Why Are You Waiting to Build Your Estate Plan?

Russ Hodgson, CFP® and Joe Pond, CFP®

Couple filling out estate plan

While you may not be able to predict when tragedy will strike, there are some things you can do to prepare for the unexpected. Many people believe that estate planning is only for those who are wealthy or own a business. While this is true in many cases, everyone needs to have an estate plan in place, especially those with a family. 

As a financial planner for estate planning in Bountiful, UT, we encourage you to use the information in these brief chapters as helpful guidance. This quick guide will walk you through the steps of estate planning. If you have more in-depth questions or need help getting started with a formal process with a financial advisor, don’t hesitate to reach out. 

In fact, we would love to hear from you because we love what we do and we genuinely care about helping people reach their financial goals! Planning for the inevitable is part of being a responsible and loving family member.

Before we jump in, let’s address the elephant in the room.

Why do people avoid creating a will or estate plan?

People tend to:

  • Avoid dealing with family issues that can arise from the efforts
  • Feel uncomfortable talking about death
  • Don’t think it’s necessary for them right now
  • Not understand the importance 
  • Think there’s no point in making a will if they don’t have much to leave behind
  • Fear what their loved ones would do with their money or possessions if they were gone

If any of these items ring true for you, we empathize and are here to walk you gently through the processes. You do not have to feel alone with any of these decisions and communication.

Chapter 1: What is an estate plan and why do I need one?

An estate plan is a set of documents that lay out your wishes for your assets, possessions, and other aspects of your life after death. When you create an estate plan, you’re making sure that your wishes are known if a tragic unexpected event were to occur. All documents within your estate plan should also be updated as life changes. 

The primary documents in an estate plan include:

  • A will: stating how you wish to distribute your property at death
  • A trust: allowing you to control who gets what from the time of creation until after death and who is tasked with administering your estate
  • Other vital documents related to health care directives (also called a medical power of attorney), funeral arrangements, and guardianship for minor children

Read: What Is An Estate Plan And Why Do I Need One?

There is high importance in making your intentions clear.

Creating documents that are clearly defined with your wishes allows you to communicate with the family members involved; we can help you with that. Defining your expectations can help avoid conflict and preserve your legacy. 

Bottomline: Your intentions should be clear so that your loved ones understand what you would like done with your assets when you pass in an organized fashion. Verbal communication should back that up to ensure they know what to expect if something were to happen to you.

Chapter 2:Who needs a will?

In addition to protecting your assets, a will can help you provide for your loved ones and ensure they have what they need. A well-written estate plan is one of the best ways to ensure that your wishes are carried out when you die.

It’s important to remember that every dollar counts when it comes time to pass on assets and possessions – and not having an estate plan could cause damage even if there isn’t much money involved!

A financial advisor in Bountiful, UT, will agree: if you haven’t yet thought about making a living trust for yourself or your loved ones (even if you don’t currently own any valuable assets), now is the time!

elder couple estate planning

Is a will the same thing as a trust?

Both are legal documents, yes, but the answer is no. 

  • A will spells out how you want your assets distributed and affairs handled after you die. 
  • A trust is a fiduciary arrangement whereby a trustor/grantor gives a trustee the right to hold and manage assets for the benefit of a specific purpose or person. Trusts can be more complicated to administer and are usually used in conjunction with wills.

Our team at ARS has the credentials and expertise to support you and your family.

Chapter 3: What’s the difference between estate planning and legacy planning?

Again, estate planning is about ensuring your assets go to the right people when you pass. The goal is to avoid taxes, creditors, and probate court. It’s all about getting your financial affairs in order so you can pass on your property without hassle or delay. This can also include creating a plan for who will care for your children if something happens to both parents.

Legacy planning, on the other hand, looks at more than just financial assets but values as well. You may want to continue giving back to causes important to you after death or even create an institution that carries on your name after death (like a scholarship).

Your estate plan is a financial legacy.

It’s important to understand that your estate plan is a legacy of your financial decisions. It has lasting impacts on the people who follow you and the world around them. You can leave a legacy of philanthropy, education, family structure – or any combination thereof. What will you choose?

Chapter 4: Elements of an estate plan

basic estate planning

Serving as guiding documents that assist your family through the logistics of managing your finances and your affairs after death, these are a few of the most common elements of an estate plan:

  • A will states how you want your assets divided and who will be in charge of carrying out your wishes after death.
  • A living will (healthcare directive or advance directive for health care) is a document that outlines if you want to receive medical treatment in certain situations or not.
  • Power of attorney gives someone else the right to act on your behalf if you cannot make decisions for yourself due to an illness or injury.
  • Health care proxy, or durable power of attorney for health care (DPOAHC) allows someone else to make treatment decisions on your behalf if you cannot communicate wishes because you are incapacitated by illness or injury.

Read more about elements of an estate plan.

Chapter 5: Advanced Healthcare Directive in an estate plan

advanced healthcare directive checked

As mentioned in Chapter 4, a living will is one of the most critical parts of an estate plan. It outlines your wishes for medical care or treatment if you are unable to speak for yourself, such as in the event of a coma or severe injury. If you don’t have a living will, it could be challenging to determine what medical procedures would be necessary to keep you alive.

A healthcare proxy allows someone else to make medical decisions on your behalf if they’re unable (or unwilling) to do so themselves. You can designate which family member should serve as your healthcare proxy and ask them if they are comfortable serving in that capacity, should it be needed.

You may also want to consider including powers of attorney for financial matters and healthcare at different stages in life. For example, one might grant authority over financial matters until age 21, and another grant authority over all financial matters after age 60 (or some other age).

Read more about the Advanced Healthcare Directive in estate planning.

What life events spark the need for a financial advisor in Bountiful, Utah?

Unfortunately, many people wait to hire a financial advisor until they desperately need help or have a significant life event that requires higher financial knowledge for proper planning. These events often include:

  • Death of a spouse or partner.
  • Retirement.
  • Divorce, separation and/or the death of a child may prompt the need for a new estate plan.
  • Marriage or remarriage brings new assets into your life that you want to protect from taxes, creditors, and family members who might try to claim them. If you’re married with children, then there is also the issue of what will happen to your spouse’s inheritance if he/she dies before you do. Your beneficiary designations can ensure that all assets are distributed in accordance with your wishes.
  • Birth or adoption of a child adds another generation to your family tree and often requires updating existing documents so that those assets go where they should when needed most: directly into his/her trust account at birth. This can be especially important for single parents who will want their children’s future well-being taken care of.

Read: Life Events That Call For For A Financial Advisor In Bountiful Utah

Chapter 6: Estate planning to-do list

First things first when estate planning

Below is a list of things you need to do to get your estate plan started.

  1. Identify what you own and owe: List all of your assets, including life insurance policies, real estate, and retirement accounts. Also, consider any debts or loans that you have outstanding.
  2. Document your wishes: Use an official will or trust to record specific instructions regarding how the assets should be distributed upon death if there are no other beneficiaries named who can act on behalf of minor children or disabled family members if they do not have a guardian appointed by the court.
  3. Establish fiduciaries: A person who has been given power over another person’s finances may be called an “attorney-in-fact” (or “agent”). The person who appoints a fiduciary is often called the “testator” or “grantor.” 

Some types of powers include making health care decisions for incapacitated individuals; managing business affairs; entering into contracts on their behalf; acquiring property for them; paying bills incurred by them; collecting debts owed them by others; distributing cash, stocks and bonds belonging to them after becoming insolvent due to illness, etc. You can also appoint guardianship over minors until they reach adulthood but only if both parents die at once without leaving behind any other legal documents stating otherwise!

    1. Devise a contingency plan: Certain tools can be implemented now to ensure your goals and concerns are fulfilled after you die. Maybe your priority is making sure that your loved ones are provided for. Perhaps your goal is to simply avoid probate or managing estate taxes.
  • Provide for children/dependents: Make sure your wishes for care for your children or dependents are laid out. Talk to those who would serve as guardians should you pass suddenly. You can leave what you would like to the caregivers and children as you deem appropriate.
  • Protect your assets with the help of an estate planner: To help protect your assets, you can inform your loved ones, utilize transfer on death deeds, appoint trustees, and gift assets.

Your family is the most important reason to create, review and update your estate plan.

A well-structured estate plan can provide financial security for your family and help them avoid legal complications after your death.

It crucial for you to remember that your family members are part of your legacy, and future generations will be impacted by what you leave behind. What do you want to be remembered for? Some loved ones feel hurt when there were things left unsaid, which could have been prevented had there been an estate plan with instructions on how best to communicate feelings while still alive (such as through letters). 

Having one document outlining all issues related to inheritance or other agreements, so it’s clear exactly what happens after death can help prevent confusion over what should happen next. This saves serious money by avoiding court costs associated with disputes over inheritance claims down the line!

CNBC reports that 67% of Americans do not have an estate plan. You do not want to be part of that statistic. 

An estate plan is a critical component of your overall financial wellness. It provides you with the structure, guidance, and support to ensure that your wishes are fulfilled. It’s the best way to ensure that your family will be taken care of no matter what happens in life, and ARS is here to serve as professional leadership in your endeavors.

Chapter 7: What a Comprehensive Financial Plan Can Do For You

A sound financial plan can: 

  • Help ensure that you live comfortably throughout your life and remain financially independent at any stage in your life
  • Enable enough money to cover all of your expenses, including housing, food and healthcare costs
  • Allow you to save for emergencies such as unexpected medical bills or home repairs – no matter what happens in the future
  • Help you retire on time with adequate income
  • Help improve your credit score and enjoy tax benefits
  • Help provide peace of mind while you are living well now
  • Help you make the most of your wealth and achieve your goals, including saving for college, buying a home and reaching financial independence
  • Help you take advantage of tax benefits like the 401(k) or Roth IRA, which offer tax-free growth on contributions over time
  • Help you reduce risk by diversifying assets across different investment vehicles like stocks and bonds as well as industries so that they work together instead of against each other in bad times (like 2008)
  • Increase income by helping you with complex topics like taxes or estate planning needs — bringing in more money upfront than you would have otherwise been able to get on your own

The list could go on and on. As part of the all encompassing wealth puzzle, if you do not have a sound retirement plan in place when you reach retirement age, then it is quite possible to run out of money – half of Americans number one fear

Read: Why You Need a Fiduciary Financial Advisor to Manage Your Retirement

The final step is to connect with a financial professional to explore crafting a custom comprehensive financial plan based on your needs. We hope you see how important it is to have a sound financial plan in place. Give ARS a call to get financial planning worries off your chest, and reach out to a team who can lead the way to a secure financial future.

CERTIFIED FINANCIAL PLANNERS™ at Advanced Retirement Strategies

Working with a CERTIFIED FINANCIAL PLANNER™ is an excellent investment of your time and money. With the high standards for CFP® certification, you’ll know you’re getting the expertise and knowledge of a highly-trained and educated professional who will always act in your best interests and with the loftiest ethical standards. 

Our team of retirement planners and investment advisors in Bountiful, Utah, specializes in helping diligent savers with $250,000 or more of investment and retirement assets (not counting your primary residence) prepare for and then transition into retirement. 

If you’re looking for a CFP® to help you live the retirement you have dreamed of, contact us now.

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