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Part 2 of Our Estate Planning Series Starts Now
Estate planning isn’t just for the wealthy or something to postpone. It’s a key part of goals-based investing, helping you prioritize primary goals like retirement security and family protection. Whether you’re a Millennial celebrating a new home or managing career and family life, creating an estate plan safeguards what matters most, ensures your wishes are honored, and provides peace of mind for your loved ones when it counts the most.
Step 1: Get to Know Your Key Players – Beneficiaries, Guardians, and Executors
Beneficiaries: These are the people or organizations who will inherit your hard-earned assets, from savings and investments to life insurance policies. Keeping your beneficiary list up-to-date ensures that your assets align with your current intentions.
Real-Life Example: Karen, an ambitious startup founder, named her husband as the sole beneficiary on her life insurance policy and 401(k). After his sudden passing, Karen forgot to update her forms, forcing her children to endure a prolonged legal process to access her funds. Lesson learned: Regularly reviewing your beneficiary designations after major life changes can prevent this kind of stress.
Quick Tip: Block out 15 minutes on your calendar every couple of years or after big life events to review and update your beneficiaries. This simple step helps ensure your plan always reflects your current wishes.
Guardians: For parents, naming a guardian is one of the most crucial parts of estate planning. It’s not just about picking someone who can care for your children but choosing someone who shares your values, lifestyle, and vision for your child’s future.
Real-Life Scenario: John and Maria initially named John’s sister as the guardian for their three young children. But as her life changed with new relationships and financial pressures, they realized she might not be the best fit anymore. They updated their choice to a close, trusted friend who shared their parenting philosophy and had a stable environment. This update gave them peace of mind, knowing their children would be in good hands.
Pro Tip: Before making anything official, talk with the person you’re considering as a guardian. Make sure they’re willing and fully understand what taking on this role entails.
Executors: This is the person responsible for carrying out the details of your estate plan—managing your assets, paying debts, and ensuring your beneficiaries receive their shares. The role requires someone who is reliable, organized, and capable of navigating potentially complex financial tasks.
Case Study: David initially chose his lifelong friend, Colin, as his executor. But after discussing the responsibilities, Colin admitted he didn’t feel equipped for the legal and financial workload. David instead chose his attorney, who was well-versed in estate management. This decision turned out to be a blessing, as it ensured a smooth process that spared his family any added stress.
Friendly Advice: Your executor doesn’t need to be a family member. Sometimes, a trusted friend or professional is a more suitable choice, especially if your estate has unique elements like business interests or multiple properties.
Step 2: Naming Beneficiaries – More Than Just Checking a Box
Choosing beneficiaries might seem simple, but it requires thought. Beneficiaries can be family members, friends, or even charitable organizations. Review these choices regularly, especially after significant life changes, to make sure they align with your current priorities.
Key Tip: Always include contingent beneficiaries. If your primary beneficiary can’t inherit, having a backup ensures your assets don’t end up in probate court.
Did You Know? Naming specific beneficiaries on your financial accounts can help those assets avoid probate, making the process faster and less stressful for your loved ones.
Step 3: Picking a Guardian – The Heart of Estate Planning
Selecting a guardian is one of the most emotionally loaded parts of estate planning. This person will not only care for your children but also influence how they grow up. Think about people in your life who align with your values, can provide a loving home, and have the financial stability to take on this responsibility.
Advice: Make a list of the qualities that matter most to you in a guardian—such as their parenting style, relationship with your kids, and lifestyle. This can help you make a choice that you feel confident about.
Friendly Reminder: Be sure to have an honest conversation with potential guardians to make sure they’re comfortable with the role. This clears up any misunderstandings and solidifies your plan.
Step 4: Choosing an Executor – Your Estate’s Organizer
An executor’s role is essential to ensure that your estate plan is followed to the letter. This person will take on tasks like liquidating assets, paying debts, and distributing what’s left to your beneficiaries. It’s important to choose someone who can handle these responsibilities and won’t be overwhelmed by the job.
Important Note: If your executor lives out of state, they may face extra challenges, like appointing a local representative or navigating different state laws. Whenever possible, choosing someone local can make the process smoother for everyone involved.
Quick Tip: Discuss the role with your chosen executor in advance to make sure they’re willing and prepared. If your estate involves complexities, like business ownership, consider hiring a professional executor to keep things efficient and stress-free.
Step 5: Keep It All Organized and Communicate Your Plan
Organize Your Assets: Compile an asset list that includes account numbers, financial institutions, and insurance policies. This will help your executor and loved ones manage your estate more efficiently.
Talk About Your Plan: While you don’t need to share every detail, discussing key aspects of your estate plan can prevent misunderstandings.
Write a Letter of Intent: Although not legally binding, a letter of intent can communicate personal wishes to your beneficiaries, guardians, and executors. This can include handling specific assets or sharing personal messages.
Common Estate Planning Mistakes to Avoid:
- Neglecting to Update Beneficiaries: Life changes often, and failing to update your estate plan can result in unintended outcomes.
- Overlooking Physical Assets: Include heirlooms, real estate, or collectibles in your plan to avoid disputes.
- Forgetting Contingent Beneficiaries: A backup ensures your assets don’t end up in probate.
- Choosing Out-of-State Executors: Try not to! This can add complexity. Local executors often simplify estate administration.
Final Thoughts: Keep Your Plan Current
Estate planning isn’t a “set it and forget it” task. Your life will evolve, and so should your estate plan. Make it a habit to review your plan every three to five years or after major milestones like getting married, having kids, or buying property. By keeping your plan updated, you ensure that your wishes are clear and your loved ones are protected.
Join the NOYACK community and empower yourself with the financial education to navigate life’s changes and make your plans come true. Your future self—and your loved ones—will thank you.
Expert Interview: Meredith M. Maller
Meredith is a highly skilled estate planning attorney at the BernsteinShur Law Firm, helping families navigate wealth transfer, non-traditional assets, and charitable giving while minimizing taxes. She specializes in complex matters like prenuptial agreements and vacation home succession, combining technical expertise with thoughtful guidance.
Check out our interview with Meredith here 👇
Check out the transcript of the conversation here 👇
