Why You Need an Up-to-Date Estate Plan

October 15, 2018

Family Estate Planning

With the 2018 increase in federal estate tax limits, protecting one’s estate from taxes has become less important for many. Effective January 1, 2018, individuals can leave just over $11 million to heirs and pay no federal estate or gift tax. A married couple can protect double that amount, or approximately $22 million, from such taxes. But even with these advantageous federal tax breaks, families shouldn’t neglect estate planning.

An up-to-date estate plan serves several important purposes.

  • For starters, your estate plan helps ensure that the appropriate legal documents are in place so that assets pass to your heirs according to your wishes.
  • Equally as important, an up-to-date estate plan is a powerful tool for determining what you want to accomplish during your lifetime.
  • Your estate plan also determines the type of legacy you want to leave when you are no longer on this earth.

The role of a wealth advisor during the estate planning process

In our experience, human dynamics play a significant role in how our clients make decisions about estate plans. For this reason, we work closely with our clients to help them think through important considerations before they meet with an estate-planning attorney to draft new or updated documents. In a series of candid conversations with our clients, we help them do the following:

Articulate their wishes and desires about caring for family members

This may include grappling with questions like these:

  • Do you treat children equally during your lifetime as well as when assets from the estate are distributed?
  • Do you want to protect assets from your child’s spouse?
  • How should assets be distributed if there are multiple marriages for your spouse or your children?
  • Is there a child or grandchild who has special needs, requirements for medical care, or circumstances that warrant an unequal distribution of assets?
  • How do you treat more successful versus less successful children?
  • How do you treat responsible versus irresponsible children?
  • Are young children involved, and how do you want them to access distributed funds?
  • How will you protect distributed assets from potential creditors?
  • How can trusts help address the above questions?

Create a bucket list of items to enjoy during their lifetime

As we age, we see how quickly life moves forward. Because of this, we always encourage our clients to think about the types of experiences they want to enjoy when they are most able to from both health and financial perspectives.

For example, some clients want to splurge on family vacations. Others seek to purchase a second home. We also have clients who want to uproot their lives to live abroad for a few years. Everyone has hopes and dreams—it’s human nature. Our role is to encourage our clients to seize the moment when they are most able to.

Determine what impact they can make on causes that they care deeply about during their lifetime, as well as after

Some clients have the means to make meaningful gifts throughout their lifetimes. For others, it may be best to give in small amounts and then leave large gifts as a bequest after their death.

Longevity has important financial implications. So, when it comes to charitable giving, we help clients decide what they can afford to give today and through which methods (e.g., outright cash, appreciated securities, giving vehicles, etc.), versus bequests when they are no longer living.

How we treat the answers to these important questions

Based on findings from these candid conversations, we prepare a written financial plan for them to rely upon and share with their estate-planning attorneys. The plan includes three key elements:

  • Documentation of lifetime and legacy goals and wishes
  • Specific ways the client can accomplish these lifetime and legacy goals
  • A balance sheet that lists all of their assets, with current values and ownership structure

This plan helps clarify how they want to live their lives today and in the future, along with the legacy they want to leave behind. It also helps the estate-planning attorney accomplish their desired outcomes more efficiently.

Estate plans can change over time

Remember, life is a fluid experience. It’s important to protect yourself and those you love. Since positive and negative circumstances change for all of us, we encourage our clients to review their estate plans every few years, or more often if life events and circumstances change.

You should plan to protect yourself and those you love, while also ensuring that you live the life you envision today and in the future.

Dean Investment Associates, LLC (“DIA”) and Dean Financial Services, LLC (“DFS”) are each a registered investment advisor with the SEC and wholly owned subsidiaries of C.H. Dean, LLC. Dean Capital Management, also an investment advisor registered with the SEC, serves as the sub-advisor for DIA. Dean Capital Management is an affiliate of C.H. Dean, LLC. Readers should note that asset allocation does not guarantee a profit nor eliminate the risk of loss.