Your Financial Plan Is Not Finished Unless Your Estate Plan is Up-To-DateAugust 5th, 2020 by Jim Allen
Estate Planning is an essential component of your overall financial plan. It allows you to gain more control over aspects of your life both during your lifetime and after your death. Unfortunately, we see the estate plan as one of those items that clients often don’t want to deal with. In fact, 6 out of 10 Americans do not have an up to date estate plan in place. Sometimes, it is a cost issue as attorneys typically charge $1,500 to $2,000 for an estate plan. Often though, it is just that people don’t want to think about it, so it gets put on the back burner of life. At Anchor Bay Capital, we approach estate planning as an essential part of the financial plan and make sure that it gets implemented as part of your comprehensive financial plan. Your financial plan isn’t complete unless your estate plan is implemented and is current.
Many basic estate plans do not need to be complicated, but virtually every adult should have a:
• Financial power of attorney
• Health care power of attorney
• Most married couples or adults with children will also likely need a living trust.
There are five major decisions that go into each estate plan. Those decisions are described below, along with examples and a description of people in your life that may be up to the task.
1) Beneficiaries – This is WHO will get your assets when you (and your spouse) pass away. Generally, if you have children, things go to your children in equal shares. However, there are also opportunities to leave things to charity (via a specific dollar amount after a death), or to other loved ones.
2) Method of Distribution – This is HOW your beneficiaries will get everything when you pass away. Depending on the age and financial capabilities of your beneficiaries, you may wish to delay distributions to a beneficiary. For example, for young beneficiaries, we often see clients give it in stages (1/3 at 25, 1/3 at 30, and 1/3 at 35). Please keep in mind that those young beneficiaries will have immediate access to funds for health care, education, and support. If you have a beneficiary with special health needs, you can leave assets for them through a special needs trust.
3) Successor Trustee/Executor/Financial Power of Attorney – This is the person (or people) who will make financial decisions for you in the event you cannot. The type of person who makes a good trustee is someone who is financially responsible, would handle finances similar to you, and is generally a good decision maker. If you don’t have a family member or friend who fits the bill, you can consider a professional trustee.
4) Health Care Power of Attorney – This is the person (or people) who will make health care decisions for you in the event you cannot. The type of person you name here would need to be able to make decisions during a difficult, emotional time. With this document, you have the ability to state your end of life and organ donation wishes in this document as well.
5) Guardian (if necessary) – This is the person (or people) who will have legal custody of any minor children should you pass away. The guardian will work with the trustee to access funds for any minor children. We often see your parents, siblings, other children you have that are over the age of 18, or possibly dear friends named here.
We take estate planning seriously at Anchor Bay and have a broad range of services available for our clients. From coordinating estate documents, either through our relationship with the Helios Integrated Planning document service, or our network of attorneys, to conducting family estate meetings and doing estate administration, we can help you put your estate plan in place.
We will be holding an information webinar on “Estate Planning Mistakes” on August 12th & 13th and encourage to attend. Please contact our office to register.