Estate Planning 101: Considerations on Planning for your Future and your Legacy

Kay Kramer, CFP®
Jul 11, 2018 12:32:00 PM

estate planning 101When we first approach the topic of estate plans with clients, we know it can often be an uncomfortable discussion for many. We celebrate when clients tell us that they do in fact have an estate plan, that they know what is says, and that it reflects their values and wishes.

But more often, it’s the following responses, which can reflect our very human desire to avoid talking about dying:

  • We don’t have one. We know we should, but we just haven’t gotten around to it.
  • We did wills a long time ago when our kids were young, but now those kids have kids of their own.
  • We have an estate plan and/or trusts but we are not sure what it says or really means.

As financial advisors, we hold the privileged position to help clients start, continue or finish this challenging conversation. Sometimes the remaining decisions are easy. Other times couples disagree, and there can be sticking points that paralyze their decisions. Sometimes there isn’t an obvious person to fill the roles involved like executor, guardian for kids, or a power of attorney.

While we are not attorneys and can’t and don’t give legal advice, we can help prepare and provide clarity for your first visit with an attorney.

Everyone has an estate plan

It’s either one that you have created or one that the state creates for you. At death, virtually all assets are distributed in the following ways:

  • Ownership – If your property is owned by joint tenants with survivorship, the asset goes to the remaining surviving owners. So if you own your house with your spouse, your spouse gets it.
  • Beneficiaries – Generally you name beneficiaries on retirement plans, life insurance, and health savings accounts.
  • By Will or State Law – Anything that isn’t distributed by ownership or beneficiary. Some people believe they will not need a will because their spouse gets everything by ownership or beneficiary. While, that may be true, what happens if you both die together?

A second marriage, a family cabin, a child with special needs, a partial interest in a piece of real estate (a family farm etc.) are examples of how the distribution of assets can become complicated.

It’s more than who gets what and when.

Your estate plan can serve as a reflection of what is important in your life. These can be hard conversations but are important.

  • If you are a charitable giver during life, do you want to continue that legacy at death?
  • How much is enough or too much for your children or other family members?
  • How do you determine what is “fair”? Oftentimes what is “fair” isn’t always “equal”.

Who will make decisions on your behalf?

Estate planning also covers the questions about whom and how decisions are made if you are incapacitated?

  • Who will make financial decisions? Power of attorney or living trusts?
  • Who will make health decisions? Health care directives are vital documents. Who has access to your medical records with current HIPPA regulations?

Planning is ongoing.

Estate planning is not something you do once and then you’re done. Your estate plan should change as your life changes. Below are some additional considerations:

  • If you have grandchildren, do you want to give money directly to them?
  • At what ages do you want any adult children to receive an inheritance? You may decide that you want money in a trust for your adult children longer than your initial estate plans indicated, or you may look at your adult children and say they shouldn’t have to wait or deal with any trusts if you died now.
  • You might not have had a charitable intent earlier in life but do now, or your charitable intent might have changed.

I have lost track of how many different wills I’ve done in my life, and that reflects the fact that I don’t have children, was in a partner relationship for 34 years before I received the right to marry, have real estate in another state, have charitable desires and I’m a financial planner that believes in planning!

Having worked with clients for over 32 years, I can tell you that one of the greatest gifts you can give your survivors is to have your estate in order. Having to dig through a deceased loved ones financial life to determine what they have and don’t have is an extra burden that can be avoided.

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Birchwood Financial Partners, Inc. does not provide tax or legal advice. Please consult a qualified professional for assistance with any tax or legal issues such as wills and trusts. The information related to estate planning in this letter is general in nature and does not constitute tax or legal advice or a solicitation for any such service. 

Investment Advisory services offered through Birchwood Financial Partners, Inc. an SEC Registered Investment Advisor.

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