Estate planning gets a bad rap.
“It’s a long process.”
“It’s only for the ultra-wealthy.”
But those things don’t have to be true. Let’s reframe.
Think of estate planning as an essential part to every financial plan. In fact, try to think of it as a set of instructions for gifts you want to give. I’ll explain.
A Gift for Your Loved Ones
Estate planning is a gift for your family in the form of peace of mind. By preparing for what will happen after you’re gone, you can help lift the stress off of their shoulders during what will surely be a difficult time for them.
Without a will or other legal documentation that lists how you would like your assets distributed, the process for your family to get access to your accounts or property is lengthy and expensive. It’s called probate and it can take many months and lots of money to unlock real estate, account information or other assets for your spouse, children or grandchildren.
When the probate process does make distributions, there’s no guarantee that your things will go to the people you intended them to pass to. Let’s say you have two biological children and a stepchild you raised as your own. When you die, many state laws in the U.S. would not recognize that step child as an equal and he or she could be left out of the distributions.
Or, let’s say you aren’t married but you have been in a loving relationship for many years. Wouldn’t you want your other half to be taken care of after you’re gone? The law won’t help them either, so you have to. And what better gift is there than saying, “No matter what happens to me, I want to take care of you”?
A Gift for Your Own Health
Estate planning is also a gift to yourself and for your health. This is where things can feel a little morbid, but have you ever thought about what kind of care you would want at the end of your life? Do you want to have hospice care in your home in the event of a terminal illness? Would you want to be on life support long term? These are all questions you can answer with the help of an advanced care directive.
Now, think about that end of life situation and imagine how your family will be feeling. It will be hard for them emotionally and leaving them with the decisions on how best to care for you through the end of your life will likely be even more taxing. So, if you are able to tell them exactly what you want before it comes to that point, wouldn’t you want to?
Another part of estate planning from a health care perspective is appointing a medical power of attorney. This is a legal document that appoints a person of your choosing to make medical decisions on your behalf if you’re unable to communicate. When you are making this decision, it’s important to consider a few things, like whether you expect that person to be around late in your life and whether or not they will be comfortable communicating your wishes to medical staff, especially if those wishes include cutting off life support or other potentially lifesaving measures. For these reasons, be sure the individual, or individuals, you plan to name as your medical power of attorney are comfortable with taking on that role.
A Gift for Others
Estate planning also helps you to navigate a wide variety of options to help give gifts during your lifetime, and far beyond it, to the organizations and charities you support. Your financial advisor and team of specialists can help you decide when gifting to your favorite causes makes the most sense for you and your money.
Thanks to their accompanying tax deductions, lifetime giving is a great option that allows you to see the money you are donating go to good use. While you may not think of charitable giving now as a part of your estate plan, discussing how much and when to give with a financial advisor can help reduce your taxable estate, which could help keep more of your money with your family down the road.
If you do plan to leave a donation after you’re gone, there are plenty of ways to do it. Using trusts, scholarship funds or donor advised funds can leave a legacy of giving to the causes you support. Because there are so many options available, your financial advisor can help you determine which course of action will fit your situation and best meet your needs.
You Don’t Have to Do it Alone
As you can see, there are a number of decisions to make when preparing your estate plan. But despite that, the process shouldn’t be difficult or intimidating. Your financial advisory team knows you and your situation. Now that you have the estate planning basics, they can help you take the next step and navigate the planning by asking the right questions and guiding you along the way. By utilizing the knowledge of trusted professionals, you can be confident that you have set you and your loved ones up for success.
JD, Series 7 & 63 Securities Registrations,1 Series 65 Advisory Registration,† Insurance License Pat brings 25 years of experience in the securities industry to his clients on a daily basis. Before coming to Wealth Enhancement Group, he worked as the chief executive officer of a mutual fund company, and he owned and operated a Registered Investment Advisory firm. Pat provides customized financial planning services for his clients combined with a values-driven and...Read More