Stableford Capital Insights

What Are the 6 Most Important Aspects of Estate Planning?

You have spent your lifetime building your estate, investing funds, allocating assets and planning for the future. But when that lifetime ends, you want to make sure your legacy continues and what you leave behind is not tied up in courts and spent on taxes and fees. One key way to

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help ensure that your assets cover your expenses and go where (and to whom) you want them to is to work with your financial advisor on estate planning.Estate plans are beneficial for everyone, no matter your estate’s value or your net worth. Planning ahead can help you avoid family conflicts, unexpected taxes, higher costs and other potentially devastating consequences. Minimize the challenges by facing the most important aspects of estate planning now.

Your Estate Planning Checklist

Although most people know that an estate plan can help you evaluate your financial needs and assets to make sure that your heirs are provided for in the best possible way, it often isn't kept up to date with life changes. This can include things like lifetime planning as the family grows, as well as the dispersing of property upon death or when the family structure changes, such as in the case of divorce. And younger professionals or those who spent years building a career and their investments may have deferred estate planning, thinking it was not a top priority.Once you’ve determined its time to create or update your estate plan, what exactly should it include? While estate plans are as unique and custom as your financial situation, there are six items every estate plan should include:

    1. A will or trust is an essential component of any estate plan. Both ensure your property is divvied up according to your wishes but the major difference and benefit of a trust is that the assets avoid probate which saves time, court fees and potentially reduces estate taxes.
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    1. It’s important to draft a durable power of attorney (POA) so that if you are incapacitated, a person you assign can act on your behalf. POAs have the power to transact real estate, complete financial transactions and make other legal decisions for you.
    2. Consider your beneficiary designations. They are essential as this is the person(s) inherits your assets after your death. Without a beneficiary, a court could decide the fate of your estate and assets.
    3. A letter of intent defines what you want to be done with particular assets. Some letters even provide funeral details or other special requests.
    4. In the event of incapacity, a healthcare power of attorney (HCPA) is appointed to make important healthcare decisions on your behalf. HCPAs are typically a family member or a spouse.
    5. If you have minor children, having guardianship designations is incredibly important and often overlooked. Without these designations, a court could rule that your children live with a family member whom you wouldn’t otherwise have selected.

It’s a Matter of Trust

Although wills are important estate planning tools, they simply aren’t enough, especially with multiple assets in play. An estate plan should also include the use of one or more trusts that work in conjunction with, or in addition to, a will.

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The five common types of trusts – living, testamentary, irrevocable life insurance, charitable remainder and qualified domestic – each has its own benefits and is useful in different circumstances.Establishing a trust fund is a streamlined way to ensure that your assets are dispersed the way that you envisioned. For example, you might set up a trust to make sure that your grandchildren are provided with college funds, or that your favorite non-profit organization receives an endowment.Among the chief advantages of trusts, they allow you to:

        • Put conditions on how and when your assets are distributed after you die.
        • Reduce estate and gift taxes.
        • Distribute assets to heirs efficiently without the cost, delay and publicity of probate court.

Trust Over Will

To truly ensure that the wealth and estate you’ve built throughout your lifetime goes to your beneficiaries as you intended, a trust is far more crucial than a will.

      • A trust can be used to avoid probate, a court-supervised process that’s required to pass an estate when there is a will or when a person dies in intestacy. Ultimately avoiding probate can save time, money and keep the wealth transfer private.
      • A trust allows you to safeguard any of your beneficiaries’ inheritance from creditors. This ensures the assets placed in a trust will be accessible to future generations.
      • If you have a child with disabilities, a trust can protect any government benefits they receive. The assets left in a trust can also help pay for expenses that are not covered by these government benefits.
      • Trusts can reduce estate taxes if you plan on leaving your assets to your family, specifically noncitizen spouses and non-spouse family members.
      • If you plan to leave money to a minor, a trust allows him or her to receive this money without court intervention. This will save time and ensure the person you want handling your assets can do so.
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While every financial situation is different, the consensus is clear: keeping a current estate plan is a must and prepares your loved ones for the unexpected. A will is important, but having a trust is essential. A trust protects your beneficiaries and your investments, ensuring that all of your assets go to the people you want handling your estate.Since Stableford Capital takes an integrated advisory approach, which includes financial planning, asset management and tax planning, our financial advisors can assist you in every step of the estate planning process. To learn more about how to begin or update your estate plan, contact Stableford today by calling 480.493.2300 or contact us online.

Nikki Sutcliffe
Nikki Sutcliffe is Stableford Capital’s Director of Advisory Services. Prior to joining Stableford, Nikki worked at Charles Schwab for five years where she was an investment advisor and most recently as a financial planner. She started her career as a portfolio manager at Girard Partners and worked there for seven years while helping to grow the firm. Nikki graduated from Penn State University with a B.S. in Finance and earned her CERTIFIED FINANCIAL PLANNER™ designation in 2013.