Why Working With a Trusted Financial Advisor Makes the Estate Planning Process Easier
Estate planning combines legal, financial and emotional decision making. Drawing on the help of trusted advisors is the best way to make sure your estate plans will actually do what you want them to do. As your estate planning attorneys help you sort through your choices around trusts, wills and other estate planning documents, a trusted financial advisor can help you make sure that all your plans are financially sound.
A financial advisor can help you take everything into account.
Estate planning is for everyone, even young adults who are just starting out. The process is pretty straightforward when you’re young, single and have few assets. As you get older, your financial situation generally gets more complex. Your money gets divided among more and more places as you do things like open new retirement accounts, expand your portfolio, pay down debt, buy rental properties and make charitable gifts.
It can be a lot to keep track of, even for people who are fiscally responsible. We want to make sure that all of your assets are accounted for and considered while estate planning. A trusted financial advisor can help you verify that you’re looking at your full financial picture when making decisions about how to pass down your assets. Your advisor may also be able to help you pull together account statements and other documentation that you may need while estate planning.
A financial advisor can help you keep beneficiary designations current.
During estate planning, you’ll get the chance to earmark certain assets for certain people. You can use your will and/or trusts to pass money and property to loved ones. But certain kinds of accounts—retirement and investment accounts, primarily—require you to designate beneficiaries when you first establish them. You can’t pass money held in these accounts through your will. Whomever you designate as the beneficiary on the account itself will inherit any money left in it when you die.
Those designations may need to be monitored and updated throughout your life. For example, if you’ve been divorced or widowed, you may need to remove your former spouse as the beneficiary of an old retirement account. Or, if you’ve somehow forgotten to designate a beneficiary for one of these accounts, your advisor should alert you so you can remedy it.
Once your initial estate planning is done, you may only meet with your estate planning attorneys when something big changes. Your financial advisor may have more of an active role in your life, and can help you with the logistics of keeping your financial accounts and beneficiary designations up-to-date between check-ins with your attorney.
A financial advisor can help you plan for affording long-term care.
Any one of us may someday need long-term care. With average nursing home costs currently exceeding $200 a day, few people are able to afford long-term care costs out of pocket without advance planning. If you’re forced to spend your life savings on your care in your final years, you may have little left to pass to your heirs.
As part of your estate planning process, a trusted financial advisor can help you prepare for these potential costs in a few ways. Some people opt to redirect some money into long-term care insurance, or into an account that’s earmarked just for these expenses. Your advisor can help you determine the best way to maximize your money.
The other option is to apply for long-term care coverage from a government program, if you do end up needing this level of care. Advance financial planning is really useful if there’s a chance you’ll take this route. Here in Massachusetts, where Medicaid is part of the MassHealth program, seniors and people who need long-term care have to meet stringent financial criteria to qualify for coverage. Applicants have to prove that they’re unable to afford their own care, which means your financial history will be scrutinized if you someday apply. You won’t qualify for coverage if you have too many assets. MassHealth also has rules about how an applicant can spend down assets to meet the program’s financial criteria, so you can’t simply transfer your home and money to a family member when you’re ready to apply. (Our blog has many articles if you would like to learn more about applying for MassHealth).
Strategizing with your financial advisor during the estate planning process allows you to protect those assets now, so they’re not a factor if you do need to qualify for long-term care in the future.
A financial advisor can help you make sure your estate plan works financially.
Your estate planning attorneys can help you with all of the legal components of your estate plans. Your financial advisor can help you align your estate plans with your short- and long-term financial goals. Your plans for your retirement, your approach to investing and your goals around building generational wealth are just some of the things that you and your advisor might discuss while you’re crafting your estate plans.
Ultimately, the goal of estate planning is to prepare for whatever your future may bring. Having both an estate planning attorney and a trusted financial advisor sign off on your plans should give you the reassurance that you’ve put all the right pieces in place.
What questions or concerns do you have about your own estate planning process? I know it can seem daunting, but estate planning can be quicker and easier than you might expect. Contact me today!
Jessica Pesce specializes in estate law and elder law. She has helped many people with their estate planning and tax planning since joining Ladimer Law in 2017. Jessica has been named a Rising Star by Super Lawyers three years running.