Articles Posted in Estate Planning

In the wake of the pandemic, the topic of estate planning has suddenly become a lot less taboo, according to Lee Baker, a certified financial planner based in Atlanta. “We get more calls around estate planning,” he says.

Baker is the founder, owner, and president of Apex Financial Services and is a member of CNBC’s Advisor Council.

“The last 36 months shifted the mindset,” explains Baker. “A lot of people have taken this opportunity to reassess.”

If it’s been years since you drafted or last updated your will, it likely references many of your existing assets, such as retirement plan accounts and life insurance policies. You also have paperwork on file with the applicable financial institutions. It’s possible that you have modified one of these documents after life events such as new births, deaths, or relationship changes without updating the other document.

It’s important to keep your will as well as your retirement plan or life insurance documents up to date. If your will names different beneficiaries from your documents on file, which one controls who these assets go to?

The beneficiary designations in your retirement plan and life insurance documents supersede what is written in your will. However, having different beneficiaries listed could cause conflict, confusion, and turmoil for your loved ones. It’s possible that one party may even try to legally challenge it.

In the last post, I wrote about 5 different major life events and changes for which you should revisit and potentially revise your estate plan. Here are 3 more life changes that are cause to take another look at your estate plan and update your documents if necessary:

  1. You may need to change important individuals within your estate plan. If you haven’t updated your estate plan in many years and previously chose a Personal Representative, Agent for your Power of Attorney, or Trustee, take time to revisit this selection. Evaluate whether the individuals you named are still the best choice for your current family and estate situation.
  2. You start or purchase a new business. Although a lot of business owners do an excellent job of building successful businesses, there are less business owners who take the time to create a good succession plan or properly incorporate their succession plan into their estate plan.

Perhaps you met with a lawyer and created an estate plan when you were younger, soon after getting married and having children. Now your kids have grown into adults and may be married and/or have children of their own.

No matter your specific life situation, there are a number of life events and changes that need to be reflected in your estate plan and will likely mean your estate plan needs to be updated. Below are 5 examples of major life changes for which your estate plan needs to be revisited:

  1. You have divorced, been widowed, remarried, or are in a relationship and living together. Following any big change in your family and relationships (new arrivals or departures), make sure to review your estate plan to ensure that your estate is going where YOU want it to go.

No one wants to think about their own death, and planning for one’s own funeral isn’t easy. Immediately following a loved one’s death, family members are already very distressed. It is hard enough to follow through with funeral arrangements that have been outlined in one’s will or other estate planning document. It is far more difficult when no arrangements have been made at all.

Family members might also live in different places around the country or world. Coordinating a funeral from far away can be very complicated and stressful.

You can make things much easier for your family members and loved ones by designating one person to take on the main responsibilities of your funeral and issues related to it. The executor is often chosen for this role, although it may make more sense to designate someone else depending on your situation. Choosing ahead of time who will make sure your wishes are carried out can provide some comfort and assurance to you and your loved ones.

When it comes to the part of your financial plan related to health, things such as insurance premiums and copays might be what come to mind.

These expenses are important. However, according to certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida, your health should influence many other parts of your financial plan.

“It’s way more than that,” McClanahan says. “A healthy person needs a totally different [financial] plan from someone who has health issues.”

As a parent with young children, you’ve put a lot of thought into the best way to raise your kids, including things such as the school they attend and the beliefs and values they are taught. But have you considered what would happen if you (and your spouse, if you are married) pass away suddenly? You can help ensure the best care for your children with some advance estate planning.

With a will, there’s a way

The biggest step you can take to make sure your intentions are known and followed is to name a guardian in your will. If you haven’t named a specific guardian in your will already, you can add a clause or, if necessary, draft a new will to do this.

The time and money you spend creating estate planning documents might all be in vain if your loved ones cannot find your documents or assets after you pass away. Although you want to be careful when it comes to sharing information about your will and assets to avoid exposing yourself to risks, you also want to ensure they will be able to be located.

Here are a few tips to help make sure your loved ones are not left searching for your estate planning documents when they need them:

1. Keep your will and other estate planning documents in a safe place where it can be found after you pass away. If you tape your will under a desk drawer or hide it in a secret compartment, it’s likely that no one will find it unless you have told them where to look and how to get to it. Make sure your executor knows where your will is located, and consider keeping it in a safe or safe deposit box if you are worried that someone will try to sneak a peek at it in advance.

Your will provides for the disposition of your assets upon your death and is designed to tie up loose ends in your estate. You may wish to include specific bequests to beneficiaries in your will, such as collectibles, jewelry, or art that you may wish to leave for your child.

However, it is important to be careful about making bequests that could lead to outcomes you do not intend. One of the more common ways this can happen is if you no longer own a specific asset when you pass away. Someone may want to leave for their child 100 shares of stock worth thousands of dollars at the time the will is drafted. However, if this person later sells the stock without updating the will, the child could be left with less than their parent intended.

Similarly, say someone bequeaths real estate to their son and life insurance proceeds to their daughter. However, in the years between creating the will and passing away, this person sells the home, invests the money from the sale of the home, and allows the life insurance policy to lapse.

Young adults who may just be starting a family often feel they have plenty of time to focus on building a financially secure future and before needing to create a comprehensive estate plan. However, estate planning, even for young adults, is crucial to ensure that children and other loved ones will be cared for if something unexpected happens. Although planning for when you are gone can be uncomfortable or scary, it’s important to do this planning so that property is passed on to your chosen beneficiaries and so that loved ones are taken care of according to your wishes.

A basic estate plan for a young family should at least include the following:

  • a last will and testament