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Important Year End Estate Planning Task

Make sure your beneficiary designations are up to date and accurate.

  1. Check that the person or persons listed on all accounts that have beneficiary designations are the people you intend them to be.
  2. Make sure that the percentages given to these individuals are how you want them.
  3. Understand the type of designation you are making and what happens if one of your beneficiaries passes away before you do.
  4. Lastly, make sure that the beneficiaries on all of your accounts are coordinated properly with your wishes and other estate planning documentation.


Who Needs Estate Planning?

This chart comes from the College for Financial Planning and provides a quick reference guide for those wondering if they need estate planning.

Ultimately everyone can use some degree of estate planning weather it is simple Wills and Powers of Attorney to more sophisticated Trust structures designed to avoid taxation and provide instruction on who gets what and how they receive it upon death. 

Client Situation Primary Concern
Clients with minor children Need to provide for the personal and financial care of the minors in the event both parents die prior to the minors’ attaining the age of majority
Clients owning assets in multiple states Need to avoid ancillary probate so as to avoid increased administrative costs and estate shrinkage
Small-business owners Interest younger family members in the business; assure marketability of the owner’s interest if the interest is to be sold at retirement or death
Clients who have sufficient wealth to leave a taxable estate at death Ensure sufficient estate liquidity to pay taxes without having to sell estate assets
Clients who want specific assets (or a specific amount of assets) to pass to a specific beneficiary at death Need to avoid intestate distribution when property is not disposed of by will or will substitute
Clients in high-risk occupations, such as a doctor Need to protect personal assets from the claims of potential creditors
Clients who have non-U.S. citizen spouses Need to provide for spouse’s financial well-being after client’s death, but keep estate taxes to a minimum; the marital deduction is available only in limited circumstances
Clients who may become disabled in the future Need to appoint decision maker for medical and financial decisions; possibly qualify for Medicaid
Clients with domestic partners Need to avoid intestate distribution when property is not disposed of by will or will substitute



Life Insurance: Part of your financial plan.

Life Insurance is designed to protect your family's financial security in the event you die. It can also be use to protect business associates as well. Many use life insurance as the basis for their financial plan. For financial planning purposes it can serve many different functions as part of your overall investment strategy. Life insurance can help you build assets to meet needs during your lifetime. Certain types of life insurance offer living benefits to the owner such as the potential of tax-deferred growth of cash values and tax-favored access to cash value.

Two types of insurance are Term Insurance and Permanent Insurance:

  • Term Insurance is similar to renting; a premium is paid and the insurance covers you for a limited time. This type of insurance does not build up cash value. The main advantage of term is that it is initially less expensive than permanent life insurance.
  • Permanent Insurance is similar to owning; three commonly used types of permanent insurance are Whole Life, Universal Life and Variable Universal Life. Each provides for the build up of cash values and riders may be available for additional benefits and features.

Which type you choose will depend on your specific financial situation and goals. Working with a planner that can bring-in insurance specialists who work to design insurance solutions that have the right benefits and features is important. The involvement of estate planning attorney's and accountants may also be necessary in order to make sure the ownership structure is appropriate while minimizing potential tax issues.


4 Financial Planning Myths


Myth #1: “My situation is very simple. Comprehensive planning is overkill.”

Some people may feel that their situation is straightforward and therefore does not require a financial plan. This stems from a misunderstanding of exactly what constitutes a plan and an assumption that planning is always a comprehensive endeavor. The truth is that planning should always meet you where you are and be scalable to your situation. 

For many, a fully comprehensive engagement is an appropriate solution. However, for others, there may be one or two simple ideas that will make a significant difference for their financial security now and later. 

Planning can help uncover these issues and define solutions, while also posing questions to clarify some things you and your outside advisors may not have considered. Regardless, complexity does not equal good planning and the net result of every planning experience should reflect that.

Myth #2: “I have an attorney and CPA…they have this covered.”

To be clear, financial planners are not a replacement for your current advisors, but they can be an excellent complement to them. Your attorney and CPA are key advisors with very specific roles, training, and skills built around their proficiencies.

Planners work more across disciplines, taking a client-centric look across all aspects of your financial situation, encompassing tax, legal, investments, and insurance. This unique vantage point allows your planner to connect the dots, providing an integrated, unbiased resource that is truly holistic. They provide this service acting solely as client advocates, suggesting alternatives appropriate for your situation while simultaneously breaking complex topics into simple everyday language. This valuable “second set of eyes” can help validate strategies enacted by each of your outside advisors, streamlining them and assuring that they are not in conflict. 

Myth #3: “I don’t need planning because my estate will fall below the federal estate exemption amount.”

While federal estate tax liability is an important estate planning consideration for some, it is far from the only concern holistic financial planning can address. Many states set estate tax thresholds below the federal level or levy inheritance or other taxes. Proactive planning can begin to address these issues and minimize their impacts. Charitably inclined investors may wish to explore strategies for using their estate to address their philanthropic interests. 

Additionally, many mistakenly think that the drafting of a will is the only step needed to avoid probate—a very public and drawn out process for distributing assets after death. While this is not the case, a planning consultation can help confirm that you are taking the additional necessary steps.

Outside of the estate planning realm, planning can also help provide actionable metrics around the exercise of stock options or advice on how to help protect assets against taxes and inflation, to name only a few. Because of these and other solutions, planning can be just as important for people who do not expect a federal estate tax liability as those who may.

Myth #4: “Planning is all about retirement funding which is not an issue for me.” 

Planning is really about aligning your financials to help you live the one life you have the best way you can. For some, this equates to defining and funding a successful retirement. For others, it may mean addressing their charitable interests, transitioning a business or managing and leveraging debt.

A plan can benefit everyone so long as it is based on your specific situation and aligned around your needs. Life is about choices—some made consciously and others unconsciously. Planning helps outline the implications of our financial choices and helps you to confront them proactively.