Estate Planning - Question on trusts etc.

  1. I do not think you are too heavily invested in stocks. Since you have significant assets which you intend to continue on generationally, you do not have the same allocation concerns as the majority of older people.

Most people need to insure they have adequate resources so they do not run out of money prior to death. This results in them accepting lower returns in exchange for lower risk. However, you have adequate respurces to continue to support you in almost any reasonable scenario.

As a result, you want an allocation with a higher return to risk ratio that over time can be assumed to steadily increase in value without your risk increasing more than expected return. That is often considered to be 75/25 or 80/20, which appears to be close to what you have.

  1. You should definitely look into trust arrangements. They will greatly simplify the process of dealing with the transfer of your assets after death. Done appropriately, they can also avoid estate taxes without overburdening the ability to enjoy the fruits of the underlying assets.

As to pros and cons, there are many different types of trusts and each have different pros and cons. The pros, in general, are that you avoid probate and you avoid estate taxes.

Trusts that effectively help avoid estate taxes often have the con of having to give up control of the assets prior to your death (by at least 3 years). Changed circumstances may cause you to want to take certain actions which will no longer be under your control, but the trustee's control.

However, you only need assets in such trusts to the extent they exceed the estate tax threshhold. While you cannot know in advance what that number will be, there may be some assets you can divest into trusts with some comfort it will not have a negative effect on you. You can place other assets in trusts which will avoid probate but not affect the estate tax analysis.

As you guessed, it really is an area where you need to talk to a competent trusts and estates lawyer. If you are in Virginia and are interested in a referral, I can recommend one if you want to PM me.

/r/personalfinance Thread