Introduction

Wealth preservation is about more than just growing your assets; it’s about making sure that wealth lasts for generations. A solid wealth preservation plan helps protect your assets from taxes, market ups and downs, and unexpected expenses, so your legacy benefits your loved ones long after you’re gone. Here’s how to create a wealth preservation plan that stands the test of time.

1. Build a Strong Financial Foundation
   • Start with an Emergency Fund: Having a cash cushion allows you to handle unexpected expenses without touching long-term investments. Aim to save three to six months of living expenses.
   • Keep Debt Under Control: High-interest debt can drain your resources, so prioritize paying it down. Use low-interest debt strategically if it helps with wealth-building, but avoid taking on unnecessary debt.
2. Diversify Your Investments
   • Spread the Risk: Diversification helps balance your portfolio by mixing high-growth, high-risk assets like stocks with more stable options like bonds or real estate.
   • Think Long-Term: Focus on steady growth over time rather than chasing quick gains. This approach helps protect your wealth from short-term market volatility.
3. Use Trusts to Protect Assets
   • Why Trusts Matter: Trusts give you control over how and when your assets are distributed, offering both protection and flexibility for future generations.
   • Choosing the Right Trust: A revocable trust can offer flexibility, while an irrevocable trust can provide tax benefits and creditor protection. Trusts like spendthrift or special needs trusts are also useful if you want to provide for family members with unique needs.
4. Include Life Insurance for Liquidity
   • Create a Cash Flow: Life insurance can provide cash that helps cover estate taxes or other expenses, so your heirs don’t have to sell off assets.
   • Pick the Right Policy: Depending on your goals, different policies might be a better fit. Term, whole life, and universal life insurance each have their own advantages, so work with an advisor to pick what works best for you.
5. Plan for Taxes
   • Minimize Estate Taxes: Estate taxes can take a big bite out of your assets. Strategies like annual gifts, charitable donations, and trusts can help reduce the tax burden for your heirs.
   • Take Advantage of Annual Gifting: You can gift up to a certain amount tax-free each year, which is a great way to pass on wealth gradually without impacting estate taxes.
6. Keep Your Will and Estate Plan Updated
   • Regular Reviews Are Key: Life changes—whether it’s a marriage, divorce, birth of a child, or a significant increase in assets—can impact your estate plan. Make it a habit to review and update your will regularly.
   • Choose the Right Executors and Trustees: Select people you trust to manage your assets responsibly. Talk with them about your goals so they understand your wishes and can carry them out as intended.
7. Bring Your Family into the Plan
   • Communicate Clearly: Talk to your family about your wealth preservation plan and the values behind it. Clear communication can help prevent future misunderstandings or conflicts.
   • Consider Financial Education: Teaching your family about financial responsibility, investments, and wealth management gives them the tools to make wise decisions and honor your legacy.

Conclusion

Building a wealth preservation plan is one of the best ways to protect the legacy you’ve worked hard to create. By laying a strong financial foundation, diversifying investments, planning for taxes, and educating your heirs, you can set your family up for lasting success.

For help creating a wealth preservation plan that fits your goals, reach out to Innovative Legacy Solutions. We’ll work with you to build a plan that keeps your wealth secure and your legacy alive for generations to come.