The Essential Estate Planning Checklist For Expats And High-Net-Worth Individuals

Estate planning is an important step in protecting your financial legacy, ensuring your loved ones are taken care of when you pass away. However, research has revealed that many expats and high-net-worth (HNW) individuals do not have an adequate plan in place. 

64% of households in the US with over $1 million net worth do not have an estate plan. Meanwhile, only 36% of HNW entrepreneurs in Asia have a will as part of their estate plan. 

Not having a comprehensive estate plan in place can make the transfer of wealth more difficult and leave your loved ones without financial protection at a time when they desperately need it. The current legal battles facing Aretha Franklin’s children serves as a cautionary tale about the importance of proper estate planning. 

If you want to make sure the wealth you have accumulated goes to the people you care about and you don’t have an estate plan in place, use our essential estate planning checklist to start developing a strategy.

Checklist #1: Start preparing/reviewing your will

A will helps to ensure your wealth is distributed in accordance with your wishes and avoids disputes between family members. 

“Having an up-to-date will is a vital part of the process when we discuss estate planning with our clients. Having a will in place allows individuals to ensure their assets are distributed how they want them to be. It also reduces the risk of family disputes and lengthy probate during an already tough period.” - Luke White, Private Wealth Manager, Melbourne Capital Group

Here are a few key requirements to keep in mind when preparing or reviewing your will:

• Clear and valid documentation: clear, valid, and up-to-date documentation is necessary to avoid confusion among your beneficiaries. Your will should also be properly executed with witnesses and notarisation to establish authenticity and validity.
• Specific bequest and distributions: When outlining the distribution of assets, be as specific and detailed as possible. This is to minimise the potential for confusion and disagreement.
• Preparing for potential tax liabilities: Mitigating inheritance tax is crucial to estate planning. Utilise any tax planning strategies available to minimise the tax burden on your beneficiaries and preserve your hard-earned assets. 
• Having a separate international will if necessary: If you have multiple assets across different countries, you will need to have an international will. This is to avoid any legal disputes and minimise the tax consequences when transferring assets between countries. 
• Seek professional advice: If you are a HNW individual, you may have more complex financial needs or businesses with associated assets. Our team of Private Wealth Managers work in partnership with legal experts and tax planners to provide you with the best professional advice to give you peace of mind.  

Checklist #2: Properly analysing your retirement plans/cost

Retirement planning and estate planning go hand-in-hand. As such, reviewing and properly analysing the cost of your retirement is another important step in your estate planning. 

Given the increased cost of living and improved life expectancy, a comfortable retirement will require a pot of around $3 million. However, calculating the exact costs will depend on your financial goals.

"Carrying out a cash flow analysis with clients allows us to provide a glimpse into what their retirement years will look like if they maintain their current financial habits. This can also act as a warning sign that their current provisions may not be sufficient and allow us to put a plan in place to reach their longer-term retirement goals." - Luke White, Private Wealth Manager, Melbourne Capital Group 

A cash flow analysis means assessing all aspects of your finances to understand how much you will require for your expenses after retirement and develop strategies to ensure you are fully prepared financially. The best approach is still to talk to a financial advisor to get an accurate assessment of your retirement costs. 

Our team can provide you with a complimentary assessment during a discovery meeting. Schedule one today. 

In regards to estate planning, where you retire is also important. If you are an expat and intend to retire abroad, then you need to consider your domestic tax obligations and plan accordingly.  

Checklist #3: Preparing your beneficiaries so they know your wishes and ensuring assets are titled accordingly. 

It’s important to tell your loved ones how you want your estate to be distributed. Discuss your wishes with your loved ones. Another important component to ensure a smooth transfer of assets is updating the beneficiaries and title ownership for your assets. 

Examples of assets that can have proper account titles or designated beneficiaries include insurance policies, retirement plans, pension plans and annuities. In keeping with the times, digital assets also need to be properly transferred to beneficiaries.

Digital assets such as emails, online banking accounts, and personal information on your devices (smartphones, tablets, computers) and even cryptocurrency should be part of your inventory. It is important to secure your digital estate plan and ensure that it is legally binding.

So when developing your estate plan, it’s vital to update the titles on your accounts.  This should avoid complications and simplify the transfer of these assets to your beneficiaries. 

You can choose to update your beneficiaries and account titling yourself or you can engage with professionals such as Melbourne Capital Group to ease the process.  

Checklist #4: Looking into trusts to supplement your will

“When used correctly, trusts are a useful tool to outline exactly how and when assets are passed on to beneficiaries. They generally avoid the need for probate to allow the efficient passing of assets. Certain trusts can also be used to minimise the impact of death taxes in certain jurisdictions.”  - Luke White, Private Wealth Manager, Melbourne Capital Group

Trusts are essentially a “vehicle” that holds and owns assets on behalf of the beneficiary and consists of:

• The Guarantor/Settlor - the provider of funds for the trust.
• The Trustees - an individual or firm appointed by the Guarantor to look after assets within the trust and are the legal owners of the trust property.
• The Beneficiaries - the beneficial owners of the trust property.

Supplementing your will with a trust can help to avoid probate on death, ensuring swift access to capital for your beneficiaries.

There are two main types of trust: a revocable trust and an irrevocable trust. 

A revocable trust can be changed at any time by the guarantor during their lifetime, as long as they are competent. An irrevocable trust usually cannot be changed without a court order or the approval of all the trust’s beneficiaries. 

Permutations of these two types of trust can be in the form of living trusts, charitable trusts, gift trusts, excluded property trusts and even cross-border trusts which serve to help expats and HNW individuals who have estates that span between the U.S. and Canada. 

While a trust might not be an essential part of an estate plan, it may be worth considering, in light of the following benefits; 

• Ensuring that your assets and privacy are preserved and protected.
• The ability to manage multiple properties in different states/countries.
• The ability to customise and fully control how your wealth will be distributed.
• Minimise or even circumvent federal and state taxes.
• Taking into account unique family circumstances (i.e. beneficiaries with disabilities, divorced or blended families).
• Distribute unique or hard-to-value forms of assets (i.e. collectables, rental properties, life insurance, etc.).

For most people, planning for what happens to your wealth after death can be complicated. However, it is necessary if you want to ensure your loved ones are protected and your wishes are honoured.

At Melbourne Capital Group, we have helped clients navigate the complicated process of estate planning to ensure a smooth transition of wealth. 

Feel free to contact Luke White (lukewhite@melbournecapitalgroup.com), Private Wealth Manager or fill out the form below and we will be in touch with a discovery call as soon as possible.

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