Financial Planning with precision
Protect Yourself and Your Family with Effective Estate Planning
By Michael Engler, Financial Advisor,
WealthScope Financial
To say most people these days are beyond busy is an understatement. Our work obligations, familial responsibilities, and day-to-day tasks can be more than enough to keep us occupied. Understandably, planning for our inevitable future financial decisions can get swept under the rug, left as another item on tomorrow’s to-do list. While it is arguably not as alluring as planning for a wedding, new home, or vacation destination, estate planning is an essential part of preservation and proper distribution of an individual’s assets after they die. Estate planning and wills should be viewed as a responsibility toward protecting the families and businesses of the deceased, ensuring that they are adequately cared for after someone has passed.
WHAT IS AN ESTATE PLAN, AND HOW CAN IT BENEFIT YOU?
A comprehensive estate plan is a collection of legal documents that will determine how your assets and resources will be allocated after you pass away. Estate planning may also include instructions regarding handling certain medical decisions on your behalf, specifically if you should become dependent upon others to make such decisions for you. For this reason, many find estate planning and creating a will can bring about a strong sense of peace and confidence in knowing that their beneficiaries will be taken care of after their passing.
The advantages of estate planning may include:
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Protecting the beneficiaries you have chosen
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Protecting your family and descendants
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Preventing familial discourse after your passing
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Providing tax benefits to those you have chosen to inherit your estate
Making sure your affairs are in order isn’t just considerate; it’s integral to the well-being of your family, employees, and business.
Estate planning is an ongoing process that is likely to require adjustment throughout your financial life cycle. Many documents and designations will need to be updated accordingly, along with the changes that will inevitably occur throughout your life. By conducting a proper estate planning analysis, the testator of the will can see what changes, if any, may need to be made to ensure that their will is up to date:
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Is your will updated to include additional family members who weren’t previously listed?
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If you have already named a trusted individual to handle your financial and medical needs, have you properly designated who they are in your estate planning documents?
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Does your health dictate a need for a living will or durable health-care power of attorney?
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If you’ve already named your beneficiaries, are they still correct? Do you need to update them in the event of the addition or subtraction of a family member?
Estate planning and trusts differ from other estate planning activities in that trusts are legal entities that allow for more detailed instructions to be given for the distribution of your estate.
ESSENTIAL ELEMENTS OF A COMPREHENSIVE ESTATE PLAN
Wills and Trusts. A will is the most crucial estate planning tool you can utilize to prepare for your financial future, yet only 32 percent of Americans actually have a will in place. A will serves as the roadmap for the proper allocation of your estate and the protection of your final wishes after your passing. It presupposes comprehensive estate planning and should be prioritized as the first step when determining how you want your estate and capital to be distributed.
One of the biggest mistakes made during this phase of planning is not leaving proper instruction in the will or trust, which would avoid any unnecessary legal hurdles for beneficiaries. Detailed planning can help prevent several problematic situations, which may include but are not limited to:
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Intestate laws interfering with your chosen loved ones’ inheritance
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A court appoints an executor or representative instead of you
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Your children being appointed to a guardian that you did not specifically choose
One of the most important parts of creating your will is choosing the representatives who will properly carry out the wishes outlined within the documents to assist in the proper distribution of assets and capital to the beneficiaries. In cases involving children who need proper placement after the passing of their primary caretaker, guardians are appointed by the testator to ensure that the wellbeing of the children is given the care and attention required. Choose an executor whose character you know well and who you can trust.
Estate planning and trusts differ from other estate planning activities in that trusts are legal entities that allow for more detailed instructions to be given for the distribution of your estate. Trusts allow for professional property management and enable the avoidance of probate, which keeps your beneficiaries’ inheritance their own instead of being used by the state. Attorneys specializing in estate planning trusts and elder care are helpful in deciphering if a trust is needed on top of your will.
Durable Power of Attorney. What do estate planning and durable power of attorney designation have in common? They’re both important factors in planning for whatever twists and turns the future holds. Becoming incapacitated due to poor health or old age is an unfortunate but widespread occurrence. A durable power of attorney is a written legal agreement that enables you to designate a trusted person in your life to execute your financial affairs in the event you are unable to. The person you designate should be a trusted contact and be filled in on your financial scenario regularly to serve your situation best should anything happen to you. Keep this person in the loop on your affairs from time to time so that they understand your goals to follow your wishes best.
Health Care Proxies and Living Wills. Health care proxies serve similarly as a durable power of attorney in that they allow you to designate a trusted family member or friend to make medical decisions on your behalf in the event you are incapacitated. This designated executor of your medical wishes is allowed to make decisions regarding your medical facilities, treatments, surgery, and many other health care issues. A health care proxy involves some of the most important decisions that can be made for you in your lifetime, so it’s important to choose someone you trust implicitly.
Like a health care proxy, a living will states a person’s wishes regarding estate planning, specifically when it comes to your health care wishes. A living will details your wishes regarding medical treatment in the event that you are unable to express informed consent. It spells out your wishes regarding various life-sustaining treatments and about life support, which is a decision only you can make. A durable health care power of attorney can be used in conjunction with a living will and is something to be considered. Developing a living will is necessary for your estate planning needs and your future.
Beneficiary Designations. Many savings, retirement, and life insurance accounts bypass estate plans, such as wills or trusts, altogether by designating beneficiaries directly to the accounts. Your IRA, annuity, and qualified plan account all allow for beneficiaries to be named to receive the account assets at the end of your life. Beneficiary designations and estate planning are extremely interrelated and should not be ignored simply because they do not coincide with standard beneficiary information detailed in a will or a trust. Beneficiary and estate planning changes should be properly reviewed and updated regularly. Naming primary and contingent beneficiaries should be coordinated with your estate plan to help ensure that your distribution objectives are met.
Do not put off the designations of executors, guardians, trustees, power of attorney, and beneficiaries. Ignoring your estate planning needs could lead to your loved ones having to pay the price as they grieve your loss. Creating and implementing a thoughtful and comprehensive estate plan can assist in giving you peace of mind in knowing that your wishes will be respected and carried out for your family and business.
Estate planning is important for everyone, no matter your age or wealth. Put a plan in place to set your family up for success today.
About Michael Engler
Michael Engler is a founding partner of WealthScope Financial, a Financial Strategizing group that specializes in working with medical professionals. Before forming WealthScope with his business partners, Michael Steigerwalt and Glenn C. Breslauer, Michael spent years working with professionals preparing personalized financial strategies. His comprehensive approach delves into several key areas, including, but not limited to: developing investment strategies; creating tax-efficient means of wealth accumulation, distribution and transfer; and protection management. Michael holds Series 7, 65 & 63 FINRA securities registrations, as well as, life and health insurance licenses.
All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
Michael Engler is a Registered Representative and Financial Advisor of Horner, Townsend & Kent (HTK). Conshohocken, PA 19428. Securities products and advisory services offered through HTK, member FINRA, SIPC. Financial Professional of Penn Mutual Life Insurance Company. HTK is a wholly owned subsidiary of Penn Mutual. WealthScope Financial is not an affiliate or subsidiary of HTK or Penn Mutual.
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Penn Mutual, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. # 2021-125676 Exp. 08/23