How to Transfer Your Wealth On Your Own Terms

Estimated reading time: 4 minutes

With 10,000 of the 78 million baby boomers turning 65 each day, the U.S. is on the verge of experiencing the largest wealth transfer in history.

While retirement planning focuses on your future and growing your investments, it’s also important to consider what will happen to your accounts after you’re gone. To ensure your financial legacy aligns with your investment principles and takes advantage of the best tax options for you and your family, there are several key steps to consider:

Make Plans

Meet with financial and legal advisors to establish a plan for passing on your investment accounts to your designated beneficiaries. Each type of account has different rules and requirements for beneficiaries, so having a detailed conversation with your advisors is essential to ensure everything is set up correctly.

Just as you self-direct your investment portfolio, you can work with advisors to direct the transfer of your accounts according to your wishes. Taking the time to create a plan helps ensure that your investment legacy reflects your financial goals.

Designate Beneficiaries

Designating beneficiaries for your accounts might seem straightforward, but it’s crucial. If you don’t designate a beneficiary, several complications can arise. The account might go to your estate, be subject to the terms of your will, or even go through probate. These scenarios can be more complex and costly, potentially exposing the wealth you’ve built to avoidable fees and taxes. Proper planning can help ensure that your assets are transferred smoothly and in line with your intentions.

Talk to Your Family & Beneficiaries

We understand this can be a tough topic. After working hard your whole life, you want to enjoy your retirement without burdening your family with worries about the future. However, discussing the financial realities of the future is crucial, especially since navigating account transfers and managing inherited assets can be challenging for your loved ones.

Giving your family and beneficiaries a heads-up about your plans will help make a difficult time easier. Here are some tips to help you start these important conversations:

1. Take the Initiative

Your adult children likely want to discuss your retirement plans, but they might also be hesitant to bring up such a sensitive topic. As the parent and retiree, you are in a great position to lead this conversation. Many adult children want to support their parents’ retirement goals and ambitions. By initiating the discussion and sharing your plans, you help them understand how they can best support you.

2. Make it an Ongoing Dialogue

Remember, conversations about significant topics like retirement and financial legacy don’t have to happen all at once. These discussions are often ongoing. Start small, and be open to revisiting the topic over time. This approach allows everyone to process the information and ask questions as they arise.

3. Consider Your Family Dynamics

Every family handles sensitive topics differently. Think about how your family communicates best and choose a relaxed setting and time to have this discussion. Make sure there is plenty of time to explain your wishes and answer any questions. Preparing any necessary documentation beforehand can also help clarify your plans.

4. Don't Wait

It’s easy to think that you’re healthy and that these conversations can wait. However, having these discussions now, while you are well and can clearly communicate your desires, ensures that your wishes are understood. This proactive approach can prevent complications that might arise from health issues or family tensions down the road.

When You Can’t Talk to Your Family or Beneficiaries

Sometimes, family dynamics make these discussions challenging. If you cannot talk to your family about your financial plans for any reason, it’s essential to work with a trusted advisor to create a clear, documented plan. Additionally, ensure that you designate your beneficiaries to avoid any ambiguity about your intentions.

Your Legacy is More Than Your Wealth

Leaving a legacy goes beyond passing on your financial assets — it’s also about preparing your family and beneficiaries to understand the process of inheriting your investment accounts. As someone who actively manages their investments through self-directed accounts, you have valuable knowledge and a unique financial perspective to share.

Educating your loved ones about the benefits of tax-advantaged accounts and the potential to invest in assets they are passionate about is another way to pass on wealth and create a lasting legacy that transcends your lifetime.

Managing an SDIRA is about taking control of your retirement portfolio and making investment choices that align with your goals. At Entrust, we support our clients’ independent and forward-thinking spirit. We believe investing is about securing your future and that of your family.

That’s why we encourage every client to designate beneficiaries for their accounts. If you need to designate or update your beneficiaries, you can easily do so through the Entrust Client Portal.

On the Dashboard, each account tile provides an option to update or add beneficiaries. You can also find and submit the Beneficiary Designation Form under the “Manage Your Account” tab. For a more comprehensive understanding of legacy planning, check out our Legacy Planning Guide.

Already an Entrust client? If you know someone who might be interested in managing their retirement account through self-direction, share your knowledge about SDIRAs with them.

You can find your referral link in the “Refer a Friend” section of your portal. As part of our referral program, you’ll receive $50 off your recordkeeping fees when they open and fund an account, and they’ll benefit too — we’ll waive their account establishment fees, giving them a head start on building their financial legacy.