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A Guide to Estate Planning

A Guide to Estate Planning

March 30, 2022

Have you taken the time to create an estate plan? If not, you're far from alone. Only 46% of U.S. adults currently have estate planning documents, according to a survey by Gallup. For those under the age of 50, the figure is even lower, with just 36% having an end-of-life plan in place.

However, skipping this important financial step could leave your loved ones in a confusing and costly situation down the road.

By taking the time to arrange your affairs and finances, you're not only ensuring an easier time for your family, but you may also be protecting yourself while you're still alive.

Selecting your beneficiaries

The first thing to consider as you create your estate plans is who you will name as your beneficiaries. Try to avoid framing the decision as, "Who should I leave everything to?" as that can put an enormous — and unnecessary burden — on both yourself and the individual you name. Instead, think about the following considerations:

  • Are you supporting anyone financially?
  • Are you married? Is it a second or third marriage?
  • Do you have children?
  • Are there special people in your life you want to honor?
  • Is there a charity you're passionate about?

If you're planning to name a child as a beneficiary, keep in mind that there are restrictions on funds they can receive if they're a minor. To avoid this, you may want to set up a trust or appoint a close family member or friend to oversee the distribution of your assets — we'll go over this shortly.

Deciding on a method of transfer

As you think about who you want to be your beneficiaries, it's important to explore all of the transfer methods available to you:

1. A will

When you think of traditional estate planning, a will is likely the first thing that comes to mind. However, you should think of your will as the foundation of your estate planning rather than its only component.

A will can only control property that is subject to probate, which leaves many of your assets unprotected and unaccounted for in your planning. Property in a living trust, retirement plan proceeds, IRAs, annuities, and life insurance proceeds are some of the assets you'll need to plan for outside of your will.

2. Trusts

A trust is a legal vehicle that allows a third party — also known as a trustee — to manage a trust fund on behalf of a beneficiary. A trust can not only be used to minimize the fees loved ones face, but they can also create a long-lasting plan for you to give to a charity of your choice.

In addition to giving you the ability to control who receives your assets, a trust also specifies when and for what purpose, which can be helpful if your beneficiary is a young adult or a minor.

3. Transfer on Death

If you don't plan to use a trust, a transfer or pay on death designation can transfer assets directly to a beneficiary without the need to go through probate.

Traditionally, a transfer on death designation is usually associated with an investment account for stocks, bonds, or other non-qualified or post-tax investments. A pay of death designation is more commonly tied to a bank account. If you decide to use either method, it's especially important to review and ensure that the beneficiary dedication is accurate and up-to-date.

4. Beneficiary Designations

This method initiates the transfer of investment assets to a beneficiary at the moment the owner passes. Beneficiary designations are popular for accounts including 401(k)s, Roth IRAs and life insurance policies, among other things.

Be sure that no matter which components you include in your estate planning the assets and beneficiaries named match across each document.

5. Power of Attorney

During your life, should you become ill, who will pay your bills? How can they access your bank accounts, talk to the social security office or possibly sell your home should that become necessary? A Power of Attorney or POA is a document that is created with your estate documents that grants a specific individual the authority to act on your behalf in your financial affairs. Once you are ill it can be too late to set up so it is important to draft and execute while healthy and competent.

6. Health Care Directive

Do you want to be kept alive at all costs or in the event of your lapsing into a vegetative state would you rather nature take its course? A Health Care Directive will state your intentions for your end of life care along with a named loved one to ensure your wishes are followed. These are personal, end of life decisions you will want to control rather than a liability shedding and profit maximizing institution.

Updating over time

Estate planning isn't a one-and-done task. Over time, review your plans and adjust accordingly to reflect any major life changes. Although everyone's financial situation will look different throughout the years, there are some common milestone occasions that call for a potential re-draft:

  • Marital status: Did you create your estate plan prior to getting married or divorced? Be sure to revisit both your financial plans as well as whether your spouse can act as a decision maker if you're incapacitated.
  • Birth of a child: If you decide to have children, it may be in their best interest to create a trust in the event that both you and your spouse pass.
  • Financial changes: If your finances significantly change, you'll likely want to review your estate documents with an attorney as well as an advisor.

Depending on your unique situation, there could be several advantages to creating a trust or updating the beneficiaries on your retirement plans and other financial accounts. Although building out an estate plan can feel overwhelming, working with an estate attorney and a financial planner can help you find the best options for you and your family over time.

We are happy to discuss your specific situation with you. Please call us at 908-379-2706 to schedule a complimentary consultation. As always, we appreciate the opportunity to assist you in addressing your financial issues.


Jones, J. M. (2021, November 20). How many Americans have a will?
Retrieved December 20, 2021, from

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