Leveraging Your Financial Advisor to Lead your Estate Planning Strategy

About 67% of Americans do not have an estate plan, according to a survey from Caring.Com, a top senior-living referral service. When asked why, most respondents simply said they had not gotten around to it.

When someone dies intestate (without a will), they complicate matters for their family members. There’s often more involvement with the court, legal complexities, and potential strains on family relationships.  

The good news is that estate planning doesn’t have to be complicated. If you’re looking to start an estate plan but aren’t sure where to begin, enlisting the help of your financial advisor may be the best decision you make during this process. 

This short guide will tell you why you should leverage your financial advisor to guide you in your estate planning strategy and what steps they can take to help you create and implement your plan.

What is the Difference Between Estate Planning and Financial Planning?

In financial planning, the goal is to help investors build wealth to achieve their goals. Financial planners generally work with their clients to set financial goals and invest carefully in pursuit of those goals. They may help clients buy real estate, purchase and manage stocks and bonds, or set aside money for a child's education. They may also help them balance cash flow, taxes, and future goal funding. 

In estate planning, the goal is to help people distribute their wealth after they die or become incapacitated. Attorneys and financial planners work with their clients to develop wills and trusts, determine executors, and appoint powers of attorney (for medical and financial decisions).. 

Can a Financial Advisor Help With Estate Planning?

Yes, while a financial advisor can not draft the legal documents or give legal advise, they can help with estate planning. 

First, a financial advisor works with you to identify your overall goals and objectives and to develop a strategy to achieve them. Then, your advisor can help you monitor your progress and make adjustments when needed.

As part of your financial plan, your advisor can also work with you to ensure that your estate benefits your heirs and does not leave them saddled with debts or taxes. A financial advisor's estate planning services can help you create a plan to manage your assets and liabilities now and in the future.

7 reasons to Include Your Financial Advisor in Your Estate Planning Process

Typically, estate planning requires an attorney to draft legal documents such as a will, trust, or advanced healthcare directives. You may also want to leverage your financial advisor to help lead your estate planning process,.

Why should your financial advisor take part  in your estate plan? We believe estate planning should be more than just what happens to your money after you die. A financial advisor can help you determine how, when, and in what form you might transfer wealth to your heirs. They can also help you consider the tax and financial impact of your estate. Here are seven more reasons to include your advisor in the estate planning process:

1 — Your financial Advisor Knows Your Overall Financial Picture.

Your financial advisor is a valuable resource when it comes to estate planning. They can help you determine what assets to include in your estate plan and how best to accomplish your goals and protect your loved ones.

Most estate plans include at least a will, a health care directive, and a financial power of attorney. Others may include a revocable or irrevocable trust or a life insurance policy. Since your financial advisor knows what assets you own and how they are managed, he or she is well positioned to help you devise the right estate plan.

Particularly large or complex estates, such as those with hard-to-value assets, can require more time and expertise to manage. many financial advisors know how to help guide participants as they grapple with these challenges.

2 — Your Financial Advisor Can Help You Determine Assets to Include in Your Estate Plan.

Should you include all your assets in your estate plan? Generally, yes. When someone dies, all assets will count as a part of their estate. However, not all assets count towards their probate estate. For example, assets in the name of your trust are not included in your probate estate. Your financial advisor can help you determine which assets you may or may not want to include in a living trust so that you and your heirs realize the most benefits.

3 — Your Financial Advisor Can Help You Make Sure Your Estate Plan is Aligned with Your Overall Financial Goals.

Your financial advisor can help you understand the different types of estate planning options available and how they fit into your overall financial picture. Helping you consider your current and future goals, as well as your goals for your heirs. He or she can also help you identify potential roadblocks and come up with strategies to overcome them.

For example, your financial advisor can help you determine how much life insurance you may want, what type of policy is best for you, and whether or not you should own the policy or have it owned by an irrevocable trust.

4 — Your Financial Advisor Can Help You Choose the Right Executor for Your Estate Plan.

Your financial advisor is a wealth of knowledge when it comes to estate planning, but perhaps more importantly, they know you personally. This lets them help you identify the right executor and successor trustee for your estate plan.

Your executor may need to file your will with probate court, pay your remaining debts, close your accounts, contact your insurance companies, communicate with heirs, and distribute your assets. It's a big job, and it can require an organized and trustworthy person to fill it. 

Most estates need 6-18 months to settle, large complex estates could take two years or longer. So choose an executor who has the aptitude, time and who will persevere for the long term.

5 — Your Financial Advisor Can Help You Navigate the Often Complex World of Estate Taxes.

If you're like most people, you probably don't have a ton of experience dealing with estate taxes. That's one of the ways your financial advisor can come in handy.

When you transfer your assets after death, the IRS may be able to claim an interest in your gross estate. In addition, your heirs may have to pay a state inheritance tax on the assets they receive. Working with your financial advisor can often help you minimize or even avoid these taxes.

6 — Your Financial Advisor Can Help You Plan How to Distribute Your Assets After Your Death.

Estate planning often raises complex emotions and can cause division in families. Working with an objective third-party, such as an attorney and advisor, introduces a dispassionate voice into the conversation, potentially avoiding conflict down the road.

Your financial advisor can help you create an estate plan that includes a will, trusts, beneficiary designations, and more. By working with your financial advisor, you can help ensure that your assets are distributed according to your wishes. Helping you optimize your estate plan and avoid potential issues with probate - the whole process of administering the estate of the deceased.

7 — Your Financial Advisor Can Provide Ongoing Support and Guidance As Your Estate Planning Needs Change Over Time.

Estate plans are rarely static because life, finances, and relationships change. Your executor could pre-decease you, for example, or you could have a grandchild with special needs for whom you want to leave a trust. Or you might decide you want to leave an asset to a mission-driven charity that has captured your heart. In these instances, you'll need to update your estate plan.

Make a habit of reviewing your estate plan every five years. If you want to make changes, consult both your estate planning attorney and your financial advisor. 

FAQs About Estate Planning

What is estate planning? Estate planning is the process of making arrangements for the disposal of your property and assets after you die. A simple estate plan consists of an advanced healthcare directive, a durable power of attorney designation, and a will and trust. By creating these documents, you inform your family — and the probate court — about your wishes regarding your assets after your incapacitation or death.

Why is it important to have an estate plan? An estate plan can help make sure that your wishes are carried out after you die, and can help minimize disputes among your heirs. For parents of minor children, estate planning also includes the opportunity to name your children's guardians and provide for their welfare. Furthermore, careful estate planning can help keep your assets from being taxed heavily upon your death. 

What should I consider when estate planning? You should consider your current financial situation, your goals for the future, how you want your assets to be distributed after you die, and the impact of those assets on your heirs. Along with your attorney and your financial advisor, you should consider the disposition of your debts, insurance policies, retirement accounts, college funds, and personal items of value such as art or jewelry. 

Who can help with my estate? Estate plans generally involve up to six people — your financial advisor, attorney, guardian, executor, trustee, and power of attorney. Typically, your attorney and your financial advisor act as professional consults while a family member or friend may fill the other roles. It's worth noting that most of those roles do not require any action until a future date. We do, however, encourage having those conversations now so it doesn’t come as a surprise later. 

What are some common estate planning services an attorney will provide? Common estate planning services include drafting a will, setting up trusts, establishing a durable power of attorney, and naming executors and successor trustees. In most cases, they will also help or instruct you on how to put your assets in the name of the trust. 

Do you need to talk with an expert advisor about your estate plan? We can help. At Cooke Wealth Management, our financial advisors excel at providing sound, confident investment and financial plans from a Biblical perspective. Give us a call!