5 steps to help create an estate plan


While many put off estate planning because it can be difficult, there are several tips one can follow that can make the process less stressful.



While many put off estate planning because it can be difficult, there are several tips one can follow that can make the process less stressful.

John J. Grande, Traudy F. Grande, and John S. Grande

Money Matters By John J. Grande, CFP; Traudy F. Grande, CFP; and John S. Grande, CFP

When it comes to estate planning, procrastinating is easy. The task of getting one’s financial house in order can seem daunting and the topic uncomfortable. In fact, while the majority of Americans believe that all adults should have an estate plan, only 44% have actually created one, according to a 2011 LexisNexis survey.1

Unplanned estates may be left to wind their way through probate court, leaving state law to determine the disposition of your assets.

“The time to devise an estate plan is now, if you haven’t already,” says John Padberg, vice president of Life Event Services and Estate Planning for Wells Fargo Advisors.

Many people equate estate plans with wills, he said, but a well-thought-out structure involves much more.

There are many tools-such as living trusts and financial and health-care powers of attorney-that can help trusted professionals and family members manage your affairs if you cannot.

Planning does not need to be stressful, and the results often confer the comfort of knowing assets will be distributed in an orderly way.

Padberg offered five steps to help create an estate plan to accomplish that goal:

1 Work with experienced estate-planning attorney

It takes specialized expertise to create a plan that includes all the necessary elements and meets specific needs. A solid estate plan will likely consist of several documents, which may include the following:

·      A will, which states how individually owned assets are to be distributed upon death.

·      A living will, which communicates your wishes regarding life-prolonging medical treatments.

·      Powers of attorney, which designate another individual to handle financial or health-care matters if you are incapacitated.

·      Revocable trusts, which can be useful in avoiding the probate process in states where probate is burdensome, and can be altered or canceled according to your wishes.

Creating a well-designed plan will require input from both an attorney and a financial advisor.

Your financial advisor may be able provide some options for legal assistance, if you do not yet have an estate planning attorney.

“You want to make sure your estate planning attorney’s skill level is commensurate with the complexity of your plan,” Padberg said.

2 Assess your assets

Before drafting an estate plan, ask a financial advisor to prepare a financial net worth statement. This will give a clear sense of what you are working with.

Also, review the beneficiaries listed on critical documents, such as life insurance policies and retirement plans. Beneficiary designations determine how those assets will be distributed, Padberg cautioned, so you want the named beneficiaries to reflect-and not undermine-your intentions.

3 Define your goals

An estate plan is also an opportunity to direct how wealth will be passed on to the next generation.

“You want to think as much about how you want to pass your assets-outright to your heirs or distributed through a trust-as you do the amount that each person should get,” Padberg said.

For instance, leaving a large sum to a child or young adult may create long-term issues if the child lacks the skills or maturity to manage such a windfall. Ask a financial advisor about trusts that might be established to control the distribution of inherited funds.

To bequeath money to a charity, ask a financial advisor and estate planning attorney about the many charitable giving strategies that are available. He or she can offer guidance on choosing the technique that best fits your philanthropic goals.

4 Determine your tax liability

Under the fiscal cliff agreement enacted in early 2013, individual estates worth $5.25 million or less-and double that amount for married couple -can avoid federal estate taxes.

Amounts that exceed the exclusion amount are taxed at a rate of 40%.

Work with a financial advisor to determine current estate tax liability and project any future liability. Consider the impact those taxes might have on how you wish to pass assets on to the family.

“The planning will be different-and more sophisticated-if you’re planning for a tax bill,” Padberg said.

5 Update your plan

Life is about change, so it’s crucial to make sure instructions are always current.

That means updating your estate plan whenever you experience a major life event, such as a new baby, a marriage, or a divorce. Otherwise, not only will the plan fail to contemplate new circumstances the way you want, but it could also increase the potential for outside challenges, such as those from disgruntled family members.

Ambiguity and conflicts about intentions could have a disastrous impact on the family, Padberg noted, so preventing them is typically well worth the investment of time and money.

“If you don’t have a comprehensive estate plan in place, you’re leaving it to state law and the courts to decide your legacy for you,” he said.



1. EZLaw survey finds most Americans recognize the importance of a will or estate planning, yet few have necessary documents in place. LexisNexis, 19 July 2011, https://www.lexisnexis.com/media/press-release.aspx?id=1311095221427043.


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