Credit: Estate planning is one of those things you know you need to do but keep putting off. You'll find this task easier by breaking it down into three essentials: organizing your financial information, communicating your plans and, of course, taking action.
Simple mention of the words estate planning conjures a variety of emotions: worry, fear and sadness, to name a few. These negative emotions, combined with the ever-increasing demands on our time, make estate planning an easy topic to defer. We tell ourselves we can get organized later, when things finally calm down.
But sometimes later can be too late. Most people believe they will live a long and healthy life, but one never knows. A major illness or death may occur before plans are in order, leaving loved ones scrambling to make sense of incomplete information and financial unknowns during a very stressful time.
Through years of helping our clients and their families through these transitions, we identify several best practices for being prepared:
1.Organizing your financial and estate information . Searching for assets and missing information is exhausting, and hiring a professional to do so can prove costly. Create an organized record that details your accounts and legal documents, so your family can easily locate them.
You can use this " Go Book " that our firm put together to keep track of your personal, financial and estate information, such as:
- Professional and family contacts
- Location of estate documents
- Disability and life insurance
- Home and auto insurance
- List of financial institutions, accounts and account numbers
- Credit cards
- Beneficiaries of retirement accounts
- User names and passwords (including those to social media websites or online photo storage)
2.Discussing your plan with family members. Too often, loved ones are left feeling overwhelmed and confused because an individual did not tell them his or her estate plan beforehand.
Any time you update your estate documents, communication is key. When you name your friends or family members to any role in your plan, you should notify them right away. Confirm that they are willing to take on the responsibilities of the roles, and explain your intentions.
Discussing these matters with children can be sensitive. Here are tips on how to make the conversations age-appropriate:
- For children in high school and college, let them know that you have plans in place. Tell them who you name to important roles (grandparents, aunts and uncles) and why.
- For young adult children, you may choose to name them to primary roles in your documents. Let them know if you plan to do so, and show openness to engaging them in this discussion in the years to come.
- As children reach middle age, giving them full knowledge of your financial situation is important. Mature adult children can help parents navigate the challenges that come with aging.
3. Taking action. Proactive planning requires careful consideration of possible future scenarios and a good understanding of yourself and your family. It also involves communicating your wishes to those close to you. While your advisors can encourage these conversations, ultimately you must take action.
Finding the time to discuss death and finances in your busy life is difficult and unpleasant. But since one never knows what the future holds, it is best to be prepared.
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Thomas E. Bentley, CFP, CTFA, is an Estate Planning Specialist & Principal and Courtney M. Weber, CPA, CFP, is a wealth advisor atTruepoint Wealth Counsel,an independent, fee-only wealth advisory firm in Cincinnati.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
