From Kendall Bauer
Dear Investor,
Our third child joined our family earlier this year in February, and now my wife and I find ourselves digging out our will and estate-planning documents for the third time in five years. Between the brief moments of peace in our house, when there isn’t a little boy falling off a bike, feeding the dog her third meal under the table to avoid eating vegetables, or waking up in the middle of the night with a hunger loud enough to wake the entire household, we find ourselves having the tough conversation about what we would want to happen to our family and our assets if something were to happen to us.
It’s not exactly the conversation that makes it onto our list of favorite date-night topics.
Thinking about our own mortality can be uncomfortable, especially when you’re young and, at times, feel invincible. But having a plan in place can provide something incredibly valuable: peace of mind. If something were to happen to you, your family wouldn’t have to guess what you wanted. You’ve already done the hard work for them.
And this isn’t just for wealthy retirees or people with complicated estates. You may not have a million-dollar portfolio. You may not own multiple properties. You may not even have children yet. But you probably have a retirement account, a bank account, some personal belongings, and people you care about.
Estate planning isn’t really about how much money you have. It’s about making your wishes known and giving the people you trust a road map to follow.
There isn’t one universal estate-planning tool. Wills, trusts, beneficiary designations, financial powers of attorney, and healthcare documents can each serve a different purpose. The goal isn’t necessarily to have every document imaginable. It’s to understand the tools available and make sure the ones you do have reflect your wishes.
A will can outline how certain assets should be handled and can be especially important for parents because it allows you to name the people you would want to care for your children. A trust can provide another way to manage and distribute assets, depending on your circumstances and goals. Beneficiary designations can direct assets such as retirement accounts and insurance policies to the people or organizations you choose. Financial and healthcare power of attorney can give someone you trust the ability to make important decisions if you are unable to make them yourself.
None of these tools is inherently better than the others. They simply solve different problems.
Sometimes, the most important part of estate planning has nothing to do with money.
If you have children, who would care for them if something happened to you and your spouse? Who would make financial decisions on their behalf? Who would make medical decisions for you if you couldn’t make them yourself?
These aren’t fun questions, but they are important ones. The documents aren’t there because you expect something bad to happen. They’re there so someone else doesn’t have to make these decisions while also trying to figure out what you would have wanted.
The same goes for your investment accounts. A beneficiary designation that was set up years ago may no longer reflect your life today. Maybe you got married. Had a child. Bought a home or vacation property. Started a business. Or simply accumulated more assets than you expected when you first opened the account.
Life changes. Your estate plan should change with it.
And fortunately, getting started is easier than it used to be. There are more resources available than ever to help organize your estate-planning documents and understand the decisions you need to make. Your financial advisor can also help you review beneficiary designations and identity areas that may need attention, while an estate-planning attorney can help with the legal documents and decisions specific to your situation.
The important thing is to start somewhere.
Find your will. Review your beneficiaries. Make sure your partner or family knows where important documents are located. Think about who you would trust to make financial and healthcare decisions for you. Then revisit those decisions as your life changes.
Estate planning isn’t about expecting the worst. It’s about making things a little easier for the people you love if the worst happens to you.
The hardest part isn’t necessarily the paperwork. It’s having the conversation.
But once you have it, you may find that the peace of mind it provides is worth far more than the discomfort of having it.
Until next time,
Kendall
Kendall Bauer is vice president and investment advisor at Landaas & Company, LLC.