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Should I Have an Estate Plan?

Should I Have an Estate Plan?

Client question:  Should I have an estate plan?

Advisor answer:  Estate planning tends to be a planning area that gets put on the “back-burner” for most people.  While each particular situation is unique, estate planning should be a top priority on everyone’s list.

What is an estate plan?

An estate plan usually refers to a set of estate planning documents such as a revocable trust, will, financial power of attorney, healthcare power of attorney, and living will.  Another key component to an estate plan is titling assets and designating beneficiaries. Below are “need-to-know” highlights of several components of an estate plan.

Asset titling and beneficiary designations

The first step to determine where assets will go when someone passes away is to look at asset titling and beneficiary designations.  If someone wants the funds in their Traditional IRA to pass to their favorite child at death, the child can be designated as the “primary beneficiary” on the Traditional IRA.  This can usually be done by simply logging into an investment account and updating the beneficiary designation online. It’s important to note, even if there is a trust document stipulating all assets be equally distributed amongst all children, this would only apply to assets titled in the name of a trust or assets for which the trust is designated as the beneficiary.  It is very common for people not to update asset titling and beneficiary designations, which is a big problem.

Examples of assets that should have proper asset titing and beneficiary designations include bank accounts, real estate, brokerage accounts, Traditional IRAs, Roth IRAs, 401(k) plans, and life insurance policies.  An estate planning attorney can provide specific instructions for asset titling and beneficiary designations.

Revocable trust

A revocable trust is advisable for married couples with younger children.  One major purpose of a revocable trust is to address how money would be handled if parents were to predecease their children.  A key benefit of a revocable trust is the post-death asset distribution and management process stays out of probate courts. This tends to have favorable outcomes such as keeping personal matters private (probate courts make estate proceedings public information), decreasing the amount of time it takes beneficiaries to receive assets, and costs can be lower since it wouldn’t be necessary to hire probate attorneys.  Below are examples of questions a revocable trust can help answer.

  • How much money does each beneficiary receive?
  • When does each beneficiary receive money from the trust?
  • Who will act as the “trustee” of the trust to serve as an intermediary between the beneficiaries (children) and the money passed down from the deceased parents?


Two primary functions of a will are to assign guardians for children and instructions for how assets without specific titling or beneficiary designations should pass.  For example, it’s possible to include in a will which one of your children should receive specific pieces of jewelry, artwork, and other personal items of value. A testamentary trust can be created within a will to address the same questions a revocable trust answers; however, testamentary trusts do not keep the estate process out of the probate courts, which may not be favorable as previously explained.

Financial/healthcare power of attorney and living will

Financial and healthcare power of attorney documents can serve to appoint trusted individuals to make financial and healthcare decisions on your behalf if you’re not able to do so (e.g. if you’re  unconscious in the hospital). It is possible to assign someone as a “durable” financial power of attorney, which gives this person the legal ability to make financial decisions with your assets virtually at anytime; however, many people prefer to have a “springing” financial power of attorney.  The springing power of attorney gives a particular person the authority to make financial decisions only in the case that someone becomes incapacitated.  

Unlike the healthcare power of attorney, which allows your appointed agent to make healthcare decisions on your behalf, the living will gives medical professionals specific instructions for how to handle certain situations (e.g. life support, resuscitation, pregnancies, etc.).  While neither a trust nor a will might be necessary for those without children, a financial/healthcare power of attorney and living will are important for everyone.

How do I get an estate plan?

Although there are discount estate planning services like LegalZoom, I recommend for my clients to meet with a reputable attorney who specifically focuses in estate planning.  Unlike tax preparation, which can be performed by a tax preparer in a different state, estate planning documents should be created by an estate planning attorney licensed in your particular state.

To learn more about how Caligiuri Financial may be able to help YOU, click here to schedule a complimentary consultation.

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Are you too busy to manage yours or your family’s financial affairs?  Check out our Financial Planning Partnership.

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