What you should know about estate planning (PHOTOS)

Tampa Bay Business and Wealth held a Women of Influence panel discussion on the topic of estate planning, at Five Labs, in Tampa. 

Bridgette Bello, chief executive officer and publisher of TBBW, moderated the panel in front of a live audience. This transcript has been edited for length and brevity. 

Panelists

Erica K. Smith Roodhouse, senior counsel, Trenam Law

Michelle Tolmoff, wealth advisor, GTE Financial

Donna Bruce, partner, FORVIS

Bridgette Bello: When should we start planning our estates? 

Donna Bruce: I suggest that everyone start planning for their estates now. That starts with thinking through where your assets would go currently, and deciding if changes are needed. 

Bello: How often should we review these plans? 

Bruce: Plans should be reviewed periodically, which may mean every few years, but also anytime there is a life event that warrants additional consideration. Marriage, divorce, children becoming adults and involved in a family business are examples of changes that would suggest a review is needed. One important reason to review is looming tax changes that could impact your plan. For example, there are significant changes expected for 2026, which is the current driver for estate plan reviews. 

Bello: When, and how, should we look at gifting to our children and family?

Bruce: All things being equal, gifting to family members is best sooner, rather than later. There are many factors to consider but transferring appreciating assets early, and letting appreciation grow in your child’s name, rather than increasing your estate, is a good plan. 

Bello: What recommendations do you have for ensuring that our assets are protected, and distributed, according to our wishes, especially considering any specific considerations women should have in estate planning?

Erica K. Smith Roodhouse: Estate planning is very important for men as well, but today we are talking about why planning is critical for women. First, women are survivors – and by that, I mean they statistically live longer than their male husbands and partners. That means that, in many relationships, it is the woman’s estate plan (or lack thereof) that will eventually determine the disposition of assets. It also means that women are more likely to deal with two inheritances in their lifetimes – that of their parents and that of their spouse, or partner. 

Second, women are caregivers, with 84% of custodial parents being women. It is vitally important that mothers with minor children have a thoughtful plan for their children’s future, if something should happen. Women may also care for elderly parents, other family members and even pets. What happens when the caregiver can no longer provide care? These scenarios need to be discussed and a plan put in place. 

Third, women are charitable with 73% of donors, worldwide, being women. A comprehensive estate plan can help a woman effectuate her charitable intent. 

Fourth, women are business owners, with an estimated 13 million women business owners expected, as of 2021. Women entrepreneurs, just like their male counterparts, need to plan for business succession. 

Fifth, women are professionals comprising 57.5% of the professional workforce. Women in fields, such as medicine or law, which may involve personal liability, should consider engaging in asset protection before a problem arises. 

Finally, women are complex – and here I am speaking about economic complexity. While a significant number of women hold great wealth, on average women still earn 81.2 cents for every dollar a man earns and are more likely to have shorter earning periods. Because many women will earn less income during their lives than their male counterparts, it is crucial to get retirement advice to make money last longer. 

Bello: For those of us in the room who are business owners what should we consider, as it relates to succession planning? And how, and when, should we get started on this? 

Smith Roodhouse: Business succession planning is vitally important for women because women are 15% more likely than men to exit their business for personal reasons. Here are some basic suggestions about business succession: First, have two succession plans – one for short absences (3-12 months) and one for permanently leaving the business, due to retirement or death. Second, and of extreme importance, thoughtfully select your successor. Third, know the value of your business – you cannot make an informed decision without a reliable appraisal. Fourth, get your key documents in place, whether this may mean partnership or buy-sell agreements, key man life insurance policies or some other type of planning. And do not forget to communicate with your staff – although you do not need to divulge specifics, it will help everyone maintain confidence if you communicate that you have planned for your departure. This planning should be done as soon as a business is started, as you never know what may happen, but definitely as you approach retirement age. You can get started with your estate planning or business attorney, your accountant and your wealth advisor. 

Bello: And for those of us who don’t believe we have any reason to be “estate planning” at this stage, based on our wealth – or lack thereof – what would you tell us we should consider? 

Smith Roodhouse: A comprehensive estate plan will accomplish much more than just the creation of a blueprint for how your assets are distributed after death and an ideal time to start planning is before and while building, wealth. A comprehensive plan should also provide for your care if you become incapacitated, help protect and grow your assets, ensure that your assets provide for you during retirement and allow you to nominate a guardian for minor children and provide for their care, should something happen to you. Additionally, we all have something that matters to us (money, a house, jewelry, a pet), even if you do not consider yourself to have substantial wealth, an estate plan is the only way you can ensure that the beneficiaries you want (including partners, charities, friends and certain family members) will inherit from you. Finally, if any of those who will inherit from you have substance abuse issues, special needs, receive Medicaid or are children, then some trust planning will be necessary to ensure that their inheritance is protected and is not detrimental to them. 

Bello: Talk about the importance of the “team” we should have as it relates to our estate planning.

Michelle Tolmoff: I’m going to start that answer with a series of questions. Thinking about your own, personal situation, and you don’t have to raise your hand, how many of you are single, married to someone older than you? Are they male? Are you a parent? Do have aging parents? Do you have a pre-existing condition or health concerns that run in your family? Are you LGTBQ? Do you have business partners? 

You may have said yes to more than one of these and you run a business, too. That’s a lot of hats to wear and priorities to juggle. I bet most of you will agree that you are busy and don’t have time for anything extra on your plate. But what if the things you don’t have time to plan for happen? 

We often think of estate planning and succession planning as just death but there’s a lot more that goes into planning for the “what-ifs” and making the time, now, to create a roadmap will make you less busy if they come to fruition. 

Having a team of professionals in your corner can help you be more efficient with your time and offer advice, and guidance, to plan for when stressful situations arise. The power of three: An attorney creates the documents and helps with legal guidance, a CPA helps with tax efficiency and an advisor helps with the planning, and implementation, of their services. 

Bello: You have some thoughts on income versus wealth and how to “create wealth” in the middle class. Can you share those with us? 

Tolmoff: The “Great Wealth Transfer” is coming and, according to McKinsey, by 2030 women in the U.S. will control over $30 trillion. They currently only control 33% of U.S. household finances and are expected to become the majority. 

Some important things to keep in mind to have a better likelihood to financial freedom and success are:

Don’t take a back seat.

Ask all the questions and keep asking until you are comfortable that you understand.

Start early. Little habits grow momentum and turn into bigger habits like building a snowman and starting with a snowball.

There are various stages to wealth, and everyone is on their own journey, don’t compare yourself to others stay focused on what you can do.

Don’t overlook life insurance and long-term care insurance. These are less costly when we are younger and detrimental to any estate if they arise, at any time. (According to ACL.gov, “someone turning 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years. Women needing an average of 3.7 years and men 2.2 years.”) It takes 30 years for us to save for retirement and less than five years to spend it all, should a long-term care event arise.

If you are a business owner, you should be taking advantage of saving for retirement like big businesses, and their employees, are and it’s tax efficient.

If you are a HENRY (high earner, not rich yet) you shouldn’t leave money on the table. Get the match your company offers by contributing to a 401k.

Pay yourself first. Figure out your monthly expenses and your monthly income. If you have more income than expenses, you should be saving as much as you can. 

 You should have an emergency savings account with at least 3-6 months’ worth of income or expenses. ♦

Photos by Tacy Briggs-Troncoso

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