Insights

August 3, 2022

3 Ways to Overcome the Initial Hurdles of Estate Planning

In Estate Planning, Wealth Strategy

When it comes to creating an estate plan, very few people have perfectly clear visions of what they want. It’s a weighty and complex topic to address, and often gets kicked down the road. Even when people take the initiative to hire an attorney to draft an estate plan, those drafts can sit in an inbox for six months or a year waiting to be reviewed. When extended delays like that happen, much of the original discussion can be forgotten, or circumstances and needs may change.

Getting your estate plan into place can be an overwhelming process. We’re here to help provide some practical tips to overcoming common emotional hurdles of estate planning.

1. Don’t Tackle It Alone. Work Through the Process with a Trusted Advisor.

Getting your estate plan in place is easier done with a trusted advisor to keep you accountable. A financial advisor and/or attorney will engage you in the process, simplify steps, and keep it from feeling overwhelming. Advisors can offer suggestions and help you gain clarity. For example, they can help you start articulating your goals and objectives, along with defining the “why” behind those goals. Starting with a high-level understanding of what you’re trying to accomplish can help direct strategic conversations when things get more technical and in the weeds. These discussions can take time and it can be helpful to have these discovery talks with your wealth manager before engaging an hourly billable attorney.

For this reason, it’s important to find an advisor whose communication style you are comfortable with. Having an open pathway of communication can make a big difference in moving the process along and allow you to confidently discuss your specific needs. Effective communication will help ensure your wishes are clear and accounted for in your estate plan.

A trusted advisor can also leverage your time and give an attorney a jump start by providing a copy of your net worth statement, details on account titling and beneficiary designations, and the names and dates of birth of immediate family. This type of practical assistance expedites the process and doesn’t allow administrative information gathering to delay the planning progress.

Finally, if you do not have an attorney – ask us for a recommendation. We have relationships with a number of estate planning attorneys with experience ranging from simple to highly complex estate planning needs. We firmly believe a team effort is essential in the area of estate planning.

2. Don’t Let Perfect Be the Enemy of Good

The most important goal in beginning your estate planning journey is just getting something in place. Don’t let the idea of creating the “perfect plan” or having every minor detail ironed out hinder you from getting documents signed. Remember, estate documents are not set in stone; they should be reviewed for possible updates every three to five years. Prioritize an estate plan that reflects your intent as opposed to debating details like giving your children 20% vs. 25% of your estate. Simply having an estate plan goes a long way towards immediately protecting your family and your assets.

As a starting point, think about what you would want for your family if you passed away tomorrow. Focusing on present wants clears up ambiguous discussions around what the world might look like decades from now. It’s very difficult, if not impossible, to write a document that meets what you would want for your family today and also anticipates what you will want 10-20 years down the road. Since the plan will be revisited as you and your children age, it is best to focus on what you want now.

The four foundational planning documents everyone should have in place are:

  1. Durable Power of Attorney for Finances – Puts a person in charge of financial decision-making who acts as your agent either immediately upon execution or upon incapacity.
  2. Durable Power of Attorney for Health Care – Puts a person in charge of health care decisions, who acts as your agent either immediately upon execution or upon incapacity.
  3. Health Care Directive (Living Will) – Lets a physician know if you want artificial nutrition or hydration if you are terminally unconscious with no hope of recovery.
  4. Will/Living Trust – a Will or Living Trust, whatever you decide to use, is the central document that distributes your estate pursuant to your wishes.

3. Don’t Reinvent the Wheel

When establishing your estate plan, don’t feel like you need to create it from scratch. Most people can start off with a standardized plan as a foundational base. Additional structural components can be easily layered on as appropriate for your situation. The key element to discuss and determine are the names of people you want to put in charge. These individuals will be responsible for fiduciary roles, acting as trustees, attorneys in fact, guardians, or making medical decisions should you become incapacitated.

To begin, create a list of two to four people who:

  • You trust
  • Understand and know your values
  • Know your family
  • Understand what matters most to you

Your list of trusted individuals do not need to have technical competency in any of the roles described above. It’s important to remember there are experts (e.g., your financial advisor, attorney, or CPA) who can help provide the technical background. Simply focus on people you trust to be decision makers and will carry out your wishes.

Conclusion

Estate planning is as important as the steps you take to achieve your other financial objectives. Your Coldstream team can help you start the process and refer you to an attorney to answer any detailed legal questions.

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