The Time for a Map is BEFORE You Get Lost

For as long as I can remember, we have stressed the need for proper titles, proper beneficiaries and the need to keep one’s financial house in order both in this space and in periodic reviews with clients. Whether that planning requires a trust, a transfer-on-death (TOD) designation or other tools like powers of attorney or advance medical directives, it is extremely important that these are not only implemented but regularly reviewed and updated as necessary.

Raymond James Trust sends a monthly email to advisors with various resources and last month there was an article from Forbes magazine titled, “Most Estate Plans Fail, Don’t Let Yours Be One of Them,” and we cannot recommend the content strongly enough.

Many estate planners admit that often times, estate plans don’t achieve the owners’ objectives. The good news is that the majority of these failures were preventable.  This is because most failures are the result “nontechnical aspects of the plan, what some refer to as the human side, or soft side, of an estate plan.”

Below you will find a few tips to help ensure your estate plans are successful:

• Remember to fund the trust(s). Trusts are set up to avoid probate and ensure assets are managed appropriately in cases of disability. In order for those goals to be met, assets must be transferred to the trust. Financial accounts, real estate deeds, automobiles, and other assets must be put in the trust’s name.
• Make sure powers of attorney and advance medical directives agents know about the documents AND have access to them. These legal documents appoint agents to act on your behalf when needed. Without awareness of them and/or access to them, your agents will likely find it difficult, if not impossible to act on your behalf.
• Remember to update the estate plan(s) as life events occur. An estate plan will change as life happens. At least every few years, review the plan and your situation with the estate planner and make any necessary updates.
• Inform your heirs. Advise them of the general value of the estate, assets and liabilities in it, and the outline of your plan. This will keep relevant parties from being surprised.
• Prepare your heirs. Try to educate them about how to handle the wealth and your intentions. If financial literacy is a concern, consider putting the wealth into trust(s) so that others will make the major decisions. “When heirs aren’t prepared, wealth often disappears.”
• Avoid being a statistic: Use these tips to avoid falling into one of the categories below. BMO Wealth Management report titled Estate Planning for Complex Family Dynamics found:
  • 40% of parents never discussed their estate intentions with their children
  • Only 28% of adults said they knew details of their parents’ estate plans
  • 40% of those whose parents passed away believed their parents’ estate plans were unfair
  • 25% of married adults said only their spouses know the locations of their estate planning documents
• Follow through on your plan. You should leave every meeting with the estate planner with a checklist of actions you need to take. Follow the checklist.

Simply put, while creating an estate plan is important, following through on that plan, making sure it is current and others are informed, prepared, and educated on how to handle the plan (or contingencies are made) are all paramount to success.  We have dealt with death and loss more than we have cared to over the years. The difference between a family who planned AND implemented and a family who did not is stunning. Create and review your “roadmap” long before you need it.

-Gary Weiss, November 2020

Forbes: Most Estate Plans Fail, Don't Let Yours Be One of Them

Any opinions are those of the author and not necessarily those of RJA or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional.