The Macro View

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The Covid pandemic has been an unavoidable reminder of life’s fragility.  No matter how much caution we take, we’re all at the mercy of the universe and our fortunes and health can turn in an instant.  As financial planners we have the somewhat unfortunate privilege of working with and educating clients on the critical importance of estate planning, the process of proactively planning for life after your incapacitation or death.  We say “somewhat unfortunate” because many people, ourselves included, find it hard to have deep conversations surrounding being impaired or passing away.

For this reason, it can be easy to put off addressing the estate planning gaps in your financial plan; Why have all these tough conversations about life and death when you can just have another chat with your advisor about the stock market?   The consequences of neglecting an estate plan however are too high.  No other part of the financial plan directly impacts your loved ones as much as your estate plan and no other part of the plan can protect your wishes, provide care for your minor children and ease the strain on relationships left behind.  If family isn’t enough motivation, then yes, you may be able reduce taxes as well! Sometimes referred to as family planning, estate planning is a broad and comprehensive subject so we’ll provide a range of matters that, depending on your life circumstances, you should be giving consideration as part of your overall financial plan:

Who needs an estate plan? 

You most likely.  The word “estate” can throw people off.  It sounds too exclusive as if it’s only for the ultra-wealthy. Rest assured, you don’t need to own a fleet of cars and boats or have a moat around your home to warrant an estate plan. Whether you’re young, single and in the early stages of your career, married with minor children or on the backside of your career and have built up some wealth, there are measures you should be taking that make it easier for your loved ones to handle your affairs during a time of grief. 

Take Inventory & Identify Goals 

Take a moment, at least every couple of years, to look around and inventory all of your assets (both tangible and intangible).  Your house and any other real estate, vehicles, collectibles & possessions, bank accounts, investment accounts, insurance policies and retirement plans are some of the key items likely to end up on such a list.  It’s always good to have a relatively current sense of what’s in your estate.  It’s also important to take assessment of what’s important to you and what you want to leave behind.  Answering questions like: Who do I want to provide for and protect? What kind of legacy do I want to leave behind? Are there any charitable intentions with my assets? 

Asset Titling & Naming Beneficiaries 

It’s super important to keep the beneficiaries of your accounts and assets updated and current.  A great place to start is with your retirement and insurance accounts as these investments will always ask for beneficiary designations and, for these accounts, these directives can outweigh what’s in a will.  Simply put, you want to make sure the right people get your stuff.  Don’t leave your beneficiary and contingent beneficiary selections blank (and left to the mercy of probate and state law) and don’t let too much time pass without making sure these selections are up to date.  We have seen scenarios where an ex-spouse has been mistakenly left as the beneficiary on retirement accounts and insurance policies.  Trust us that this news will not help your current spouse in the grieving process. Similar to beneficiary designations, if you have shared/joint accounts with someone else it’s important to understand how those accounts are titled and what it means. 

Titles have specific legal meanings and often take precedence over wills and trusts.  Because your circumstances are bound to change over time, it’s important to occasionally re-confirm that your account titling accurately reflects your current intentions for those assets.

Establish Directives 

Naming someone to act for you in the event something were to happen is a key part of any complete estate plan.  There are several types of Powers of Attorney (POAs) and directives that can authorize someone to act on your behalf.  They include: 

Medical Care Directive – allows you to state your wishes for medical care should you become unable to make those decisions in real-time.  You can also designate someone as your medical power of attorney and grant them the authority to make health and treatment decisions on your behalf.  Such a directive could carry extra weight for unmarried partners in certain instances as laws could prevent anyone not a legal spouse or next of kin from making such decisions. 

Financial Powers of Attorney – Can be comprehensive or limited in scope and allows you to designate someone else to manage your financial affairs if you become unable to do so.

This seems obvious but it’s extremely important to consider to whom you’re assigning these responsibilities and it may be wise to engage multiple people for financial and medical representation.

Life Insurance 

Not everyone needs life insurance (i.e. if you’re single with no children or dependents) but for many of us, it’s going to be a foundational part of our estate plan.  Having life insurance in place will be instrumental in making sure our family is cared for in the event of our death.  The death benefit of a life insurance policy can help to replace your income, pay financial responsibilities like the mortgage and to fund future responsibilities like your children’s education. Insurance proceeds can also be used to cover medical expenses, pay estate taxes* and, if you’re a business owner, cover outstanding expenses and loans of the business while bridging some stability. *At the federal level, only very large estates are subject to estate taxes.  In 2021, up to $11.7 million will be exempt from federal estate taxes but several states have their own estate and inheritance taxes that could impact your situation.

Wills and Trusts 

Wills help to accomplish things like specifying how you would like your assets distributed after your death, naming a guardian if you have minor children and providing direction during probate.   A simple revocable trust is similar to a will, in that it specifies how we want our assets distributed, but with some additional benefits.  At death, assets that pass via a trust bypass the probate court which means you can avoid the costs and delays associated with the probate process.  Additionally, assets that pass via trust do not become part of the public record therefore providing privacy around your affairs and because trusts are created under contract law vs. testamentary law they tend to be less contestable if someone in your life takes issue with your final wishes and sues your estate.   A revocable trust is just one type of trust.  Trusts can be set-up to accomplish all sorts of goals some common ones are to: protect disability benefits for a special needs beneficiary, control the distribution of assets to young adults who may not yet be responsible enough to manage a large inheritance, creditor or divorce protection and to minimize estate taxes.  As a baseline it’s advisable for everyone to have a will and then consider if a trust can provide needed (or desired) additional levels of control.


Everyone should give some consideration to their estate plan regardless of age, net-worth or marital status.  Failing to plan for how your assets and liabilities will be handled after your death can put a burden on the loved ones you leave behind, who will already be dealing with the emotional toll of losing a loved one.  Start by asking yourself “What-If?” and then “What would I want to happen?”.   At a minimum, make sure the beneficiary designations on your life insurance and retirement accounts are up-to-date with your objectives.  Draft a Will to handle the other stuff including specifying who you would want to look after minor children.  With a basic understanding of trusts, talk to your financial advisor or an attorney to see if you could benefit from one.  Above all, don’t avoid the topic out of fear, procrastination or discomfort – your family is too important. 

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