At the beginning of the new year, Keen Wealth makes it a priority to run through our financial planning checklists with clients. This helps us put a bow on the year we just finished and make sure that folks have everything in order to try to make the year ahead as productive and prosperous as possible.
I love seeing clients’ eyes light up when we talk about some fun things on our checklists, like preparing for a child going away to college, big travel plans, or any exciting developments in their professional lives.
But once we work our way down to estate planning… well, some of that enthusiasm starts to drain away.
We certainly understand that thinking about what’s going to happen to your assets when you’re not around to enjoy them isn’t a fun topic of discussion. That’s why so many folks put off their estate planning. “Out of sight out of mind” is certainly an easier alternative. But what’s easier for you now is going to make things a lot harder for your loved ones when the time comes if you delay.
Here’s a few of the major items on the estate-planning checklist we use at Keen Wealth. I’m not saying these items are pleasant to think about, but you’ll be surprised how much peace of mind you and your spouse will feel once you’ve made some decisions around these issues.
1. Create a balance sheet.
First, add up all your assets, including:
- Real estate
- Personal valuables (vehicles, jewelry, etc.)
- Bank accounts
- Investment accounts
- Retirement plans (401(k), ESOP, IRA, pension, etc.)
- Business interests (ownership, equipment, etc.)
- Benefits payable upon death (life insurance, Social Security, etc.)
From this total, subtract your liabilities, such as:
- Credit card debt
- Vehicle loans
- Personal loans
Now you have a rough idea of your net worth, and a list of “big ticket” items you’ll want to think about bequeathing to beneficiaries.
2. Determine what estate planning documents you need.
At the bare minimum, everyone should have:
- Last Will and Testament, which details how you want your assets distributed to heirs and charitable organizations.
- Power of Attorney, which authorizes someone of your choosing to act on your behalf if you’re incapacitated.
- Health Care Directive, which details what kind of care you want should you become incapacitated.
- Living Will, which authorizes someone to make medical decisions for you if you can’t, based upon what’s stipulated in your health care directive.
Discuss your legacy wishes with your spouse.
Like every other part of your retirement planning, clear and open communication with your spouse is key. If you’re having trouble opening this line of dialogue, here are some questions to get you started:
- Do we have all our important documents (personal ID, bank accounts, legacy documents, etc.) organized in one place?
- Who should execute our will?
- Who are our key beneficiaries? What do we want to leave them?
- What charities or causes would we like to support with our legacy?
- What are our medical wishes in the event one or both of us become incapacitated?
- If one of us passes, where will the surviving spouse live?
4. Meet with professionals.
Congratulations! The hard part is over.
Once you and your spouse have a general idea of what your estate plan should look like, bring it in to Keen Wealth. We’ll go over your wishes and discuss the best strategies to incorporate them into your financial plan. We can also put you in touch with attorneys who will make the necessary legal arrangements. Then, when the next year rolls around, reviewing your estate plan will already be on our checklist to make sure there aren’t any changes you’d like to make.
I understand that these are difficult questions to tackle. Many folks prefer to tell themselves, “I won’t be around, I don’t care, the good kid will take care of it.”
Unfortunately, your state of residence doesn’t consider this a legal estate plan. If you don’t have all your essential documents in order when you pass, the state will settle your estate according to local law. In even the closest families, this process can get really messy once the courts start deciding where your assets will end up.
If you’ve been putting off your estate planning, please don’t wait any longer. Come in and talk to us about how we can help you put a plan in place that will extend your legacy for years to come while also making a difficult time a little bit easier on your loved ones.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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