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5 Must-Have Estate Planning Tools for Wealthy Investors


When you’re actively working toward building wealth, it’s a good idea to make sure you’re taking steps to protect it. Taking the time to develop an estate plan is a must for wealthy investors and the sooner you get started, the better. If you don’t have an estate plan in place yet, you can take a look at some important tools that you can use to safeguard your nest egg.

Find out now: How much life insurance do I need?

1. A Last Will and Testament

A will is the most basic element of any estate plan and it’s particularly important when you have a large estate and/or minor children. Besides allowing you to spell out the exact distribution of your assets to your heirs, a will gives you the power to name an executor and specify guardians for your kids. A will is subject to the probate process so if you have assets that you want to exclude from probate, consider the next tool on our list.

2. A Trust

5 Must-Have Estate Planning Tools for Wealthy Investors

A trust is a legal entity that allows you to transfer control of certain assets to a trustee. You can act as your own trustee during your lifetime and name someone else to succeed you after your death.

The trustee’s job is to ensure that the assets in the trust are managed according to your specific wishes. For example, you can spell out the terms under which your children can inherit their share of your estate or arrange for charitable donations to be made from your estate.

A trust can take effect during your lifetime or upon your death. You also have a choice between a revocable trust and an irrevocable trust. The former allows for assets to be transferred in and out. But property transfers with an irrevocable trust are permanent. The type of trust you’ll need will depend on how large your estate is, how many beneficiaries you have and what you want done with your assets after you’re gone.

3. Beneficiary Designation

If you have money invested in a 401(k), IRA or another account, it’s important to be very clear on who you want the beneficiary to be. Generally, when you open these kinds of accounts, you’re asked to designate someone as your beneficiary. But if you haven’t chosen one yet, consider adding that to your to-do list.

When you die without listing beneficiaries, your heirs have to wait out the probate process before collecting whatever you’ve left them. At that point, the money would be distributed according to your state’s inheritance laws. Making sure you have the appropriate beneficiary designation forms on file for each of your investment accounts can eliminate any problems or delays down the line.

4. Long-Term Care Insurance

5 Must-Have Estate Planning Tools for Wealthy Investors

Medical costs can easily eat into your savings and purchasing long-term care insurance can offset some of the expense. This kind of insurance is designed to pay out a daily benefit when you require eldercare so you can avoid having to spend down your assets to qualify for Medicaid. If you’re worried about seeing all your investment returns go up in smoke, it might be worth it to spend a few thousand dollars a year on a long-term care policy.

5. Life Insurance

You might be thinking that if you’ve built up a sizable base of wealth you don’t need life insurance. But that’s not necessarily true. Life insurance can be used to pay down any lingering debts owed by your estate, cover funeral and burial expenses or pay for your child’s college expenses later down the line.

If you figure out how much life insurance you need and purchase a policy, you’ll be creating a fund your heirs can draw on to settle your estate.

The Bottom Line

Mapping out your estate plan is an important part of building and preserving wealth for the long term. Taking an in-depth look at the five tools we’ve outlined here is a good starting point if you’re not sure where to begin.

You might also consider turning to a professional for guidance. Many financial advisors offer estate planning services to ensure you leave the legacy you want. SmartAsset’s financial advisor matching tool makes it easier to find an advisor who meets your needs. First you’ll respond to a short questionnaire about your financial situation and goals.  Then we’ll match you with up to three financial advisors in your area. This allows you to find a good fit while the program does much of the hard work for you.

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