Category: Estate Planning

Estate Planning: An Overview

Estate Planning is one of the more misunderstood financial planning topics, especially for younger professionals. Since an estate plan is a cornerstone of a solid financial plan, it’s important to know it’s far more than just a Will, and why even if you’re not planning on walking through those pearly gates anytime soon, it’s still a smart move to have one in place.




I heard a fellow XY Planning Network member, Pam Horack, say that investments are the dessert of financial planning – everyone wants to focus on them first because they’re exciting and cool, but other aspects of your financial life like estate planning, insurance, and budgeting are the fruit and vegetables that should fill up most of your plate. I couldn’t agree more! Investments definitely have a key role to play in a financial plan, but they often receive attention at the expense of other aspects of a good financial plan.

Have you ever thought about what would happen if you were travelling, got really sick or had an accident, and couldn’t take care of your financial responsibilities? What a mess for your family to deal with at an already stressful time. You won’t be worried about it – you’re out of it, remember?

There’s a way you could make it easier on them and your health care providers. Tell them what you want to have happen through your estate planning documents, asset titling, and beneficiary designations.

Let’s start with the basics: what do you mean by an ‘estate plan’?

Your Estate is everything you own, typically at death. However, a good estate planning attorney won’t just prepare a Will (instructions about what happens to what you own at your death). Your attorney will also work with you to develop:

  • A Living Will (aka advance health care directive) explains what medical actions should be taken – or withheld – on your behalf if you’re no longer able to make decisions for yourself due to incapacity or illness.
  • Powers of Attorney for Healthcare. This is a document you use to appoint someone you trust to make health care decisions for you and to follow your wishes that are outlined in your Living Will if you are incapacitated.
  • Financial Powers of Attorney. This document allows someone you named to manage your finances if you are unable. It may be as simple as allowing your spouse to take care of financial matters on your behalf when you’re out of town, or could only take effect if you become medically incapacitated.


If you don’t have this document in place and you become incapacitated, your family would likely need to ask a court for authority to take care of your finances for you – a lengthy and costly task during an already stressful time!

An important thing to remember about an estate plan (and nearly any other financial planning action, for that matter) is that these decisions are not set in stone.

If something in your life changes and you need to make updates

to these documents, you can and should!

There are other, more subtle, decisions to make when it comes to your estate plan. How you title your assets can make a big difference in whether or not what you think would happen actually would. Do you have an account, property, or other asset with joint ownership? The kind of joint ownership (yes, there are multiple kinds of joint ownership) can determine who would inherit the assets. If they are not owned jointly, but you wish for someone to inherit the asset, are your wishes defined in your will?

Other commonly overlooked decisions include beneficiary designations on life insurance or retirement accounts (like IRA’s, or 401k’s). Those kind of assets pass ‘by contract’ to the beneficiary(ies) named, and are not distributed by instructions in your will.

Along these lines, please do not name a minor child as a beneficiary! That can cause yet another unnecessary costly and lengthy court process. By naming a custodian for an UTMA (Uniform Gifts to Minors Act) account, who can be the same person(s) named as guardian in your will to care for your child(ren), you can make sure the assets are used for the benefit of the minor(s) until they are an adult, at which time they would receive any remaining assets.

Estate planning really is an example of a time when an ounce of prevention can be worth a pound of cure. The cost of having an estate planning attorney prepare these documents before you need them is small compared to a potentially lengthy and costly court process. Remember that you’re not the only one that benefits from taking these actions. In addition to your own peace of mind that your wishes will be followed, it’s your family and/or friends that will benefit from your thoughtfulness.


Best Practices:

  1. Give your doctor and named agent a copy of your Living Will and Power of Attorney for Health Care.
  2. Give your bank and named agent a copy of your Financial Power of Attorney.
  3. Review your beneficiary designations
  4. Review your account and assets ownership
  5. Review your Will after any big life event: marriage, adoption, birth of a child, divorce, etc…
  6. If you move to a new state, find an attorney that will review your documents. The state laws in your new home state may be different enough to require some modifications of your estate plan.


There are many estate planning strategies beyond these basics that can be used to customize your estate plan to your specific needs. Please consult your estate planning attorney, accountant, and/or financial planner to determine what actions are best in your situation. This article is for information purposes only and should not be considered personal advice.

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A guest post by Jennifer Harper, MBA, CFP, Founder and Director of Bridge Financial Planning, LLC, providing fee-only financial planning & investing for today’s professionals. She is also the founder of Common Cents Financial Literacy, Inc., a non-profit organization dedicated to providing financial education, focusing on ages 16-22.

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