Estate Planning Basics

Although estate planning can be a complex task, a well-constructed plan can make a big difference in what is left for your loved ones. Before you begin to act on your estate plan, it is important to understand the key topics that may arise as you address your specific needs.

Teamwork is Everything

It is essential to work with your financial advisor, tax advisor, and attorney on your estate plan.

The attorney’s role will include guiding you through the creation of essential estate planning documents including Wills, healthcare proxies, and durable powers of attorney. The tax advisor can help with any associated tax issues. However, because you usually only meet with your attorney and tax advisor on an as-needed basis, he or she does not have consistently updated knowledge of your personal matters.

In contrast, because financial advisors meet with their clients frequently, they often have up-to-

date knowledge about their clients’ personal lives and families. If there is a change in your family, such as a marriage, birth, or adoption, your financial advisor is more likely to hear about it than your attorney or tax advisor. When your financial advisor is aware of changes in your personal life, they can better advise you on steps you should take with your attorney and tax advisor.

Watch Out for These Common Estate Planning Pitfalls

Estate planning mistakes often fall into the following five categories. Through careful and thoughtful estate planning, most can be avoided.

  1. Not understanding the plan.

Too many people become passive when meeting with their estate planning attorney and end up relying on their attorney to make sure everything is done properly. It is important for you to understand the basics, including how the plan works, what’s needed to implement & maintain it, and how it will work for you & your beneficiaries.

  1. Not updating asset ownership.

You might own some assets in your name and others in joint title with your spouse, adult child, or

someone else. A few assets could be in trusts or limited partnership. Like beneficiary designations, these need to be reviewed and updated regularly.

  1. Failure to fund revocable trusts (aka living trusts).

Assets owned by trusts avoid probate and can help with disability planning and other issues. Once the trust is created, it must be funded, meaning assets need to be transferred to the trust.

  1. Not coordinating trusts and retirement plans.

Many people routinely designate their living trusts or other trusts as beneficiaries of their retirement plans. However, due to IRS regulations, naming the wrong type of trust as an IRA beneficiary can accelerate taxes.

  1. Not updating powers of attorney.

Every estate plan should include powers of attorney. You need at least two: one for financial matters and one for medical care.

Finally, you need to treat your estate plan as a living document that must be reviewed and updated from time to time. You should be in touch with your attorney as well as financial and tax advisors any time there’s a major life change in your family.

Changes in your net worth, job status, goals, and many other factors also should also trigger a review of the plan. Click here to claim our FREE Estate Planning Report to find out what you need to know to make sure your final wishes are carried out.

Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm. The Retirement Income Store® , LLC and Sound Income Strategies, LLC are associated entities.


When Income is the Primary Focus

Help Maximize Income in Volatile Markets: Strategies for Risk Management

Building a Sustainable Income Stream with a Differentiated Approach: The Sound Income Strategies Method