Estate Planning: It’s easier (and more important!) than you think

Katie Fischer, CFP®
09.08.17

You’ve made financial planning a priority, and for good reason. Careful planning helps ensure your own financial security throughout your lifetime. But what about after your lifetime? What will happen to your assets after you die or when you’re no longer able to manage your own financial life?

Estate planning may be the last thing you want to think about, but while planning for illness or death is not a pleasant topic, neglecting to plan for the inevitable puts your hard-earned and well-saved assets at risk. Even more, it can create unwanted stress for the people you love most who are left to pick up the pieces of an unplanned estate.

The good news is that estate planning doesn’t have to be as much of a headache as you might think. Yes, the process can be complex, but it certainly doesn’t have to be. In truth, it can be as complex or as simple as you desire. It all depends on your specific needs and how you want your assets to be distributed after your death.

If you’ve put off estate planning until now—or if it’s been a while since you’ve updated your plan—here are five items to start tackling today:

  1. Get a Healthcare Power of Attorney Assigning a Healthcare Power of Attorney (POA) is one of the easiest steps in estate planning, and perhaps the most important. A Healthcare POA gives the person you designate the legal right to make healthcare decisions on your behalf if you become incapacitated. When decisions need to be made quickly, the last thing you want is to put your family in a position of having to fight a legal battle to make immediate and often emotional healthcare decisions. It’s important to note that a POA cannot be assigned after something happens—it must be done when you are mentally capable by law. That’s why it’s a vital first step in the planning process. (While you’re at it, be sure your parents have their own Healthcare POA to avoid being put in a stressful situation yourself down the road.)
  2. Get a Durable Power of Attorney. Just as you may need someone to be your ‘voice’ regarding your healthcare if you’re incapacitated, you’ll also need someone to handle the financial side of things. That can range from paying your bills and making day-to-day money decisions, to accessing other assets to cover costs of extended healthcare. Without a Durable POA, it can be difficult or even impossible to access the funds needed to pay for your care and keep your financial life in order.
  3. Create a will. Wills are not just for the wealthy. Without a will, the state—not you—decides who receives your assets when you die. If you are a parent of minor children, a will is particularly critical. Without it, the state will decide who receives guardianship of your children—a decision that is much better made by you and your spouse. When naming a guardian, choose people you trust to raise your kids according to your wishes, and provide sufficient assets to pay for the care of your children until they reach 18, either through the transfer of assets, a life insurance policy, or both. Once your children are of age, you may want to consider how you want them to receive your assets. Do you trust them to be responsible for 100% of your estate right now, or would you like to retain some control over the assets through a trust? Young adults don’t always have the discipline to spend and invest wisely, so parental guidance can help, even if you’re no longer around to provide it. You will also need to name an executor for your will to manage your estate at death.
  4. Name beneficiaries to your financial accounts. This is an easy but important task, and yet it is often overlooked. Make a list of every account you own, including bank, retirement, and brokerage accounts, as well as insurance policies. Next, verify that you’ve named a beneficiary (or multiple beneficiaries) for every account. For checking and savings accounts, you may want to consider using a Payable on Death (POD). This designation gives your beneficiaries access to your assets at the time of your death without going through the probate process.
  5. Tell your family and other important people your plans. If you’re choosing guardians for your children, be sure to discuss your plans before finalizing your will. Guardianship is a huge responsibility, so it’s important that the people you choose understand all that it entails. And don’t stop there. Review your plan with your spouse or partner, and be sure both your spouse and your executor know where your important documents are kept and how to access them. If your documents are in a safe deposit box, be sure your executor has legal access to your box—not just a key! —as well as a copy of your will and contact information for your lawyer and your financial advisor. The goal is to make things as easy as possible for your family and others following your death. The more information and instruction they have ahead of time, the better.

 Once you have your estate plan in place, don’t “set it and forget it.” Life changes, and marriage, divorce, new children, pending retirement, relocating, and other major events may require an important shift in your estate plan. Of course, whether you are tackling your estate plan for the first time or amending it to address changing needs, meet with a competent professional to ensure you’re making the best possible decisions, and be sure that your financial advisor has a record of your beneficiaries as well as contact information for your POA designees, the executor of your will, and your attorney.

Whatever you do, don’t put estate planning off any longer. Taking the right steps today can have a significant impact on the financial security of the people you love most—more than you’ll ever know once you’re gone.

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Want help integrating your estate plans into your overall financial picture?  I can work with your preferred attorney or help you identify a qualified attorney in order to make sure your documents are up-to-date and reflect your wishes. Email me to schedule a time to talk. 

Katie Fischer, CFP®
Senior Financial Planner & Compliance Officer

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