You may have known your financial professional for years, and you probably trust him or her for all the beneficial things they’ve done for you.

Whenever personal finance comes up in a conversation with friends, you freely refer them to your financial professional. It’s nice to refer friends for advice, but the most important financial referral you should make is your benefi ciaries—namely, your children and/or grandchildren. When discussing finances, there are four major phases of planning that most people go through over their lifetimes … and if you don’t, it’s never too late to start:

Accumulation... is what most people focus on for so long that it’s the only phase they really know. There are people in their 90s that are still in the accumulation phase—most of them don’t need to be—but that’s what they’re used to; saving money and having it grow.

Preservation... relates to introducing various insurances into your master plan to make sure that you and your family will be taken care of if something happens to you—an accident, sickness, disability or death. By pre-planning with life, health, disability and long-term care insurances, you and the ones you care about can avoid a potential fi nancial disaster.

Distribution... this phase should typically begin simultaneously with retirement. You worked hard for years to build up money for retirement; now is the time to start to make your money work hard for you. This means working with a qualifi ed fi nancial professional who specializes in retirement income planning to guarantee that you never run out of money as long as you live. You should get all of your statements together and work with a professional who can help you reposition some assets, if necessary, to more appropriate vehicles for you in retirement.

Transfer... is, unfortunately, totally neglected more often than not. This is where individuals have an opportunity to create a legacy or protect spendthrift beneficiaries from blowing their inheritance. Naturally, transferring wealth means preparing to whom your hard earned money will go, once you are no longer here. However, there are many things you can do while you are alive and well to plan for that time. If you have drafted a Will, allocate funds for a pre-paid funeral or gifted money to family, then you have already started the transfer phase. There is no reason why you should not continue to prepare to ultimately transfer your assets to those you care about.

It is important to understand what happens to your assets once you pass on. For example, an IRA—when transferred at death—is 100 percent taxable to the beneficiary and included in their earned income. This can result in up to about a third of your hard-earned money being paid to Uncle Sam. However, by preparing in advance with a qualified financial professional, you can transfer an IRA at death to a spouse, or it can be transferred to a child, where it can then be “stretched out” over their entire lifetimes. This simple planning detail is called an Inherited IRA. Knowing this can help to create a “legacy” for your family and make sure that they inherit most of your money and not the government.

Then again, if your beneficiaries are unaware of this amazing, available option, they most likely will just cash-in your accounts and do whoknows- what with them. This is another reason why it is so important for your beneficiaries to meet with your financial professional. It is much more effective to plan wealth transfer while you are still here, and to tell your fi nancial professional and beneficiaries your wishes, so they can ultimately carry them out.

There are several other aspects to consider, one of which is assets that will receive a ‘stepped up’ basis at death. These assets will not result in taxable income to your benefi ciaries; they include stocks held for over one year and real estate that is considered a primary residence. Another aspect to consider is assets that will be received tax-free at death. When comparing which assets are the ‘worst to pass away with,’ an IRA holds this distinction since it is totally taxable. Contrarily, life insurance is considered the ‘best asset to pass away with’ since it is generally received 100 percent income tax free. Life insurance can also be purchased for pennies on the dollar, whereas any other asset cannot. Many people in their 60s through 80s realize this and integrate it into their financial plan. Some of these people use their required minimum distribution (RMD) after the age of 70… to acquire more assets that will be tax free upon passing, if they do not plan to use the money themselves.

It is never too late to revisit your wealth transfer plans for the people you care about. Just because you are planning in advance does not mean you are more likely to pass away sooner. It also does not mean that you are going to give up control of your assets. Sometimes, something as simple as changing an account registration or updating benefi ciaries can make a world of difference in your loved ones’ futures.

You wouldn’t let a child or grandchild behind the wheel of a car without driving lessons. Why would you let them inherit the money you’ve worked for over your entire lifetime without any instructions? A pre-meditated wealth transfer plan involving your benefi ciaries gives you an opportunity to be personally responsible for helping to take care of your family, even after you are no longer here. It is also a great time for your benefi ciaries to meet with and review their own plans with your trusted fi nancial professional to make sure they are taking care of themselves and their kids; your grandkids. If you trust your fi nancial professional with your own money, you should introduce him or her to your family. This could undoubtedly be the most important referral you will ever make.

Joel I. Steele, CLU is a Financial Services Professional and a Licensed Agent for New York Life Insurance Company.

Joel can be reached at (856) 321-0212 or by e-mail at jisteele@ft.newyorklife.com