“I know I should probably make a will, but I’m not going to be around, so really, what do I care?”
Way too many folks hear this voice in their head whenever the subject of estate planning comes up. They don’t realize that an estate plan isn’t just a matter of deciding who gets what once we’ve passed. Most of us are going to need help handling our affairs at some point in our lives, whether due to the realities of old age or a serious incapacitation. Your estate plan protects your assets and your wishes in the event that you aren’t able to speak for yourself anymore. It can offer you safety and peace of mind now, and a blueprint for a lasting legacy once you’re gone.
On today’s show, we discuss the essential steps everyone needs to take to create an estate plan, and how your estate fits in with your big picture financial planning as well.
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Estate Planning Essentials
1. Don’t think too far ahead.
Another common reason that folks put off their estate planning is that they get overwhelmed trying to figure out how decisions they make today will affect their estate decades into the future. And we’re sympathetic to that feeling. It is overwhelming to think about the world without you in it. Uncertainty about the future is something that we all grapple with as we age, retire, and enter our golden years.
This is probably the only time you’ll hear me say this about your financial plan, but the easiest way to get going on your estate planning is to narrow your perspective. Fretting about what tax laws and giving levels will look like 20 or 30 years from now isn’t going to help you make the key decisions you need to make right now. Instead, ask yourself, “If something happens to me in the next three-to-five years, what would my last wishes be?” Use that vision as your guide. And as circumstances change in your life and in the world, we can help you revisit your plan down the road and fine-tune specific details as necessary.
2. Create your essential estate documents.
At the bare minimum, everyone’s estate plan should include:
- Your Last Will and Testament, which outlines your last wishes and explains how you want your estate to be distributed to your heirs and any other beneficiaries, such as charitable organizations.
- Power of Attorney that authorizes someone you trust to act on your behalf while you’re still alive, in the event that you are incapacitated or unable to make decisions. Be aware that your designee only has power of attorney while you are still alive.
- Your Healthcare Directive dictating how you would like to be cared for in the event that you become incapacitated.
- A Living Will designating a person to be in charge of making important medical choices on your behalf if you are unable to. This person might use your healthcare directive as a guide, or you can explain the thought process you want your designee to go through to aid in their decision-making.
A common but possibly less-essential document is a Trust, which creates a separate entity that holds your property for the benefit of either the people who created the trust and/or the beneficiaries of the trust. If you’re wondering if a trust is right for your estate, give us a call.
It’s important to remember that these documents are, first and foremost, for your benefit. They are all usually revocable and changeable should any of your wishes change over time.
3. Pick the right beneficiaries.
Too many folks try to simplify their estate planning by leaving everything to “the good kid” and trusting him or her to distribute everything fairly.
So what happens if that heir decides that what’s “fair” is a one-way ticket to the Caribbean, with the rest of your estate in tow?
After you pass, emotions will be running high. The smallest trinket left on your nightstand might provoke intense sentiment in your friends and family and cause unnecessary conflicts.
If “the good kid” is the person you trust to execute your wishes faithfully, then by all means put that person in charge. But the clearer you are about the specific details, the easier that person’s job is going to be.
4. Collect and file all your other important info.
You know the drill: bank records, insurance and investment accounts, copies of your personal IDs, property deeds, vehicle titles – get everything together, scan digital copies for backup, and file everything away in one place where your beneficiaries will know to find them.
One new item that’s going to be on everyone’s list of essentials from now on: passwords to email addresses and social media accounts. I know I haven’t printed out a photograph or written a letter by hand in quite a long time, and I’ll bet you haven’t either! Your Facebook and Google accounts are today’s photo albums and desk drawers stuffed with old letters. Make sure your heirs can access them and preserve all those precious memories.
5. Consider the alternative.
So what happens if you keep putting off your estate planning until it’s too late?
That’s when your “other” estate plan will kick in: the one that your state of residence will execute according to law if you don’t have your affairs in order when you pass. Instead of your loved ones privately settling your estate according to your own wishes, your estate will become a very public and potentially messy affair tangled up in statues and, in some cases, lawsuits that tear friends and family apart.
I know thinking about your mortality is hard. But when it comes to estate planning, the hard thing – making these tough decisions – is ultimately the easiest thing for you and your loved ones. And if you want to make the process even easier, come in to Keen Wealth and work with one of my fiduciary advisors. We can help point you in the right direction.
Bill Keen on estate planning …
“Your estate plan protects your assets and your wishes in the event that you aren’t able to speak for yourself anymore.”
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Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
Keen Wealth Advisors is a Registered Investment Adviser. Nothing within this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Keen Wealth Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed here. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.