How often have you seen something go completely sideways with a friend or relative’s estate plan? When this happens, you might be thinking:
It won’t happen to me.
This is one of the most dangerous mindsets because it doesn’t push you to be proactive. Instead, it leaves you lying in wait, hoping that things will go smoothly for your loved ones after you pass away. We tell our clients all the time how important it is to create (and update) their estate plans for this exact reason.
Estate planning isn’t always easy to talk about, which can leave some people avoiding these necessary conversations until it is too late. We would like to help change the narrative of estate planning. As opposed to thinking of it as a negative weight on your shoulders, think of it as a tool to establish your legacy and preserve your memory for generations to come
How can you create an estate plan that works for you and your loved ones? Let’s explore the answer to this question and more today.
Building blocks of an estate plan
Estate plans have many moving pieces and each plan will look different depending on your lifestyle: married, single, children, no children, etc. Be sure to consult your estate planning attorney as you work through creating the necessary documents to ensure you have the ones that are applicable to you.
Taking a broad stroke, estate plans tend to include the following:
- A will is a legal document that outlines your wishes for your estate. A big misconception is that a will avoids probate, a legal process that authenticates a will and ensures that property and assets are distributed properly.
- Living trust
- A legal document that is created during your lifetime where your assets are managed by a trustee for the benefit of a future beneficiary. This document often avoids probate.
- Power of attorney
- A document that allows you to grant another person the authority to act on your behalf should you become incapacitated or unable to make the decision yourself.
- Health care directive
- A written document that specifies your wishes about your health care. You can select an agent to carry those wishes out for you should you be incapacitated.
- A guardian has a legal responsibility to care for a child. A guardian assumes the duty of caring for them both personally (clothing, feeding, education) and financially.
- The people you select to be your beneficiaries are the ones who will receive assets from the chosen accounts after you pass.
Remember, each estate plan will look different and it is important to tailor your plan to your needs. We notice that there is a common fear that once you create an estate plan, it is set in stone. But that isn’t the case. An estate plan takes time to create and should be updated as new changes occur in your life (marriage, divorce, children, etc.)
Take some time to meet with your estate planning professional team to help you devise a plan that will provide you with the comprehensive estate plan that you and your loved ones need.
But filling out the paperwork isn’t the only thing you need to do to create a successful estate plan.
Don’t create your estate plan in a vacuum
We see this happen so often, where one person is “in charge” of the financial situation of the household. For the sake of this example, let’s look at a hypothetical husband and wife, Joe and Jane.
Jane has always taken care of the household finances. She takes charge, gets things done, and doesn’t look back, and while amazing, sometimes Jane forgets to make a back-up plan, leaving Joe in the dark about how their finances actually work. This can cause trouble especially if Jane wasn’t in a position to handle the finances. This example goes to show that communication when creating your estate plan is vital to its success.
It is so important to create your estate plan in the context of your life. If you are married, include your spouse in these conversations and work to make a plan that makes sense and is clear to both of you. Don’t create your estate plan in a vacuum.
While your plan may be clear and straightforward to you, it might not be for others involved. Talk with your spouse, kids, and other significant parties to make sure that you are all on the same page, as it will make your plan smooth, understandable, and way less stressful for your loved ones. You may think that shielding your loved ones from these tough conversations is helping, and it might in the short-term, but it will cause much more time, stress, and confusion later on.
Include your team of professionals
Creating an estate plan is a tall order and not something that you should do alone. Your estate planning attorney and wealth advisor are excellent resources to help guide you through the process.
Your relationship with your wealth advisor is so important and building up that relationship will only help more in the difficult times. They will be able to be a beacon of clarity and precision through this process. Working in concert with your attorney, a financial advisor will be able to help make sure that your plan is the best reflection of your wishes. Strengthening this network of professionals and promoting healthy communication between them will only streamline the process, alleviating stress from you and your loved ones.
An estate plan may not be simple to create, but it helps outline the path for your legacy and all the beauty it can be.