Insights

April 15, 2024

5 Key Players in your Estate Plan

In Estate Planning, Wealth Strategy

Katelyn Spangler
Contributions from: Katelyn Spangler, CFP®

When most people decide to start their wealth management journey, the shiny object in the room is always financial planning – and we get why! Nothing beats seeing your years of savings, short-term goals like that once-in-a-lifetime trip, and long-term goals like early retirement, all in one place and your advisor confirms your financial plan will work. Getting a financial plan in place is like making it to the top of a big hill. At the top of that hill, however, lies a more daunting mountain to climb – estate planning.

If you don’t have an estate plan in place, you’re not alone. A study by Caring.com found that “only 32% of Americans have a will, a 6% decline from 2023 and the first decrease in estate planning rates since 2020.”[1] The truth is everybody needs an estate plan whether you are single, married, a parent or someone’s favorite auntie – an estate plan is an invaluable piece of your wealth strategy.

Why is it so hard to get an estate plan in place if everyone needs one? Our article 3 Ways to Overcome the Initial Hurdles of Estate Planning goes into some detail, but can be summarized with the opening line, “when creating an estate plan, many individuals lack a clear vision of what they want.”

Weighty and complex topics are addressed during the estate planning process. A vital part of the process is determining who you want to designate as your fiduciaries – aka your key players. We’ll dive into each crucial role, but first let’s clarify the documents that are typically included in an estate plan:

Common Estate Plan Documents

A Will or Living Trust: These documents outline how your assets should be distributed upon your passing. For parents, a will is especially important as it will establish a guardian for your children while they are still minors, or otherwise unable to care for themselves. A will typically goes through probate, where the court system determines its validity and interprets your desires. A living trust does not go through probate and is interpreted by a named Trustee. An Estate Planning Attorney can help you determine if a will or living trust is best for you.

Powers of Attorney: Allows you to appoint a person to act as the agent of your financial affairs or make health care decisions on your behalf. This appointment may spring into action upon incapacitation (typically requiring a doctor’s letter) or be immediately effective.

Health Care Directive (Living Will): In the unfortunate scenario that you become terminally unconscious and are unable to make your own decisions, this document establishes whether you would like to be kept alive artificially.

Now let’s dive into the five key roles in putting together your estate plan.

1. Estate Planning Attorney

Your Estate Planning Attorney works side-by-side with you to draft your estate planning documents. They will highlight key considerations and help you through the decision-making process. It is important to work with someone who is licensed in your residential state. Your Coldstream team will happily recommend and introduce you to local attorneys that we believe will be a good fit for you.

2. Personal Representative/Executor in Will

A personal representative or an executor is the person or professional organization selected to administer your estate after your passing. They have the key, overarching role of making sure the beneficiaries of your estate receive the appropriate inheritance after debts are paid and that your documents are interpreted correctly. As fiduciaries, they have the duty to act in good faith and in the best interest of the estate’s beneficiaries.

3. Power of Attorney

Your Power of Attorney is the agent who you designate to legally act on your behalf – their authority may be broad or limited in scope when making decisions about your investments, property, finances, or health care. You can have multiple power of attorney documents which allows you to appoint different persons, particularly if they have specialized knowledge in specific areas like finance or healthcare. Designating multiple power of attorneys helps ensure you have the right person in place to make important decisions in each area.

4. Trustee

A Living Trust will appoint a trustee – they are fiduciaries who take on the responsibility of managing your money and assets based on your desires. Your Trustee can be a person, like a family member or close friend, or a professional organization (e.g., Schwab, Fidelity, or trust management organization). Each estate plan is unique and therefore might benefit from a personal or professional trustee, depending on complexity or family dynamics.

5. Guardian

A guardian is the individual who your will designates to legally care for any minor or adult children who cannot care for themselves. If you do not identify a guardian in your will, a judge may appoint one for you.

Conclusion

One of the most challenging pieces of putting together your estate plan can be identifying your trusted team of key players. For many, their team is a combination of family members, close friends, or vetted professionals. Always remember that you can change the key players in your estate plan if necessary. Your estate documents should be reviewed every 3-5 years – especially if your family grows, you move to a new state, or your charitable giving preferences evolve.

Your Coldstream team is ready to help you identify these key players. We encourage you to review your estate plan if it’s been more than three years since you established it or connect you with an estate attorney to draft your estate plan if you don’t have one yet.

[1] https://www.caring.com/caregivers/estate-planning/wills-survey/

Related Articles

April 22, 2024

Estate Changes Are Coming: Who Really Needs to Take Action?

When Taylor Swift wrote her song, You Need to Calm Down, she probably had no idea how relevant her song title would be when thinking about the Tax Cuts and Jobs Act of 2017 (TCJA) sunsetting on January 1, 2026. Headlines are setting off alarms and panic for many high-net-worth individuals. However, the TCJA sunset [...]

Becky Wilcox
Contributions from: Becky Wilcox, CFA®, MBA, FRM®, Heather Hamamoto, CFP®, CDFA®, Anne Marie Stonich, CFP®, CPA

April 19, 2024

Navigating the Impending “Sunset”: How to Prepare for Tax Changes Expected in 2026

The Tax Cuts and Jobs Act of 2017 (TCJA) ushered in numerous changes to U.S. tax law, many of which are set to expire or “sunset” on January 1, 2026. This impending shift presents both challenges and planning opportunities for taxpayers. Here’s a detailed look at the key changes and strategic planning approaches to consider: [...]

Contributions from: Anne Marie Stonich, CFP®, CPA

March 13, 2024

Risk Tolerance vs Asset Allocation: Finding the Right Balance

When people hear the word risk, they usually visualize “dangerous” things like riding a motorcycle, starting a business, or maybe even a high-stakes game of poker. Taking on risk often comes with the potential for reward – in poker, you can never win a big hand if you don’t ante up. In investing, there is [...]

Contributions from: Bryan Carr, CFA®, Jay Winston, CFP®, Jordan Travis, MBA, FPQP™