(Ryan Correa | Photo courtesy of Rosell Wealth Management)
The Importance of Having an Estate Plan
Ryan Correa shares his insights
A secure retirement is not an accident — it is the result of planning. Markets go up and markets go down, but good planning can help you take control of your finances. To build a successful retirement plan, you need to devote time to do your homework or seek the assistance of a financial professional — someone who can help guide key decisions.
My guest columnist today is Ryan Correa. Correa is an Estate Planning attorney and partner in his practice, Estana Law Group based in Bend, OR. He has extensive estate planning, business succession planning, probate and trust administration experience. Having “seen it all,” he is well-equipped to assist in the planning process for any estate. The advice he provides and the plans he develops result in lower estate tax burdens and reduced administration costs. Having a background in financial planning, one of the most rewarding aspects of the practice to Correa is helping families to navigate their estate planning as it relates to building, protecting and transferring assets in the most efficient and effective way possible. I recently interviewed Correa on my Podcast show Recession Proof Your Retirement. I thought it would be beneficial to share his wisdom this month with CBN readers.
The stats are startling as Forbes reports that only 32 percent of Americans have a will. This means that an estimated 68 percent of our population die Intestate and the potential repercussions for not planning ahead can be severe. Estate planning provides financial security for families. It helps ensure that your property is preserved and passed on to your beneficiaries in the most efficient way possible. It also helps to avoid disputes among family members, business owners or with third parties (including the IRS).
Here’s some words of wisdom from Correa:
Central Oregon is a special place. It is no wonder Bend and the surrounding areas have been listed in numerous publications as an ultra-desirable place to live, work and retire. Many of our clients are transplants, having moved to Central Oregon from other states after retiring, finding it to be a nice-sized town with attractive bigger city amenities such as high-quality restaurants, shopping, museums, art galleries, as well as experienced professionals, while still maintaining its unique comfortable and welcoming small-town vibe. Not to mention the incredible outdoor experiences just minutes from town. With all of the considerable attractions drawing people to this area from all over the country, it is no wonder some of the downsides go unnoticed.
I do not like being the bearer of bad news, but sitting across the table from my colleagues and me during an initial client meeting is often the first time many of our clients ever get wind of the Oregon estate tax and what it means for people planning to live out the rest of their lives in Central Oregon. Oregon’s estate tax is one of the most aggressive in the country. Of the 50 states, only 12 states and the District of Columbia impose a state-level estate tax, and six impose a similar inheritance tax (with one [Maryland] imposing both an estate and inheritance tax). While some states impose estate taxes at slightly higher rates than Oregon (Hawaii and Washington top out at 20 percent, compared to Oregon’s top rate of 16 percent), Oregon and Massachusetts are the only two states with an exemption amount of only $1,000,000. This means that when a person dies as a resident of the state of Oregon, they are taxed on the value of their estate to the extent it is over $1,000,000 in value. This tax takes many new Oregon residents by surprise, especially when compared to the federal estate tax, which only kicks in for estates above $12,060,000 in value under current law. While the Oregon estate tax news can be a bit of bummer, there are many planning techniques available to help minimize the estate tax hit, or to at least take advantage of both spouses’ $1,000,000 exemption amounts, essentially increasing a family’s exemption amount to $2,000,000.
Planning for each client’s specific goals and particular family dynamics is very rewarding work. Breaking the news of the estate tax to new residents can be difficult, but the planning involved after the fact tends to make up for it. Many clients begin lifetime gifting plans to move assets down to the next generation during their lives, which as you can imagine can be quite a bit more fun than giving gifts postmortem. In addition, many clients start charitable giving practices, incorporating members of the next generation as additional advisors over time, to begin a family legacy of charitable giving which can have huge impacts both during life and at death. One of the simplest techniques we often recommend is pretty basic: spend your money! Depending on the balance sheet, we often encourage clients to spend their assets during their lifetimes, particularly on experiences such as traveling with loved ones. Spending money on additional assets (cars, houses, art, etc.) won’t do much good, because it still leaves the value of the newly acquired asset on the balance sheet and subject to the potential tax. But spending the money on experiences — travel, concerts, dining, etc. can bit by bit help with your estate tax “problem” … or maybe we just say that because we want our clients to like us again after hitting them with the surprise news of the Oregon estate tax.
Nonetheless, despite the fairly onerous estate tax regime, we still believe Central Oregon is the best place to live and retire. With a little planning we can make the tax consequences of an Oregon death a little less burdensome. And if some of your hard-earned (and previously taxed) dollars do get eaten up by the estate tax, at least you can rest assured it will go to Oregon’s General Fund, which is intended to provide primarily for education, health, human services and public safety.
~ Ryan Correa
When it comes to estate planning and your legacy, everything you’ve spent a lifetime building can be at risk. Unfortunately, many people’s confusion causes them to take no action at all. Fortunately, there are strategies to enable you to transfer your wealth in an efficient manner. It is important to seek expert advice and become familiar with these different methods. You owe it to yourself as well as your family to plan ahead. I hope you have a wonderful holiday season ahead!
David Rosell is president of Rosell Wealth Management in Bend. RosellWealthManagement.com. He is the host of Recession-Proof Your Retirement Podcast and author of Failure is Not an Option — Creating Certainty in the Uncertainty of Retirement and Keep Climbing — A Millennial’s Guide to Financial Planning. His new book In The Know will be available in January of 2023. Find David’s books at local bookstores, Amazon, Audible as well as the Redmond Airport.
Securities offered through Valmark Securities, Inc. Member FINRA, SPIC.130 Springside Drive, Suite 300, Akron, OH 44333 800.765.5201 Investment Advisory Services offered through Valmark Advisers, Inc., a SEC-registered investment advisor. Ryan Correa and Estana Law group are not affiliated with Rosell Wealth Management, Valmark Securities, Inc. and Valmark Advisers, Inc. Rosell Wealth Management is unaffilated with Valmark Securities, Inc. and Valmark Advisers, Inc.
