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4 Reasons to Build Your Estate Plan This Quarter Thumbnail

4 Reasons to Build Your Estate Plan This Quarter

As New Year’s Resolutions fade, and our financial attention shifts to tax prep or the latest gyrations of the stock market, we’d like to touch on one financial planning priority that so many of our clients and prospects leave unattended: planning for the unexpected with an estate plan.  Both as financial advisors and as humans, we understand, no one likes thinking about their own demise or disability, but the savings in confusion and frustration for our loved ones amidst their heartache is difficult to overstate.

If you haven’t gotten your estate in order, don’t feel alone; we see it so often when we engage in financial planning conversations.  After we talk about dreams for the future, current saving and spending, investments, and all the other parts of a financial plan, we ask our clients about a will, a living trust, a power of attorney, and advanced medical directives. Subsequently, we frequently see clients of all ages and all walks of life staring at their shoes.  They know they need to get those pieces in place, (perhaps mostly because they’ve been told they need to do so) and the fact is that there are some tremendously good reasons why having your estate in good order is important.  Let us share a few:


When you plan ahead and create a living trust, you can control exactly who gets how much, at what time, and under what conditions. 

Here’s an example: let’s say you have heirs who may not be in a place to responsibly manage a whole pile of inherited money at their current stage of life. A good estate plan can create a sensible plan for them to use what you’ve saved to help them create an independent life, rather than one that depends on the inherited trust fund. 

If there is no plan, or just a simple will but no revocable trust, then the government (through the laborious, expensive, public, and slow probate process) and your heirs’ lawyers will hash out those details after you’re gone.  It also opens your estate disbursement to public challenge from other claimants, and the whole process can arrive at a conclusion other then what you would have intended, too often to negative consequence for your heirs and their relationships with each other.


Paying the government taxes is final and permanent.  Once that money is gone, you can never exert any influence or realize any benefit from those dollars.  Paying more than you have to especially stings, because apart from the cash out of pocket, you’re left with the knowledge that you could have paid less had you planned ahead and gotten better knowledge.  In the case of estate taxes, that’s doubly the case because this is money that’s already seen taxes when it was originally earned.

The 2018 tax law increased the individual estate tax limits to $11.18 million, or double that for a couple, at least until 2026 when it is slated to return to half that level, as it was prior to the tax law change.  That increase dramatically reduced the number of families subject to estate tax.  For those that may still be affected, happily there are many ways during life that a prepared family or couple can reduce their tax burden by creating trusts that reduce the assets considered part of their estate.  But that only happens with a good plan and forethought.


If you become incapacitated and are unable to make determinations for your own affairs, having set a power of attorney ahead of time means you get to decide who will take accountability for managing your affairs.  Otherwise, a court would decide for you.  And, incapacity happens more often then you might think.


Our clients report that once the major pieces of their estate plan are complete, it certainly gives them piece of mind. A single page note in place laying out the different pieces, where the documents are kept, and who to contact, they and their family members have a newfound feeling of relief and decreased levels of stress and anxiety that the important details are taken care of ahead of time.  That way, should tragedy strike, all involved can focus on family and grieving without worrying about the logistics of money or access.

Does one or more of the reasons above have you curious about where your estate plan currently stands? We recommend sitting down with an experienced financial advisor to discuss your situation. Give us a call at (916) 269-0671 or complete our contact form to schedule a time.

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