The estate planning process can prove quite difficult, as it forces people to face their own mortality. Because of the emotions that can arise, it is important to ensure that you have the best people in your corner who continually keep your interests at the heart of the conversation and remain thorough in exploring relevant topics. Perhaps the most important person in this whole process is an experienced financial adviser. This person can ensure you consider all the important points while guaranteeing that your estate plan accounts for all your assets, and intentions for loved ones. Moreover, this person often ends up playing an important support role as that plan gets executed. Below are some of the signs that your financial adviser is the right person for the job.
1. A lot of the time is spent on non-probate assets
During the estate planning process, there must be a focus on those assets that go through probate, the court system that oversees inheritances, as well as those assets that skip the probate process and are distributed directly to named beneficiaries. Most adults in the United States have several assets that do not pass-through probate and thus do not regularly get represented in a last will and testament. Important examples of this are retirement plans and life insurance policies, which require that you name beneficiaries directly through the custodian or insurer. When some beneficiaries do not get named or represented properly, the consequences can be catastrophic, such as a life insurance policy getting passed to a former partner rather than a current one, or an IRA being distributed to a beneficiary list that doesn’t include all intended parties. These issues can also cause a lot of additional administrative costs. Great financial advisers will help you account for and track these assets to make sure that all designations accurately reflect your current choices, and actual intentions.
2. Family meetings are part of the process
Not all financial advisers will want to involve your family in the process, but those who do are really thinking about the future. Forming these bonds early will help ensure that assets are passed easily and efficiently down the road and can even provide some hints about how those individuals may manage their inheritance. Family meetings help keep everyone on the same page so that there are no surprises in the future. Plus, these meetings can help members of your family start thinking about their own estate plans early so that they are better prepared when the time comes. Furthermore, the financial adviser can help answer any questions your family members may have about the process of transferring assets, what the tax consequences may be, and how best to protect those assets in the future.
3. The full gamut of inheritance vehicles is explored
Financial advisers who have less experience with estate planning often assume that you will want to pass assets directly to your heirs. However, this is often not the best option. For many people, a lifetime trust, or a “special needs trust” is a better option because they protect assets from creditors, and potential bad habits, while also possibly providing tax other benefits. Several other types of trusts exist depending on your particular circumstances and a financial adviser should explore these with you to figure out the best option. In some cases, an option other than a trust may be the best choice. The important point is that your financial adviser is concerned with exactly how an heir will inherit an asset, not just which particular assets go to that person. When your adviser plays an active role in this process, it makes it easier for them to facilitate the inheritance process down the line.
4. You can name the pros and cons of your estate plan
Financial advisers have a duty to inform you of the particular pros and cons of any choice that you make. When it comes to virtually any financial decision, there is always a downside that you need to consider, even if the primary disadvantage is giving up the opportunity for a higher which typically comes with greater risks. Financial advisers should never try to hide or downplay the potential risks of a plan. You need to understand the complete costs of a particular decision before you can make it confidently. This balances out the conversation about the benefits of a particular decision. You will never find an option that is entirely advantageous without any disadvantages, but you can minimize the drawbacks and limit them to ones that may not affect you. This conversation should also consider how different market scenarios would affect you, which is particularly important when considering insurance coverage to protect your assets.
5. Regular review meetings are scheduled
One of the most important aspects of estate planning is the fact that it is a continual process rather than something you do just once. Your financial adviser should schedule periodic meetings to review your family situation, legacy intentions, and asset allocation strategy. These regular meetings can help to ensure that nothing falls through the cracks and that you think critically about changes in your circumstances (think births and deaths, etc.) and how they will affect your future. Such meetings will also let your financial adviser review your goals for your estate plan and check in about whether or not anything else has changed, such as health or income needs. These goals may significantly affect how you are counseled, so it is important to be candid with your financial adviser. If your financial adviser is not asking questions about your goals or tailoring the advice you get to your answers or is not familiar with and conversant with wills and trusts and powers of attorney, consider using a different advisor.