Estate planning is a necessary component of a quality financial plan. While putting the right plan in place can feel daunting, it does not have to be. Below are some general estate planning dos and don’ts to help keep you on track.
- Do have a plan in place
There is an old saying: “If you fail to plan, you plan to fail.” That sentiment is especially true in estate planning. Taking the time to prepare a will and powers of attorney ensures your long-term personal and financial wishes are documented. It also provides an opportunity to leave a legacy and support the people and causes that matter most to you.
- Do ensure your estate plan is aligned with your financial reality
Estate plans can include detailed or complex instructions based on health, family, or other personal circumstances. It is essential to ensure there are sufficient financial resources to carry out those instructions. For example, if your plan includes remaining at home for as long as medically possible, additional funds may be needed for renovations, repairs, or in-home care. Regular communication with your financial advisor and estate planning professionals can help keep your plan aligned with your financial circumstances.
- Don’t forget to review your plan regularly
As a general rule, an estate plan should be reviewed at least every three to five years. It should also be updated as often as needed, but typically every three years is a good guide. It should also be reviewed promptly after major life events such as marriage, divorce, separation, the birth or death of a loved one, or a significant change in financial circumstances.
- Don’t forget to plan for special needs beneficiaries
Beneficiaries with special needs may include minor children, individuals with significant cognitive or physical impairments, aging parents, or adults who rely on government assistance or ongoing financial support. Trusts are often used to help ensure these beneficiaries are appropriately provided for within the estate plan.
- Do a regular review of beneficiary designations on registered accounts and insurance policies
Naming individuals as beneficiaries on registered accounts and insurance policies may help reduce probate fees on death. Beneficiary designations should be reviewed regularly to ensure they remain aligned with your overall estate plan and personal objectives. It is also important to review them after major life events such as divorce, separation, or the death of a named beneficiary.
- Do communicate with members of your “estate team”
Your executor, trustee, guardians or custodians for minor children, and those acting under powers of attorney all play an important role in carrying out your estate plan. It is important to communicate with them regularly and keep them informed of any relevant changes or updates. They should also know where to find your original will, powers of attorney, key financial documents and statements, insurance policies, and contact information for family members, friends, and advisors. Clear communication among everyone involved helps ensure your wishes and objectives are understood and carried out effectively.
- Don’t ignore personal articles
Personal articles include items such as automobiles, furniture, clothing, jewelry, household contents, artwork, and other belongings with financial or sentimental value. Their intentional distribution is often overlooked in estate planning. If you want specific items of personal property to go to different individuals, a personal property memorandum can be used. This document lists the items you want your executor to distribute and to whom. It can be updated and revised over time as needed.
When creating your estate plan, consider it as an ongoing process that evolves alongside your life, family circumstances, and financial situation. We recommend putting a plan in place, that aligns with your goals and resources. By reviewing it regularly, considering your own unique needs, and those of your beneficiaries, you can plan for your future care and help to protect the people and causes that matter most to you. Taking proactive steps today can help create and provide for a smoother transition of wealth and responsibilities for future generations.
This content is for general informational purposes only and is not intended to provide individual financial, investment, tax, legal, or accounting advice. Information is subject to change and while we strive for accuracy, we recommend speaking with a qualified professional to discuss your personal circumstances.