Service

Avoiding Probate

Probate is the legal process of distributing a deceased person’s assets, which can be lengthy and expensive. Without proper planning, your assets could be tied up in probate for months or years, leaving your loved ones in a difficult financial situation. However, with proper estate planning, you can help avoid probate and ensure your assets are distributed quickly and efficiently.

Strategies to help avoid probate include setting up trusts, naming beneficiaries, and jointly owning a property with the right of survivorship. Working with a fiduciary advisor can create a plan that helps minimize probate. Estate planning is a framework to help ensure your loved ones are cared for after you’re gone. Working with a fiduciary advisor is essential to ensure all your needs are met. 

What Happens if I Don’t Have an Estate Plan?

Without a proper estate plan in place, your assets could be tied up in probate for months or years, leaving your loved ones in a difficult financial situation.

That’s why at Johnson Wealth and Income Management, we strongly encourage you to prioritize estate planning to help ensure that your wishes are carried out after you are no longer able to do so and help ensure your loved ones are taken care of. Start your estate plan today to help avoid the following in the future:

  1. Your family going to court. If you don’t have a plan, or if you only have a will (yes, even with a will), you’re forcing your family to go through probate upon your death.
  2. Having no control over who inherits your assets. If you die without a plan, the court will decide who inherits your assets, and this can lead to all sorts of issues. Who is entitled to your property is determined by our state’s intestate succession laws, which hinge largely upon whether you are married and if you have children.
  3. Having no control over your medical, financial, or legal decisions in the event of your incapacity. Most people incorrectly assume estate planning only comes into play when they die. Although planning for your eventual death is a big part of the process, it’s just as important—if not more so—to plan for your potential incapacity due to accident or illness.

Working With a Fiduciary

By working with a Fiduciary advisor experienced in estate planning, you can help further identify tax-efficient strategies to help minimize your tax burden and help ensure that your assets are distributed according to your wishes.

Johnson Wealth and Income Management is a financial advisory firm with extensive experience in estate planning. Our knowledgeable team has helped countless clients in Iowa and Southern Minnesota create comprehensive estate plans that help provide peace of mind for them and their families, no matter what life may bring. We offer a range of services to help you with your estate planning needs, including:

  • Wealth Management: Our team of Fiduciary advisors can help you manage your assets and investments to help preserve and distribute your wealth according to your wishes.
  • Reviewing Your Current Plan: If you already have an estate plan, we can help ensure it is up-to-date and meets your current needs as life progresses, identifying potential issues and recommending improvements.
  • Creating a New Plan: If you don’t have an estate plan, we can help you create one. We will work with you to identify your goals and priorities and create a plan that meets your unique estate planning needs.
  • Trusts and Wills: Our team can help you set up all relevant documents, such as trusts and wills, to help ensure your estate plan is legally bound. We can also help you establish guardianship for minor children and create a plan for incapacity.
  • Tax Planning: We can help you minimize taxes and help ensure that your heirs receive the maximum amount of your assets. We can identify tax-efficient strategies and make recommendations to help reduce estate, gift, and income taxes.

At Johnson Wealth and Income Management, we understand that estate planning can be complex and overwhelming. That’s why we offer personalized services to help you navigate the process and create a plan that meets your needs.

Final Thoughts

Estate planning is crucial for managing your affairs throughout your lifetime while helping to ensure that your wealth is distributed accordingly after your passing. While estate planning may seem complex, a well-informed and robust plan can significantly affect what you leave behind for your loved ones.

It’s essential to be clear about who will decide on your behalf. Having open conversations with your loved ones and adequately documenting them can also help ensure everyone is on the same page. If you’re looking for Fiduciary services and estate management in Iowa, don’t hesitate to contact the trusted advisors at Johnson Wealth and Income Management.

Contact us today to schedule a consultation and take the first step toward helping to secure your family’s financial future.

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