No Estate Plan? You’re Planting the Seeds for Family Dysfunction

Estate planning is something that makes sense for every person or family. Without one, it could cause unintentional chaos when you pass.

As retirement nears, evaluate the legacy you want to leave behind for your loved ones. You may think you don’t need an estate plan as it’s only for those with millions or billions of assets. When in reality, an asset is anything you possess. This includes your car, home, family heirlooms, and even your pets.

It’s completely understandable that discussing family skeletons or emotionally charged issues may not be the most enjoyable conversation, but ignoring estate planning could lead to potential family dysfunction. Instead of dwelling on the negative aspects of a poorly handled will, let’s focus on the benefits of having a robust estate plan. By creating an estate plan, you can provide for your loved ones even after you’re gone. Here’s what you need to know.

Why is Having an Estate Plan So Important?

An estate plan is a legal document that outlines how your assets and property will be distributed after your death. Estate plans also include instructions for healthcare decisions and guardianship of children. It’s an essential tool for ensuring your wishes are carried out and your loved ones are taken care of when you’re no longer here.

Many people assume that estate planning is only necessary for the wealthy, but this couldn’t be further from the truth. Regardless of your net worth, having an estate plan in place is critical for several reasons:

1. Ensures Your Wishes Are Carried Out – Without an estate plan, the distribution of your assets will be left up to the state’s intestacy laws. This means that your assets may not be distributed according to your wishes or in a way that’s best for your family.
2. Protects Your Loved Ones – An estate plan can also protect your loved ones. For example, you can name a guardian for your beloved dog, set up a trust to provide for a disabled/in-need family member or make sure that your spouse is taken care of if something happens to you.
3. Can Reduce Conflict – When you have a clear and comprehensive estate plan, there’s less room for family members to argue over your assets and property. This can help reduce conflict and ensure your family remains united after your death.

Having understood the significance of estate planning, let’s examine why discussing your estate plan sooner rather than later can help relieve future conflict.

It’s Time to Talk About Death

Family discord is the most significant risk to the continuity of family wealth across generations. In fact, lack of communication and trust account for 60% of wealth transfer breakdowns.

This is one of the reasons many people avoid these uncomfortable conversations. Some parent keep their children in the dark about their wealth, which can lead to a great surprise upon their passing. This revelation can cause emotional responses such as resentment and wondering why they weren’t trusted with the information. Additionally, if children are unprepared to manage their wealth, it can lead them to feel overwhelmed.

Communicating openly about the extent of your wealth helps ensure heirs are prepared to manage it successfully in the future. It’s essential to consult with your financial advisory team to determine the amount and detail of information to provide to your family, as every situation is unique.

We will all die someday, so starting the conversation with your family now will ultimately lead to a more peaceful transfer after you’ve gone.

What Should Your Estate Plan Include?

When creating an estate plan, it’s essential to consider potential issues that could arise. At the end of the day, your estate plan should be customized to meet your unique needs and goals. By addressing these issues, your estate plan can effectively ensure your wishes are carried out and your family is cared for as you planned.

 Here’s a look at some essential documents that every estate plan should include:

1. A Will – A will is a legal document that outlines how your assets will be distributed after your death. It also names an executor to oversee the distribution of your assets.
2. A Trust – A trust is a legal entity that can hold your assets and distribute them according to your wishes. Trusts can be useful for minimizing estate taxes, providing for minor children, and protecting assets from creditors.
3. Power of Attorney – Power of attorney is a legal document that authorizes someone to make financial and healthcare decisions on your behalf if you become incapacitated.
4. Living Will – A living will outlines your wishes for end-of-life medical care.

Starting the estate planning process earlier in life is crucial, regardless of misconceptions about time, assets, or affordability. Currently, around 60% of Americans don’t have an estate plan. More alarmingly, 1 out of 4 Americans without a will say nothing would motivate them to get one, and more than 40% say they won’t bother until their life is in danger. Dying intestate (having no will) will result in a state court deciding who gets your assets and, if you have children, who will care for them.

Pre-retirees and retirees should make it their top priority now to ensure they have an estate plan in place. It will help guarantee that their wishes are carried out and their loved ones are taken care of after they’re gone.

How to Get Started

If you haven’t created an estate plan yet, it’s never too late to start. The first step is to meet with an experienced estate planning professional, such as a fiduciary advisor, who can help identify your goals and create a customized plan that meets your needs. This process includes an assessment of your assets and liabilities, identifying potential beneficiaries, and determining how your assets will be distributed.

Make your estate plans as complex as necessary but as simple as possible. This helps ensure you understand what you’re doing and that your plan can be sufficiently explained to your heirs after your passing, minimizing misinterpretation.

Additionally, the process of administering wills, dubbed probate, is handled on a state-by-state basis. This is why it is recommended to have your will completed by a fiduciary highly experienced in estate planning in your state of residence. You wouldn’t ask your dermatologist to perform heart surgery, would you?

How do you choose the right advisor? Approach friends and family members you deem the most responsible and ask whom they used. Additionally, check reviews and experiences, and speak with another one of their clients to hear their first-hand experiences.

At APO Financial, our team of fiduciary advisors can help explain the legal and tax implications of estate planning and strategize the best course of action. With the help of our talented team, you can have peace of mind that your wishes will be carried out and your loved ones will be taken care of when you’re no longer here.

Final Thoughts

Estate planning is essential for everyone, regardless of age or wealth. While there is no one-size-fits-all solution, it is important to note that you can change your plans at any time. Failing to create an estate plan can plant the seeds for family dysfunction and unnecessary stress when you’re no longer here. By taking the time to create a comprehensive estate plan, you can ensure that your wishes are carried out, and your loved ones are protected.

At APO Financial, we help you look at the bigger picture and determine what kind of legacy you want to leave. Our approach to estate planning diverges from traditional methods as we strongly emphasize considering the broader view.

Our services encompass a range of strategies, from minimizing taxes to evaluating life insurance options and guiding clients on avoiding probate. We work closely with our clients to determine their desired legacy and develop a comprehensive plan that not only realizes their posthumous wishes but also provides protection to their loved ones. Our goal is to optimize the assets and wealth our clients leave to their heirs.

Whether you reside in Florida or Colorado, take action and start planning for the future today. Schedule a complimentary consultation here, and let us help you on this important journey.

© 2023 APO Financial. All rights reserved.

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Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all.. Prior to making any investment, insurance, financial or legal decision, you should always seek individualized advice from a financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of your individual own situation

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Information relating to annuities is intended for educational purposes only and should not be construed as comprehensive or all-inclusive. Therefore, it should not be regarded as a complete analysis of the subjects discussed and should not be used to make an investment decision.

Annuities can be an important part of an overall portfolio but may not be appropriate for everyone. Before purchasing an annuity, it is important to understand the details of the product. Certain products may not be available in your state. The terms of each indexed annuity varies. It is always important to speak to a financial professional. about an annuity’s features, benefits and fees, and whether an annuity is appropriate for you, based on your financial situation and objectives. Participation rates, cap rates and/or index spreads may be subject to change by the insurance company according to the annuity contract provisions. If the insurance company makes such changes, this could adversely affect the return. Guarantees of an indexed annuity are backed by the claims-paying ability of the underwriting insurance company. The surrender charge period for a product may be longer, and the surrender charges may be higher than other annuity products. Indexed annuities are long-term investments. If the annuity contract is surrendered early, there is the possibility of a surrender charge being imposed and/or the funds may be subject to income taxes. The IRS may also impose a 10% penalty on withdrawals prior to age 59 ½, depending on the circumstances. With indexed annuities, there is the potential to lose money, depending on the product charges and minimum guarantee contract provisions. For additional information on annuities, reference the following websites: The FINRA (www.FINRA.org), the Securities and Exchange Commission (www.SEC.gov), Insured Retirement Institute (www.irionline.org), the National Association of Insurance Commissioners (www.NAIC.org) or your state's insurance department.