Cents & Sensibility —
Establishing an estate plan

Beth Peabody

“Tell me and I forget, teach me and I remember, involve me and I learn.”
— Benjamin Franklin

This is the seventh column written to assist readers with gaining greater financial security. Because a large portion of personal assets may be growing in investment vehicles that require a beneficiary designation, the most recent Cents & Sensibility’s action item was to check the named beneficiaries on file for all life insurance, annuity, and retirement accounts. Once this action is completed, document your decisions in writing and share the location of this information with a trusted friend or family member.

This action, combined with ones suggested in earlier columns regarding establishing a budget and tallying investment buckets and investment strategies, are steps to managing your net worth.

Today’s column will make recommendations to map out a plan to protect these financial assets by working on an estate plan.

Establishing an estate plan may sound like an exercise performed only by the wealthy, but everyone should consider documenting their goals and wishes through this process. An estate plan is not just about net worth and its creation makes sure that your assets are protected and that your intent is not left to the interpretation of others.

It is your responsibility to mitigate the burden that will be placed on others if you are no longer able to speak for yourself. In addition, an estate plan can alleviate pressure on people that are closest to you at an emotional time.

A simple estate plan is easy to coordinate, but requires some difficult considerations. No one really wants to spend time contemplating death or disability. Who wants to spend time on “date night” discussing naming a guardian for the children? Do aging parents want to spend valuable family dinner time discussing their wishes for healthcare decisions if they become ill? These discussions are tough to have, but are critically important.

The actions previously offered by this column have provided the first steps in the estate planning process. By making an inventory of your financial assets and naming beneficiaries of many of your retirement assets you have a good head start.

The next few columns will provide additional suggestions that will help you in creating and documenting an estate plan.

An important aspect of developing an effective estate plan is identifying key individuals. Those who you select will be responsible for your wishes to be carried out in case of death or incapacity. Roles you should assign include:

  • Executor: This person(s) is identified in your will and is responsible for gathering all of your financial and personal assets and making sure these are distributed as spelled out in your will or beneficiary forms. This is a difficult task and requires one to have skills that include being comfortable with finance, being detail-oriented and having the time to devote to this possibly year-long process.
  • Financial Durable Power of Attorney: This document appoints your named representative to have the legal authority to make financial decisions on your behalf. This person should have the same skills as the executor.
  • Healthcare Power of Attorney: a document appoints someone to make healthcare decisions on your behalf if you become incapacitated. Often this appointment is a family member who is required to confer with your doctor(s) and possibly other family members.
  • Guardian: Your will appoints someone to look after your children if both parents die. The person selected to fulfill this role should share your values and parenting views.

The same person may fulfill more than one role. The selected individuals may change over time, so it’s important to make this decision part of your annual review, much like this column has suggested for your budget and investment allocations. All named individuals should agree to serve in these roles before you place their name in legal documents.

Even if you have already established an estate plan, this is an ongoing process, not something to be done once and forgotten. If you have a plan in place, find it, dust it off and review it and have the discussions again and amend the plan if necessary.

Next month: Further estate planning considerations.

Beth Stegner Peabody is CEO of Stegner Investment Associates, Inc., and a graduate of Sacred Heart Academy.

Leave a Reply

Your email address will not be published. Required fields are marked *