More Than a Will: Understanding Your Estate Plan

Maybe you’ve been meaning to create an estate plan but haven’t gotten around to it. Maybe you have a will but haven’t looked at it in years. Or maybe you haven’t really thought about estate planning at all because you assume it’s something you’ll need to worry about later.

At its heart, estate planning is about making your wishes known, protecting the people and assets that matter to you, and choosing who can make important decisions if you cannot.

You don’t have to predict the future; you just need to prepare for it, and Everence Financial can help.

Will or Living Trust: What’s the Difference?

A will and a living trust can both be part of an estate plan, but they serve different purposes.

A will explains how you want certain assets handled and names the person responsible for settling your estate. A will generally goes through probate, the legal process used to settle an estate.

Without a will, Virginia law determines how certain assets are distributed, which may not reflect your wishes. Creating a will allows you to make those decisions yourself.

A living trust can provide another way to manage assets and can offer more control over how and when those assets are distributed.

For example, parents with young children may not want a child to receive a large inheritance all at once. A properly structured trust can establish a plan for distributing assets over time.

A trust isn’t automatically better than a will, and not everyone needs one. The right approach depends on your family, finances, goals and the assets you own.

The important thing is understanding that a will and a trust are different planning tools. The right combination depends on what you want your plan to accomplish.

Don’t Forget What’s Outside Your Will

Here’s one of the easiest parts of estate planning to overlook: beneficiary designations.

Retirement accounts, life insurance policies and annuities generally allow you to name beneficiaries. Certain bank accounts may also have payable-on-death or transfer-on-death designations.

These designations can determine who receives those assets, so they need to stay current.

Think about someone who opened a retirement account when they were single and later got married. Or someone who divorced and remarried. Perhaps the person originally named as a beneficiary is no longer the person they would choose today.

The account may still have the original designation.

That’s why estate planning isn’t just about the documents in a folder. Your accounts and beneficiary designations need to work with the rest of your plan.

A Simple Place to Start

Review the beneficiaries on your retirement accounts, life insurance, annuities and bank accounts. Make sure they still reflect your wishes.

Planning for the Unexpected

Estate planning isn’t only about what happens to your assets. It also helps prepare for situations when you’re unable to make decisions for yourself.

An accident or serious illness can happen at any age. Without clear instructions, family members may have to make important financial or medical decisions without knowing what you would have wanted.

An advance medical directive allows you to communicate your wishes about medical care and can identify someone to make health care decisions if you cannot communicate them yourself.

A durable power of attorney allows you to designate someone who can act on your behalf and handle financial decisions if you become unable to do so. That could include managing accounts, handling property or taking care of other financial responsibilities.

A power of attorney can also be useful when you’re temporarily unavailable, such as during extended travel.

Planning ahead gives you a chance to make those decisions yourself and gives the people you trust a clearer path forward.

Who Should You Choose?

Creating the documents is only part of the process. You also need to think carefully about who will carry out your wishes.

Depending on your plan, that could include:

• Executor: Handles the estate and carries out the instructions in a will.
• Trustee: Manages assets held in a trust according to its terms.
• Power of attorney: Acts on your behalf and makes financial decisions when authorized to do so.
• Professional or corporate fiduciary: An individual or organization that can take on responsibilities such as serving as a trustee or executor.

Choosing someone simply because they are your oldest child, closest relative or best friend may not always be the best choice.

Consider whether the person is responsible, comfortable handling financial details, able to make difficult decisions and willing to put your interests first.

That’s where the term fiduciary becomes important. A fiduciary has a legal and ethical responsibility to act in the best interest of the person or beneficiaries they serve.

For some families, a professional or corporate fiduciary may make sense, particularly when finances are more complicated or there isn’t an individual who is the right fit for the responsibility. It can also provide continuity when an individual you’ve chosen is no longer able or willing to serve.

Want to learn more about professional and corporate fiduciary services?

When Should You Review Your Estate Plan?

There isn’t a magic age when everyone needs an estate plan. Instead, think about life changes.

Consider reviewing your plan after:

• Marriage or divorce
• The birth or adoption of a child
• A child reaching adulthood
• A significant change in your finances
• Buying or selling major property
• Starting or selling a business
• Retirement
• The death of someone named in your plan
• A change in the people you’ve chosen to make decisions for you

Even if none of these things have happened, it’s worth periodically checking that your documents and beneficiary designations still reflect your wishes.

The plan you created years ago was based on the life you had then. Your life today may look very different.

Start With One Simple Step

Check your beneficiary designations.

Review your retirement accounts, life insurance, annuities and bank accounts, and make sure the people you’ve named still reflect your wishes.

It’s a small step that can make a big difference.

Estate planning isn’t about predicting exactly what the future will look like.

It’s about making important decisions while you have the time and ability to make them, and giving the people you trust a clear path forward.

You don’t have to predict the future; you just need to prepare for it.

To contact Brian today, click here.

Listen to Brian’s full conversation here.