Personal & Financial Strategies

Four Considerations for Estate Planning

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The world doesn’t stop when someone dies, and it can be a struggle for surviving family members to compose a new financial puzzle. Mark Gerard, of Charles Schwab, in Rockford, shares his thoughts on how to be prepared.

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The past year has been a real challenge for our family. Within a span of six months, my father and my father-in-law passed away. I deal with my clients’ life events on a regular basis, but it was the first time that my wife and I had to grieve the loss of a parent and attend to the financial situations of our surviving mothers. The world does not stop when someone passes away, and it can be a real struggle to locate everything, understand everything, and address myriad financial components that surround us. It can take many months. It’s my hope that this article will prompt you to start having a discussion with your loved ones.

The estate planning process doesn’t have to be a burden. Here are four easy-to-implement steps to create and maintain an estate plan that will help provide you and your heirs with greater financial confidence.

1. Take stock. You need to know exactly what you’ve got before you can make a plan. An inventory of your estate – everything you own and owe – will help you make smart decisions about your assets and make things easier and less costly for those who will one day be tasked with handling your affairs.
To start, gather and document the following information:
• The value of your home and any other real estate, cars, jewelry and other personal property
• Recent bank, brokerage and retirement account statements
• All insurance policies, their cash values and death benefits
• All liabilities, including mortgages, lines of credit and other debt

2. Make a plan. Estate settlement rules vary by state and can get complex, so it’s best to work with an experienced estate planning attorney. If you choose to design your own plan, you’ll want to have a professional review done to ensure that it’s set up accurately. To prepare for your first meeting with your attorney, be ready to answer these important questions:
• Who do you want to manage your financial affairs if you become incapacitated?
• Who do you want to inherit your assets, in what proportions?
• Who should be responsible for distributing your assets?
• Who do you want to care for your minor children (if applicable)?
• How much is needed for your children’s care and education (if applicable)?

3. Put your plan into action. An estate planning attorney will craft a plan that reflects your wishes and meets state and federal laws. It will likely consist of a will that directs how your assets will be distributed at death as well as medical and financial powers of attorney documents that spell out who will make financial and healthcare decisions if you can’t. It also may include trust documents to manage the distribution of certain types of assets. 

Tip: Knowing when to place assets in a trust is an important step. If you set up a trust, make sure you work with your estate attorney to ensure the trust is funded to meet your estate planning goals. Otherwise, the agreement might not take effect, and your assets may not pass to your beneficiaries as intended.

An attorney also can help you with any key issues that you’re unaware of or may have overlooked. For example, a professional review might reveal that you need to update your beneficiaries or retitle your assets. (You can also get help from your financial advisor with asset titling and beneficiary designations.)

4. Update your plan regularly. Estate planning is not a “set it and forget it” one-time event. You’ll want to review your plan regularly to ensure that it continues to reflect your wishes – especially in the wake of any new major developments that occur in your life, such as purchasing a home, births, deaths, marriages and divorces. As years go by, you may need to update your beneficiary designations or other key pieces of information to ensure that your assets go exactly where you want them to go. What’s more, tax laws change, and you’ll want to be sure your plan is in line with current estate tax rules and regulations.

I’ve always had a good handle on my parents’ finances, which really helped the transition for my mom. With my father-in-law, while we talked in generalities, we never went through the files and the specifics. I wish I had taken the time to walk through it with him. The week after his passing, we still had a business to run and personal finances to sort out, and I was seeing all of these files for the first time. Nine months later I still have a concern that I may have missed something important. Please take my suggestion and walk through everything with your loved ones. They will truly appreciate it one day.

Mark Gerard is the Independent Branch Leader at the Charles Schwab Rockford Branch, 801 N. Perryville Road. Call him at (815) 209-0055.

Information presented is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager. Employees of Charles Schwab & Co., Inc. (“Schwab”) Member SIPC are not estate planning attorneys and cannot offer tax or legal advice, or create and prepare legal documents associated with such plans.  Charles Schwab & Co., Inc. (“Schwab”) Member SIPC. (0917-7SHJ)(08/2017)

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