The Ultimate Gift – Visionary Wealth Advisors

The Ultimate Gift

Katie Martin, CFA, CFP®

June 7, 2021

Part of my role as a wealth management advisor is to keep people accountable. There are things we need to do to be secure in our financial future that are hard. One of those is getting our estate plan in order.

Talking about the end of our life is unpleasant, and as a result, it’s easy to put off – or avoid all together. I know, I did it for far too long. However, it is incredibly important. It helps to think of having a plan in place as the ultimate gift to your loved ones. It lets them focus on healing emotionally after your passing without the additional stress of trying to sort through your affairs. It also ensures your wishes are known, which can reduce questions, decisions, and potential conflict within the family when you’re no longer here.

Your estate planning needs are a bit different depending on your age, marital status, whether you have children, and the size of your assets. However, here are a few places to start:

  • Identify Powers of Attorney (POA) – Naming someone to make financial and health care decisions for you when you can’t is important for anyone over the age of 18. When you name a financial POA, you are appointing that person to make financial and legal decisions in the event you become incapacitated and can no longer make them yourself. A health care POA handles the day-to-day decisions for your health care needs. In addition, you can also create a Living Will, which will make your end-of-life wishes known to aid your health care POA in making the difficult decisions on what kind of treatment to pursue. If you don’t decide on who you want these people to be, you leave it up to the court to make the decision for you.
  • Review Your Beneficiaries One of the easiest ways to make sure your assets end up in the right hands is to name your desired beneficiaries where possible. Retirement accounts, investment accounts, and bank accounts can all have a beneficiary or transfer on death (TOD) named for the account. Naming beneficiaries is an important step in the account-opening process, but it can be easy to forget to review them regularly to make sure they continue to reflect your wishes. Key times to be sure to review your beneficiaries include when you get married, divorced, become a parent, face a health challenge, or have a death in the family.
  • Create a Will – A will is probably the most top-of-mind estate planning tool. A will names to whom assets will pass. It also names guardians for your children. While a will can direct where you want your assets to go, keep in mind that it still has to go through the probate process, which can be time-consuming, expensive, and public (estate notices still get published in the local newspapers.) So while it’s a great first step, it may not entirely meet your needs.
  • Consider a Trust – If you have assets that cannot be transferred via beneficiary, then establishing a trust may be a good estate planning tool for you. A living trust is a way to transfer assets to the people you want without having to go through the probate process (meaning faster and often less costly.) It is considered a revocable trust, so it can be changed any time during your lifetime. A trust can be particularly useful if you have minor children. You can name the trust as a beneficiary on retirement accounts or life insurance policies, and then the Trustee can help ensure the assets are managed for your children’s benefit. You also have more control over when your children receive their inheritance. For example, you can state that they receive it at age 25 or 30 instead of 18.

Keep in mind that creating the trust is just the first step. Once it’s established, you need to fund it by retitling your assets (such as your investment accounts and real estate) into the name of the trust. You may also add the trust as a primary or contingent beneficiary on retirement accounts and life insurance policies. If this isn’t done, your trust won’t be effective.

Estate planning is very personal and can be complex, so finding an estate planning attorney you trust is incredibly important. It can be a difficult conversation for you, so you want to be sure you are comfortable asking questions and getting the information you need to make the decision that’s right for you. Your financial advisor should be able to point you in the direction of attorneys to consider.

This blog post is intended for general information only and should not be construed as personalized investment, legal, or tax advice. The information is based on sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Statements made in this blog may be subject to change depending on revisions to the tax code, statutes, regulations, or government policy. Please consult your accountant, attorney, or financial advisor prior to engaging in any legal, investment, or tax strategy.