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3 Reasons Why Estate Planning is Crucial Part of Financial Planning

3 Reasons Why Estate Planning is Crucial


Estate planning is an important part of life that is often overlooked. It's more than just a legal process, it's also a financial and control process. There is a belief that estate planning is only for the wealthy, but that is not the reality. Estate planning is for anyone at any point in their life. In this blog post, we'll explore three of the most compelling reasons why estate planning is and essential part of financial planning. I hope it helps you learn more about why an estate plan can ensure that your wishes are respected and that all of your interests are protected.

Power of attorney & financial planning
Estate planning documents & financial planning

Reason 1: Asset Protection


One of the most important reasons for estate planning is to ensure that your assets are protected. By creating a comprehensive financial plan that includes estate planning, you have the power to control how and when your assets are distributed. This means that you can specify who receives what assets and when they receive them, helping to protect your loved ones from potential conflicts or disputes. Proper estate planning can also help with credit protection, when done properly with experienced legal counsel.


Estate planning can involve creating important legal documents such as a will, power of attorney, and a traditional will or pour-over will. These documents provide important protections for your assets and ensure that your wishes are carried out, while living or even after your passing. For example, a pour-over will is designed to transfer any assets that were not included in your trust, to the trust upon your death. This can help to prevent your assets from going through the expensive and time consuming probate process. Furthermore, by creating a health directive, you can ensure that your medical wishes are carried out in the event that you become incapacitated. This important document outlines your wishes for medical care and treatment, including any end-of-life decisions that you may want to make. By including a health directive in your estate plan, you can help to protect your assets by ensuring that your medical wishes are respected, even if you are unable to communicate them yourself.


Reason #2 You Need to Protect Your Family


Many times family members have good intentions, but have opinions of their own, which may not be in line with your wishes. Also, there could be situations where you have minor children or dependents with special needs who will benefit from having a properly executed estate planning documentation. There are two considerations that take into account your family members.


In the first situation, adult children or family members should be included with the details of your wishes. I have seen good individuals turn against their brothers and sisters, even when knowing what mom or dad wanted. Having details clearly known up front is always better. You might want to have copies of your estate plan or highlights given to those


that need to be "in the know". While some may not like the situation, that isn’t the goal of your estate plan, it's to protect you and your family.


In the case of minor children or children with special needs/abilities, Guardianship is an important concept that should be addressed with estate planning versus winging it. Not having documentation or appropriate planning can quickly create the loss of control of resources for your child or dependent with special needs/abilities. Even in a situation where co-parenting exists, it is better to have the correct guardianship documents properly prepared to ensure children or dependents' needs are met. Terms such as how to receive and manage money, housing, education, access to health care or applying for public assistance benefits if necessary.


Reason #3 Financial Planning


No matter your wealth level, estate planning should be part of a comprehensive financial planning process. Estate planning isn’t just a legal process, it is also about controlling your financial resources efficiently. Having the best subject matter experts assisting and collaborating would be better when a team approach is taken. A team approach in estate planning has greater outcomes whether you are using estate planning to optimize your tax efficiency, or making sure assets are protected by securing your legacy for future generations. Either way, it matters greatly. Another important consideration is jurisdiction, which could vary from state to state or even country. As mentioned earlier, the right subject matter experts need to be informed and each working on their portion or jurisdiction to ensure best implementation of your state plan.


In terms of the relationship between estate planning and financial planning, once it has been completed, it will require some revisiting to make sure the planning is still appropriate. States or countries can update or pass new laws or taxation rules that could have an impact on your estate. Keeping the details organized and readily available to review annually are important to make sure that your estate planning is in alignment with your financial goals.


What are your next steps to ensure your estate planning is in line with your financial goals and protects your family or business? When the right team is in place, the process is simple and convenient. Need help? Book a complimentary consultation to review your situation and experience the benefits of working with an advisory firm that accomplishes comprehensive financial planning which includes estate planning subject matter experts.



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