Estate Planning…Yeah, I Should Get Around to That.

Everyone knows they need estate planning documents, right? After all, what exactly falls under the category of “estate planning documents” anyway? If someone has a good advisor, they likely discussed whether a written estate plan makes sense - and in most cases, it does. For example, a last will and testament (often just called a will) is something that usually makes sense to have along with other estate planning documents. But if that’s the case, why is it that slightly less than half of Americans have actually executed a will?¹

Let’s first discuss what the basic estate planning documents are.

• Powers of Attorney: While you are alive but unable to make decisions or handle transactions for yourself, a power of attorney is a legal document granting a person of your choosing the authority to act on your behalf.² This includes two types: a Medical or Healthcare Power of Attorney authorizes someone of your choosing to make healthcare decisions for you, while a Financial Power of Attorney authorizes someone to manage your financial transactions or decisions.³
• Trusts: In certain situations, and states, creating a trust during your lifetime (an inter-vivos trust)⁴ or upon your death through your will (a testamentary trust)⁵ may make sense to save on taxes, protect beneficiaries, and/or preserve assets.
• Last Will and Testament: This legal document directs how your assets will be distributed upon your death and can also include provisions for your family, such as appointing guardians for minor children.

These documents are essential in caring for you and your family, managing your finances while you are living (and unavailable or incapacitated), and handling matters after your death. So why is it that so many of us have not executed these documents? The reasons vary, but thankfully they are relatively easy to overcome. Let’s explore what might be preventing people from putting an estate plan in place.

• I’m too busy! While many of us feel stretched for time and resources, estate planning does not have to be time consuming or expensive. In fact, a well-thought-out plan can remain in place for many years.
• I don’t even know where to start! Since creating an estate plan is not something we do often (or yet for some, not at all), it can feel overwhelming. You can start by asking one or more of the professionals on your team for their recommendations on how to begin.
• The decisions are too complex! While important decisions need to be made, such as who will handle financial and health care decisions, where your assets will go after your death, or who will care for your children if (heaven forbid) you pass away while they are minors, competent and caring professionals can guide you through the process with skill and compassion.
• I don’t know how to find an attorney! Professionals on your team, such as your financial planner, Certified Public Accountant (CPA), or insurance agent, can often recommend an estate planning attorney who’s a good fit for your situation and budget.
• It’s too expensive! While drafting and executing your estate documents may cost more than your monthly cell phone bill, a well-designed estate plan can serve you for many years and save you countless headaches (and possibly money) when needed.
• It’s just too hard to think about that stuff! It can be difficult to consider situations you hope never happen. That’s where the expertise of a professional team skilled in guiding clients through these conversations can be invaluable. In fact, these discussions can often be affirming, poignant, and even strengthen connections with your family and professional team.

The reasons listed above are certainly valid, but by not having an estate plan, it’s often our loved ones who pay the price. The “price” can take many forms, such as family members’ stress in not having access to funds or not being able to easily find all of your assets, higher taxes or legal costs, and even discord among family members. It only takes a quick call or email to your Apella advisor to kick off the process and finally take that important step.

Sources:

1. How Many Americans Have a Will?
2. Power of Attorney (POA): Meaning, Types, and How and Why to Set One Up
3. Financial vs. Medical Power of Attorney: What’s the Difference?
4. What Is an Inter-Vivos Trust? Definition, How It Works, and Benefits
5. Testamentary Trust: Definition, Examples, Pros and Cons

Disclosures:  

Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration with the SEC or any state securities authority does not imply a certain level of skill or training. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, product or any non-investment-related content made reference to directly or indirectly in this material will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Diversification seeks to improve performance by spreading your investment dollars into various asset classes to add balance to your portfolio. Using this methodology, however, does not guarantee a profit or protection from loss in a declining market. Past performance does not guarantee future results. All data is from sources believed to be reliable but cannot be guaranteed or warranted. 

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