Thinking about what to leave your loved ones after you’re gone can be difficult, but it’s an important decision to make. And in our experience, less than 10% of the people we speak to have a well-thought out estate plan.
A good estate plan should act as a bridge to assess where you are financially, and where you are in your life in general. It should also serve as a catalyst for more detailed and effective financial planning.
But if you’re unfamiliar with the concept of estate planning and wills, or you don’t think it applies to you at this point in your life, this blog post is for you. We’ll explain why it’s so important, the common mistakes we see, and why you need to think about planning for the unthinkable, before it’s too late.
Let’s start with just some of the reasons why people put off estate planning:
Why Do People Put It Off?
Most people tend to think that estate planning is age-specific, with many considering it an activity for the over 40s. However, age is completely irrelevant. In reality, anyone who has a significant other, dependents, or accelerated earnings should put an estate plan in place.
Another reason for overlooking this important activity is time. Day-to-day life gets in the way constantly. When you’re running errands, looking after family, fulfilling social obligations, or simply working hard to provide for your loved ones in the here and now, thinking about the future can become less pressing.
What’s more, estate planning requires coming to terms with your own mortality, and that’s something many of us just aren’t prepared to do. And for those of us who can accept one of life’s guarantees (the other being ‘taxes’) then family dynamics can throw a wrench in the works. When you’re not sure what to leave and to whom, creating an estate plan can quickly find itself low on your list of priorities.
Instead of putting it off, you should think of reviewing your estate in the same way as getting an annual physical. Life keeps changing and your plan must identify and incorporate those changes; and doing so annually will give you peace of mind that everything is financially healthy.
Common Estate Planning Mistakes
Safeguarding your family’s financial well-being after you’ve passed is crucial. The last thing you want to leave behind is a mess of debt, tax, and overall confusion as to who should benefit from the contents of your estate (i.e. your money, land, property, and investments).
While taking that first step and planning for the future is admirable, there are a number of pitfalls you must avoid. And working with a professional can certainly help you do just that.
Here are some of the common mistakes we see when clients first begin the process of estate planning:
1. They don’t have anyone to appoint as a trustee.
First, what is a trustee? Well, a trustee is simply the person or organization that oversees the estate of a third party. They are entrusted to make decisions in the best interests of beneficiaries.
Appointing a trustee is a critical part of estate planning, and something we can help you do.
2. They don’t know who will be the executor(s) of their will.
An executor is responsible for the distribution of the estate of the deceased in accordance with their will. Typically this will be a partner or a spouse, but if you’re unsure who to name we can provide guidance.
3. They have marital or partner issues.
Some people begin the estate planning process against the backdrop of marital or relationship problems. They often rush into decisions, leaving their estate at risk should the relationship breakdown. And this can result in dependents losing out.
While we can’t act as marriage counselors, we can help you address these concerns by structuring your options in order to better protect your assets in the event of your death.
4. They haven’t considered future earning potential.
This is particularly important for athletes or those within the entertainment industry. Estate planning for such individuals is unique because their earnings are front loaded, and it’s unknown how long it will be until they retire or get injured and have to cut their career short. This leaves many former athletes and entertainers worried at the prospect of supporting themselves into retirement, and concerned with what they’ll be leaving behind for their loved ones.
We can help put in place financial planning measures to alleviate those concerns.
The Questions We Ask Our Clients
When we begin the estate planning process, we like to ask the following questions:
- What do you want to do with your estate? What are your goals?
- What are your thoughts regarding your legacy?
- Do you want to be philanthropic?
- Do you want to be active in your planning and review plan annually or be hands-off?
- Do you want your spouse/partner and/or family to be actively involved in planning as well?
This helps us create a clearer picture for what you want to achieve with your estate. For instance, many people like to be philanthropic by donating part of their estate to charity. This is obviously an inherently good thing to do, but it also brings with it specific tax benefits.
Meanwhile, some prefer to be heavily involved in all aspects of the planning process, even going so far as to include their family, while others are happy to be hands-off and allow the professionals to present the best course of action. Speaking of which…
How Polay+Clark Can Help
Simply getting started with estate planning is often the hardest part. We can help you overcome your indifference to or anxiety about this important task by handling the logistics on your behalf.
We’ll track down the necessary documents and gather essential data, before pulling together the best options that reflect your life, your family situation, and your legacy wishes.
From there, we lay out the agreed plan, ready to be drafted by your estate planning attorney. And if you don’t have one, we can recommend one for you.
Don’t Leave It Too Late
Planning for a day that doesn’t bear thinking about is one of the hardest things you’ll ever have to do. But to make sure your family is well looked after should that day come sooner than expected is not only responsible, it’s the right thing to do.
Our friendly staff here at Polay+Clark are ready to help you take that first step towards creating an effective estate plan that will provide for your loved ones.
Get in touch today to find out more about our services.