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Estate Planning is Family Planning

Estate planning is Family Planning!  

Estate planning is the part of the financial planning process where you proactively put a plan in place in the event you become incapacitated or die.  Cheery stuff, eh!? 

Anyone who is interested in making sure their wishes for themselves and their loved ones are carried out should do some level of estate planning.   

Why people fail to plan 

Before we dive into the basics of estate planning let’s take a minute to address some of the typical reasons people put it off:  

#1: “I don’t have millions of dollars, multiple houses and a fleet of cars; estate planning is only for the uber wealthy” 

Estate planning is for everyone.  Sure, part of estate planning is specifying who you want to inherit your savings, 401k, house, etc. but most estate planning has nothing to do with the amount of money you have.  Estate planning also entails controlling decisions about your healthcare when you can’t make decisions on your own, making sure minor children are cared for and preventing family squabbles when you are gone.  

#2: “I’m uncomfortable thinking about disability and death.  I believe in Murphy’s law- if I talk about it something bad might happen” 

I feel ya!  But the truth is we are all mortal.  Death or disability can happen to any of us at any time.  Having a plan in place allows you to live more freely knowing that your wishes are in place for you and your loved ones.  

#3: “I don’t know where to start or who to include in my estate plan” 

Ok, we can work with this!  Read on...

Where to start 

If you dive into the Googleverse it’s easy to get overwhelmed with the various aspects of estate planning.  That is why when we approach estate planning with clients, we break it into two parts: basic or level 1 planning which applies to most everyone and level 2 which is more specialized and addresses more complicated family dynamics and/or financial issues.  

Basic Planning

Basic planning applies to just about everybody.  A basic plan addresses mostly non-financial issues related to mental incapacity or death.    

  1. Review beneficiary designations on any life insurance and retirement accounts to make sure the beneficiaries are up to date.    
  2. Have “power of attorneys” in place.  When you appoint someone as a power of attorney you are authorizing them to act as an agent on your behalf if you are no longer able to make decisions or conduct business on your own.  This will allow them to communicate and work with financial institutions and health care providers on your behalf.   When naming powers of attorney you can have a separate representative for healthcare and finances to either spread the workload or align specific people based on their experiences or abilities.  
  3. An Advanced Medical Directive is a document that specifies your wishes for life prolonging medical treatment if you had a medical condition that doctors determined was irreversible and would result in never regaining consciousness or death in short period of time.  Having a medical directive relieves the burden from your healthcare power of attorney of having to make difficult decisions.    
  4. Appoint guardians and financial conservators for minor children.  Guardians are responsible for the non-financial oversight of minor children and would be the ones providing housing and making decisions about education and overall upbringing.   A conservator is someone who you would appoint to manage financial affairs for minor children.  The guardian and conservator could be the same person, but they do not need to be.    
  5. Last Will and Testament is the document that probate courts will look at to determine how you would like any assets passed on at your death and any other specific wishes.  It usually includes the appointment of guardians and conservators for minor children.  When drafting a Will, you will need to appoint an executor.  The executor is responsible for carrying out the terms of your Will.  The executor should be someone that you trust and has some administrative acumen to manage your affairs.  

Revocable Living Trusts 

A Revocable Living Trust is a type of trust that is similar to a Will with the added benefits of avoiding the probate process; which can delay the transfer of your assets and is an added expense to your estate.  In addition, unlike a Will, a trust is private, and it is not as easily contested if someone were to challenge your wishes.  For this reason, a revocable trust can be a benefit if you are concerned that heirs might not agree or get along when settling your estate.  For many people, a revocable trust is part of a basic plan simply because of the efficiency it provides.   

Advanced Planning 

When we refer to advanced or level two estate planning, we are referring to any family or financial complexities that might require more specific instructions, more legal protections, or strategic tax planning.  Typical situations where advanced planning is required could be: 

  • An heir with special needs 
  • Children from a prior marriage  
  • Same-sex marriages or unions 
  • Business owners 
  • Charitable wishes 
  • High net-worth individuals (level of net-worth depends on the state you are in) 

Estate Planning is for You and for Them 

Everyone’s story is unique so estate planning starts with understanding how you would want your story to play out if you were no longer able to make decisions due to mental incapacity or death.  In addition to helping, you maintain control, estate planning eases the administrative burden of your heirs, can help protect family relationships and can help preserve assets for future generations.  Estate planning is as much for your heirs as it is for you.