Everyday Affluence: Estate Planning — Yes, It’s For You

We often encounter clients who aren’t very concerned about estate planning. Sometimes it’s because they want to put it off — which we understand. No one likes to spend too much time thinking about the Grim Reaper!

But other clients seem to be under the impression that estate planning isn’t for them. They don’t have children or never married, so nobody pops immediately to mind when they think about dispersing their assets.

Well, we’re here to set the record straight. Everybody — yes, everybody — needs an estate plan. If you own stuff, you need to have a plan for where that stuff will go once you’re not here to watch over it anymore. And obviously, that goes double for those who do have spouses or children.

The 5 Critical Components of an Estate Plan

Estate planning can seem convoluted at first, and there are a decent number of moving parts. But once you sit down and start working through it, things come together pretty quickly and make a lot of sense.

Here are the core components of any solid estate plan.

1. The Will

This is probably the most familiar part of your estate plan (and perhaps the most time- and effort-consuming): the document that denotes who, exactly, gets your stuff. You’ll want to sit down and thoroughly assess your assets, taking care to include both physical objects like homes and cars as well as investments or any leftover funds stashed in retirement accounts — and, of course, that prized brooch you were handed down from Great Aunt Mabel.

While it’s not anyone’s idea of a fun Saturday afternoon activity, being exhaustive and exacting when drafting your will can make things a lot easier for your loved ones down the line. After all, if something is unclear, it’s likely that family members will fight about it… and the ultimate decision may be left up to the court.

2. The Springing Power of Attorney

You may already be familiar with the idea of power of attorney: documentation that gives someone else the legal authority to act and decide in your stead. When it comes to estate planning, what you’re looking for is durable legal power of attorney with a spring provision — that is, power of attorney that “springs” into action when you become incapacitated.

Think carefully about who you trust to make your financial decisions and manage your financial affairs, and be sure to take a second look every now and again. You never know what might change in a decade, and the last thing you want is someone you’ve fallen out of touch with calling the shots.

3. The Healthcare Directive

Otherwise known as the “living will,” this is the part that spells out your wishes for end-of-life care, including naming a proxy who’s authorized to make medical decisions should you be unable. Do you want to be kept on life support? What about cardiopulmonary resuscitation? Again, we’re not saying this stuff is fun to think about… but it is important, and can save your loved ones from an agonizing decision-making process.

4.The Trust

Imagine you had a very peculiar magic power: you could program an ATM to spit out measured amounts of discretionary funds to your children, but unlimited funds for required expenses like health, housing, and education.

Good news: you actually do have this magic power. All you have to do is set up a trust!

Along with ensuring your family is financially covered in the event of your passing, trusts also often avoid probate, which means your beneficiaries can get their hands on those funds sooner. They also help you save on court fees and, in some cases, minimize estate taxes.

You can name a professional trustee to manage your trust, but we recommend against naming a bank — they tend to be costlier than other options.

5. The (Updated!) List of Beneficiaries

Who are your beneficiaries? Chances are, the list is lengthier than you think… and might not be entirely up to date. Take into account life insurance policies, retirement accounts, pension accounts, and more; all of these need to be kept up-to-date and have the proper beneficiaries on file.

Trust us, we get it. Nobody wants to think about the end. But proper estate planning is more than just a solid financial move — it’s a favor you’re doing for your loved ones that they’ll be grateful for in a very difficult time.

Even if you’ve already got your estate plan set out, it’s equally important to review it on a regular basis, paying particular attention to the actors who will be responsible for making sure everything goes to plan: your personal representative, trustee, and guardian, to name a few.

Although estate planning can be challenging both conceptually and psychologically, we’re here to walk you through the process every step of the way. We’d love to find out more about how we can make sure your money goes exactly where it needs to go: into the pockets of you and the ones you’re closest to!

For more information on estate planning or just to chat about any other wealth management questions you may have, reach out to us directly.

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investing for retirement ebook ipad - McClain Lovejoy
investing for retirement ebook ipad - McClain Lovejoy
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