Estate Planning for All

By Brian McKinney, CFP®, MBA

What will be your legacy?  Have you spent time thinking about it?

Maybe you want a building named in your honor. Or a foundation committed to championing the causes that fill you with passion. Or maybe you want to ensure your family will be financially comfortable for generations to come.

So, what will be your legacy?

This is one of the first questions I ask clients when we begin to work together. What I try to find out is simple: how do you want to be remembered when you are gone? It’s a question that many people don’t actively think about – but it’s a very important one. 

Laying the groundwork for your legacy is a part of estate planning. However, for most people, estate planning is not always top of mind.  As a financial advisor, I have seen how quickly the strongest investment plans can be unraveled due to inefficient wealth transfer strategies, costly taxes and expensive court costs – often times leaving families penniless and in direct conflict with each other –  the exact opposite of what the deceased wanted. Prolonged disputes resulting from vague directions and multi-state probate processes can quickly add more complexity and heartache. 

The good news is that many of these burdens can be avoided by addressing estate planning issues early, preferably as you complete your financial plan. For example, as you consider how your retirement accounts are invested, review the beneficiary designations. Are the names still valid? If you are divorced, it is very possible that an ex-spouse may be listed. If you are remarried, your new spouse could be left out which would have devastating implications.

The Last Will and Testament should also be executed and reviewed periodically. The Will designates an Executor of your estate. An Executor will be responsible for collecting your assets, paying taxes and expenses, and also distributing your assets and specified gifts. Ensure you pick the right person. The Will also identifies guardians for minor children. If you and your spouse pass away at the same time, who will care for your children? Think deeply about whom you would trust to act in the best interest of your children. 

You can also give an individual power to make decisions for you by establishing a Power of Attorney (POA). A Durable POA goes into effect as soon as it is executed, however a Springing POA only takes effect if certain conditions are met, such as incapacity. Think about which you prefer and ensure your POA is aware of the responsibility. Review your POAs annually, as relationships are subject to change.  State laws vary, so be sure to work with an estate planning attorney to discuss the appropriate form for your situation. 

Another important document in estate planning is the Advance Healthcare Directive. Essentially it asks: do you want to be kept alive on a machine? Think about the mental state of a loved one tasked with making this decision for you. It’s always best to relieve them of this burden and take the question out of their hands. 

These are just several of the core estate planning documents to consider for your specific situation. So, how will you be remembered? My advice is to proactively plan your estate, efficiently transfer wealth and create a lasting, well-executed legacy that reflects your core values – and eliminates asking your loved ones to make heart-wrenching decisions on your behalf.

If you know what you want your legacy to be while you’re still alive, it becomes much easier to outline the steps necessary to ensure it is upheld once you have passed.

Disclaimer: Financial advisors cannot draft or execute any documents. Please consult an estate planning attorney prior to executing any of the documents referenced in this article.