As a financial professional, part of my commitment to my clients is to help guide their financial affairs. One area that is particularly critical to get right, but is often overlooked is estate preparation and the protection of your loved ones from the unexpected.
I recently had the opportunity to sit down with Paul Yokabitus, an Estate Planning Attorney with NC Planning to get his input on some of the common estate planning questions I hear from clients.
Paul, let's start with something very basic. What are the key documents that everyone should have in place?
- Financial power of attorney
- Healthcare power of attorney
- Living Will
There are instances where a trust-based plan may be appropriate, but our job as the attorney is to get you to your desired solution in the easiest and most cost-effective way possible - that may or may not include a trust. If you have young children we would also be addressing guardianship designations during the planning process.
Often times the response I get when I ask young professionals if they have an estate plan in place is "No. We don't have any kids or significant assets yet, so we don't need one. Right?". What would your advice be to people that share that same belief?
What I often tell people is that estate planning isn't just about planning for when you die, it is about protecting yourself while you are alive. A lot of people don't realize that if they are seriously injured in an accident, without documents in place - it is very difficult for the people that care about them to make financial and medical decisions on their behalf.
Most people also don't realize that if they die without documents in place, the default distribution plan allocates a portion of their probated estate to their parents, even if they are married. I like to refer to estate planning as empowered planning. The idea is that you are taking initiative now to avoid the defaults from ever coming into play.
Something I've seen a lot throughout my career in financial planning is the use of online tools to take care of estate planning needs, often in an attempt to save on the cost. Is this really a good idea?
I always say that having some type of plan is better than having no plan. With that being said, these plans should only be considered when trying to cover a shorter period of time or if cost is a greater concern than the plan itself. They aren't designed to be a long term comprehensive plan. You also don't have the opportunity to establish a relationship with an attorney, which can be important when changes occur in your life or with the laws surrounding estate planning. Based on my experience most DIY estate plans fall short of what clients actually want to have happen. I've probated DIY wills and probably 9 out of 10 times there is an issue that makes the process longer or more expensive for the family.
What are some of the key things people should look for when deciding to work with an estate planning attorney?
- There should always be a free initial consultation offered - the attorney shouldn't put a road block between you and your planning options.
- You want to make sure there is a signed representation agreement that covers the terms and scope of the services, as well as the cost.
- Look for a fixed fee estate planning attorney.
- Read through their online reviews. This can be an excellent way of determining what you could expect when working with that attorney.
- Responsiveness. You want to work with someone that is a good communicator and returns communications from you quickly.
What are some common mistakes you see people making when it comes to estate planning?
- Not planning with alternatives. Many people only name one back up and that doesn't provide enough depth to a comprehensive estate plan. You want to have a "deep bench" if possible.
- Not updating their plan. Estate planning has gone through many changes over time and will likely continue to change in the future. It is important to review and make changes to your plan when this happens.
- Not coordinating your estate plan with your financial life. This means updating the titling or beneficiaries on your different assets. Working as a team with your financial planning professional can help ensure this is done properly.
- Waiting too long to get something in place. Most people procrastinate until something happens and at that point it might be too late.
I want to thank Paul for providing us with great information. If you want to learn more about how he works with clients click here.
As you can see, in this month's blog, we've tackled some questions that I hope will help you think about your priorities and prompt a discussion with your loved ones. Please feel free to share this information with your friends and family; everyone deserves the benefit of professional recommendations and the confidence of knowing that their future wishes are protected.
If you would like to review your current estate provisions please call my office at 919-463-0018.