Welcome to your golden years! Now that you have some extra time, it’s perfect for reviewing and updating your estate plan.
What is Estate Planning?
Estate planning is organizing and preparing your assets for when you are no longer in a position to do so. Writing a will, establishing trusts, advance directives, powers of attorney, assigning an executor, and selecting beneficiaries for your assets are all part of estate planning.
People often avoid estate planning and set it aside because it can seem like a grim task when in reality, it’s an excellent way for you to plan your legacy.
#1 Review Your Will
Your will is the foundation of your estate plan. A will is a document that outlines the distribution of your assets after you die. It can also be a ‘catch-all’ document that outlines any other requests you have, such as guardianship or beneficiaries.
Without a will, your estate will be divided in probate court. Will documents always have to go through probate, but someone else will control how your assets and money get distributed if you don’t have one. Wouldn’t you instead prefer to make those decisions?
Your will should be regularly updated, especially after significant life events such as getting married or starting a family.
- Have you remarried, divorced, or been widowed?
- Has one of your named beneficiaries passed away?
- Have you moved to a new state?
- Have you adopted a child or grandchild, niece or nephew?
- Has your insurance coverage changed?
- Have you or your spouse been diagnosed with an illness?
If you answered ‘yes’ to one or more of the above, it’s time to update your will.
#2 Ensure Your Estate Plan Is Updated According to Your Wishes
As you grow and evolve, your values and goals may shift. Reviewing the design of your trusts or summaries every few years will ensure they still match your goals.
Ensure your documentation regarding bank statements, investment statements, beneficiary designation forms, etc., are all accounted for and in a location known by your executor.
There are also a lot of people you need to account for in your estate plan:
- Beneficiaries: Your will or trust will designate who your assets will go to, but reviewing the beneficiaries on your other accounts is crucial, such as life insurance or 401k. The last thing you want is to have your beneficiaries listed incorrectly!
- Financial Power of Attorney: Your financial power of attorney will be responsible for making financial decisions if you become incapacitated.
- Medical Power of Attorney: As you probably guessed, your medical power of attorney will be responsible for making healthcare decisions if you cannot do so.
- Dependents: If you have dependent children under 18, you must have their guardians listed within your estate plan.
Pro tip: Your financial and medical power of attorney can be the same person, but that doesn’t mean it should be. Consider each position’s credentials and qualifications and evaluate the strengths of the person taking on the role. Your health and finances are nothing to mess around with.
You must also make plans for your personal property like furniture, tools, jewelry, cars, and even pets! The last thing you want is the family arguing over who gets your precious furry companion.
Last but not least, remember digital assets like passwords, emails, social sets, online banking, etc. It can be a severe pain for your family to attempt to access these things without the proper credentials.
#3 Explain The “Why” to Your Family
How you decide to divide up your estate is ultimately your call. For example, you’re giving everything evenly to your children, some to a charity, or you want to include funds for your grandchildren. It’s your legacy—you call the shots.
Whatever you decide to do, you must talk with your children and loved ones about your plans. This way, you can manage their expectations and explain the why behind what you’re doing. It’s much more personal and better coming from you rather than a stranger from the court after you are no longer around.
Transparency is crucial here—talk about your intentions and decisions so everyone is on the same page. Having an open dialogue in a positive environment will give you an opportunity to:
- Help your family come to a common understanding of your choices and how you want your legacy to live on
- Pass on your family values
- Prepare your family to develop a plan once you pass on
- Empower your family to take control of their legacy
During this conversation, you can fend off any confusion, hurt feelings, or misaligned expectations. Laying everything out and discussing it as a family can save potential family disagreements.
Be sure to allow time and space for people to ask questions and use this conversation as a teachable moment to inform your family about your financial life and how your choices impacted it.
A Lasting Legacy Built With a Trusted Partner
Estate planning is an important time for you to design the legacy you want to leave behind. Your estate plan will also change as life changes, so it’s crucial to review it regularly.
As a fee-only financial advisory practice based here in St. Louis, we are here to help you design an estate and legacy plan you’re proud of. Schedule some time to get started.
Craig Toberman is the Founder of Toberman Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.
Craig received a Bachelor of Science (B.S.) degree in Agricultural and Consumer Economics from the University of Illinois and a Master of Business Administration (M.B.A.) degree in Finance from Saint Louis University. He is a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) charterholder, and Certified Public Accountant (CPA).
Craig is a member of the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network.
Craig lives in the greater St. Louis area with his wife, Ally and son, Hank.