Young families could be viewed as anyone. From the perspective of new parents in their 20’s or 30’s, to new grandparents with children to educate, to the individual with a new pet (still a family), to the husband and wife with no dependents. At some point they were all ‘young families’. And some young families never get around to their estate planning which is why we are bringing this to your attention. Estate planning is for everyone.
Estate planning can be complicated with many intricacies. This conversation will focus on bigger picture topics of proper estate planning. We will talk about things here that can be applicable to all stages of life.
Estate planning, by definition, is the planning and preparation for ‘the end’. It is an act of love you do for your family. By completing meaningful estate planning, you are helping your family in more ways than one. Estate planning is important for all people because ‘the end’ can happen in a blink of an eye. Estate planning also helps create security for you during life. Over the years, we have observed that this can be a tough conversation to have. Not many people like to plan and/or think about ‘the end’. From experience, I know it takes courage and trust to complete your plan.
You may now be thinking, “So, what is it and how do I get started?” At its basic level, it is ensuring you have beneficiaries on your investment accounts, retirement accounts, bank accounts, and all employer benefits. It is ensuring you are organized. For younger families with children, it is ensuring there is enough life insurance in place on the parents. For younger families it is ensuring you can pay the bills through disability income insurance if you become disabled in an accident. Beneficiary designations are an often-overlooked task. It is important to stress this point about beneficiaries. It is a simple but a very important task. Review yours now.
Why have a trust? Typically, a younger family does not need a living trust. That is, until they buy their first home! Most assets can avoid probate with proper beneficiary designations. Real estate, however, can only be passed on efficiently by means of trust. A trust will help the family avoid probate. Probate is expensive and time consuming. Probate is a long, public process which can take up to 18 months to finish. Probate is not good and can be avoided through appropriate asset titling.
We often discuss and educate on trust planning. Think of a trust as a safety deposit box. Assets, like jewelry or cash, need to be placed into your safety deposit box for you to utilize the safety deposit boxes value. Same with a trust. To use it, working with a financial professional, you will change ownership of your asset to your family trust.
A complete estate plan will contain at a minimum five documents (including a trust). They are:
- Living Trust
- Pour Over Will
- Power of Attorney (POA) for financial transactions
- Health Care Directive (HCD) for healthcare related decisions
- HIPPA authorizations for healthcare information sharing
As we heard from Sean Hooper in his last blog post, younger families with children really need to be naming a guardian for children under age 18. If you do not have a plan on who is taking care of your children should something happen to you both prematurely, your state of residence has a plan for you. If this is a concern of yours, simply create a will and name a guardian for your children. Your will also distributes personal belongings like an automobile or family heirlooms. No children? What about your pet? Who will take care of them? This can all be addressed in your estate planning documents.
Other documents like the POA and HCD, are used during life. If we ever become unable to care for ourselves, these documents name someone who can step in and help. The POA power should be someone you 110% trust. They will have general power to ‘pay the bills’ of your estate. HCD power should be someone you also trust. This person will have to be strong and hold steadfast to your wishes. They will make a healthcare related decision when you are unable to.
We had a recent experience with one of our clients cementing why this is important. Through our years of working together, we had encouraged and acted as a catalyst to get much of this done. Our client ended up having all their documents in place. Fast forward many years, and this person could no longer act in their own best interest leaving them suspect to online schemes, late utility payments, and more. Our client’s POA stepped in. With their parent’s best interest at heart, the POA was able to manage the bills and utilities, set up care, and ultimately make this a better experience for our client.
Our team has worked closely and extensively with estate planning lawyers who can create these important documents for you. We are here to educate and answer any questions you have on this important topic.
We are looking forward to a great year!
Mike Kish is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp. a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln Marketing and Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc. and other fine companies. 17400 Laguna Canyon Road, Suite 125, Irvine, CA 92618, Phone: (888) 485-5001. Lincoln Financial Advisors Corp does not provide legal or tax advice. Oakwood Wealth Partners is not an affiliate of Lincoln Financial Advisors Corp. CRN-4874224-072622