Estate Planning Essentials: More Than Just a Will
The phrase “estate planning” can sound like something reserved for people with sprawling properties, complicated family trusts, and enough assets to require their own spreadsheet department.
In reality, estate planning is important for many families.
At its core, estate planning is about making your wishes known. Who should receive your assets? Who can make financial or medical decisions for you if you can’t? Who should care for minor children? And how can you make things easier for the people you love?
A thoughtful estate plan can help answer those questions before they’re asked during an already difficult time.
1. Start With a Will
A will is one of the most familiar pieces of an estate plan.
It provides instructions for distributing certain assets after your death and allows you to name an executor who will be responsible for administering your estate.
For parents with minor children, a will is especially important because it allows you to identify the person or people you would want to serve as guardians.
However, a will is only one piece of the puzzle.
2. Don’t Forget Your Beneficiary Designations
Some assets don’t necessarily pass according to the instructions in your will.
Retirement accounts, life insurance policies, and certain financial accounts can pass directly to the beneficiaries you’ve named on those accounts.
That makes beneficiary designations an important part of your overall estate plan.
Imagine updating your will after a major life change but forgetting about a beneficiary designation you completed 15 years ago. That little oversight could create a very different outcome than the one you intended.
Beneficiary designations should be reviewed regularly and especially after significant events such as:
- Marriage or remarriage
- Divorce
- Birth or adoption of a child
- Death of a spouse or beneficiary
- Major changes in your financial situation
It’s a relatively simple review that can prevent some very complicated problems later.
3. Prepare for Incapacity, Not Just Death
Estate planning isn’t solely about what happens after you die.
It’s also about what happens if you’re alive but temporarily or permanently unable to make decisions for yourself.
A financial power of attorney allows someone you trust to handle certain financial matters on your behalf. Depending on how the document is structured, that could include paying bills, handling financial accounts, dealing with insurance, or managing other financial responsibilities.
Without the proper authorization, family members may have difficulty stepping in when they’re needed most.
4. Put Healthcare Wishes in Writing
Your estate plan should also address medical decisions.
A healthcare power of attorney allows you to designate someone to make healthcare decisions on your behalf if you are unable to do so.
An advance directive, sometimes referred to as a living will, can provide additional guidance regarding your wishes for medical care.
These documents aren’t always easy to think about, but they can provide valuable direction to family members who might otherwise be left making difficult decisions without knowing what you would have wanted.
5. Determine Whether a Trust Makes Sense
Not everyone needs a trust, but trusts can be useful estate planning tools in the right circumstances.
Depending on your situation and the type of trust involved, a trust may help provide greater control over how assets are managed or distributed.
For example, trusts may be worth discussing when planning for:
- Minor children
- Blended families
- A beneficiary who may need assistance managing an inheritance
- Family members with special circumstances
- More complex assets or distribution wishes
- Certain tax or legacy-planning objectives
Trusts can be complex, so this is an area where working with a qualified estate planning attorney is particularly important.
6. Make Sure Your Estate Plan and Financial Plan Agree
One commonly overlooked part of estate planning is coordination.
Your attorney may prepare excellent estate documents, but your financial accounts, beneficiary designations, insurance policies, and account ownership also need to support the plan.
For example, creating a trust doesn’t necessarily accomplish much if assets that were intended to be associated with the trust are never properly coordinated with it.
This is one reason your financial advisor, estate planning attorney, tax professional, and insurance professionals may need to work together.
Estate Planning Is Not “Set It and Forget It”
Completing your estate documents is an accomplishment—but it isn’t the end of the process.
Families change. Assets change. Laws change. And sometimes the people you trusted to fill certain roles years ago may no longer be the people you would choose today.
Consider reviewing your estate plan every few years and after major life events. As part of that review, look at your:
- Will
- Trust documents
- Financial powers of attorney
- Healthcare directives
- Beneficiary designations
- Life insurance
- Account ownership and titling
The goal isn’t simply to have a folder labeled “Estate Plan” tucked safely away somewhere.
The goal is to have a plan that still reflects your life today.
A Gift to the People You Love
Estate planning is ultimately about more than transferring assets.
It’s about making decisions while you’re able to make them, clearly communicating your wishes, and reducing uncertainty for the people who may someday need to carry those wishes out.
No estate plan can make a difficult time easy. But a well-thought-out plan can help make it easier.
If you haven’t reviewed your estate plan recently, your financial advisor and estate planning attorney can help you determine whether your documents, beneficiaries, accounts, and overall financial plan are still working together as intended.
About Charles
Charles McNamara, III (Charlie), is a Founding Partner, Financial Advisor, and President at Paragon Wealth Management, a financial services firm based in Doylestown, Pennsylvania, dedicated to professionally supporting, educating, and providing informed direction to each and every client. Charlie’s passion for working with clients one-on-one to find specialized solutions to pursue their financial goals drives the firm’s client-focused mission and continued success. He values the confidence clients have in him to always keep their best interests in mind.
A veteran of the financial services industry since 2000, Charlie brings an extraordinary level of knowledge and experience to the financial field. After obtaining a business finance degree from Delaware Valley University, he began his career as a financial advisor with Prudential Financial in 2001, and was promoted to management in only three years due to his hard work and dedication. With an entrepreneurial spirit and a passion for helping people solve problems, he launched his own practice in 2007.
When he’s not at work, Charlie spends time with his wife, Lisa (co-owner of local salon Moxie), daughter, Carissa, and their two dogs and cat. He enjoys weightlifting, running, golfing, fishing, and giving back to the community through his church, Our Lady of Mt. Carmel, and local organizations, such as the Travis Manion Foundation. To learn more about Charles, connect with him on LinkedIn.
Paragon Wealth Management and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Advisors associated with Paragon Wealth Management may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Great Valley Advisor Group, or (2) solely investment advisor representatives of Great Valley Advisor Group, and not affiliated with LPL Financial. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Advisor Group and Paragon Wealth Management are separate entities from LPL Financial.