In our last piece, we emphasized the importance of estate planning as the greatest gift you can bequeath to your loved ones, to reduce their painful stress load during an already stressful time. If you’ve been putting off your estate planning, taking the initial steps can be daunting. However, it can also be liberating at the same time. So, let’s get started today, one hurdle at a time.
Who are your heirs and other beneficiaries? How much should each receive? Who’s going to get your vintage bomber jacket and grandmother’s pearls?
Don’t become overwhelmed by trying to control every detail. Instead, start with what leaps to mind as your greatest possessions, goals, and challenges. You can always build on this base over time, but your biggest benefits will come from resolving that which you care about the most.
Once you’ve got an idea of what you’ve got, to whom you’d like to leave it, and how you’d like to implement your plans, the next step is to create a legal road map for others to follow.
It’s possible to tackle this hurdle on your own, but we don’t usually recommend it. Any missing or misguided legal language can sabotage your best intentions. As such, a generic template rarely replaces a reputable estate planning attorney who takes the time to get to know you, translates your wishes into legally binding documents, and collaborates with your financial partners to seek the strongest outcomes for you and your beneficiaries. After you’ve established the relationship, it also will be easier to maintain your estate plans over time.
What if you die intestate (without a will)? It usually takes a lot more time and money to settle even a simple estate, leaving a spouse, parent, or adult child with extra work during a painful time. Plus, your heirs will likely inherit less, as extra settlement costs eat into their inheritance. You’re also opening the door to ugly, and even costlier infighting if your potential heirs don’t see eye to eye.
Another common question is which legal document(s) will best serve your needs:
A Will: Nearly everyone should have a will to specify who gets what when you go. If you have minimal net worth and obvious beneficiaries, a basic will might do it. You typically name one or more executors to move your estate through probate (the legal process for carrying out the terms in your will). Your executors can be family members or professionals such as a bank’s trust services.
A Revocable Living Trust (RLT): If your relationships and/or financial affairs are more elaborate, you might want to supplement your will with a revocable living trust (RLT). You should also still have a will, to settle any assets that remain outside of your trust(s). But an RLT lets the bulk of your estate bypass public probate, which usually means a more rapid, private, and cost-effective settlement. It also can resolve complex family dynamics that a will alone cannot address. For example:
What if you want your second spouse to be supported financially during their lifetime, with the remainder left to children from a first marriage? What if your children aren’t yet ready to manage their inheritance? What if an heir’s spouse is a spendthrift?
With an RLT, you can establish successor trusts and trustees to oversee your estate over time and across these and other scenarios.
Other Specialized Trusts: If you’re preparing for a business succession, philanthropic endowment, multigenerational legacy, or similar higher goals, a specialized trust may help minimize tax ramifications and facilitate optimal outcomes. Various trusts can also be combined with targeted insurance coverage, to help fund critical financial gaps. For example, what if you co-own a business, and your spouse would prefer to be bought out by your partners once you pass? Life insurance may be an affordable way to resolve the challenge.
You’re nearly to the finish line, so don’t stop now! No matter how carefully you’ve structured your legal documents, it can be difficult for others to settle your estate as intended if your affairs are in chaos. So, once you’ve formalized your estate plans, the final hurdle is to complete the goals you established during your initial “Who Gets What” planning. In other words, it’s time to organize the important loose ends—and keep them organized over time.
Last but not least, let’s touch on security. Even once you’re gone, your private information needs to remain private, to protect against identity theft, legal challenges, and other concerns. And yet it also needs to be relatively accessible to your legal representatives and administrators. That’s a tricky balance to strike, and one more reason to use a reputable password manager to securely store all your logins. We suggest selecting one that lets you name an emergency contact who can access your account once you’ve passed. Or, if you already have a password manager in place, now is a great time to set up this important role.
Of course, it’s possible to skip all three of these hurdles on your way to the estate planning finish line. If you don’t say otherwise, your state’s laws typically govern who gets what. You also can let the chips fall where they may on who gets to settle your estate (assuming they can find it).
But make no mistake: If you do nothing, you’re still doing something. It just may not be the “something” you and your loved ones would prefer. If you’ve been procrastinating on your estate planning, we hope our handy summary has served as a source of inspiration. Contact us today, and we’ll help you navigate past your estate planning hurdles, connecting you with the relationships and resources you need to speed you on your way. That’s what we’re here for!
This post was prepared and first distributed by Wendy J. Cook.
Shore Point Advisors is an investment adviser located in Brielle, New Jersey. Shore Point Advisors is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Shore Point Advisors only transacts business in states in which it is properly registered or is excluded or exempted from registration. Insurance products and services are offered through JCL Financial, LLC (“JCL”). Shore Point Advisors and JCL are affiliated entities.
Let’s take a look at five of the most common financial adages and review why they are often much easier said than done.