Don’t Leave Your Legacy to Chance: Essential Estate Planning
This week’s insight is a little morbid, but it is that spooky time of year after all…
I came across a recent Wall Street Journal article detailing how many people without children leave unexpected inheritances to charities, distant relatives, friends, or even pets. It’s a growing issue since more adults, particularly millennials and Gen Z, either delay family formation due to the rising cost of living, or just see kids as a burden on the YOLO lifestyle.
Regardless of the reason, estate planning is more important today than ever, even though it’s probably the last thing on the minds of the under-40 crowd. Working with small business owners who, by nature, handle many complicated issues at once, estate planning is usually just one item on the checklist that we carefully consider and execute. For folks who don’t have the right guidance, however, weird things can happen. Let’s double-click on that.
Since 64% of adults don’t have a will, state laws generally determine how assets are distributed, potentially resulting in windfalls for people who they don’t even know all that well. In the financial planning industry, there are countless tales of massive IRAs or other assets going to an ex-spouse or a disgraced former business partner. Another all-too-common occurrence is stacks of stocks and funds going over to the state as an unclaimed asset – what a waste.
With technology and a few hours of dedicated time, you can avoid these unfortunate outcomes. If you aren’t partnering with an advisor, here’s what you can do:
- Name beneficiaries on all of your accounts
- Create or update a will
- Create or update a power of attorney and healthcare proxy
- Choose an executor of your estate
- Talk with your heirs and outline the why behind your wealth and what they are set to inherit
Don’t wait until receiving news of a terminal illness to complete these tasks. The easiest thing you can do to get started is to simply log in to your accounts (IRA, 401(k), HSA, etc.) and ensure that the beneficiary page is complete and correct. This takes 10 minutes. Taxable brokerage accounts and checking & savings accounts work similarly if they have a Transfer on Death feature. That’s just step one – the onus is on you to keep that ball rolling.
