Outsmart the Certainty of Death and Taxes: Make a Will

Aug 31, 2022 Heather Belli Posted in Articles, NBBJ

Originally published in North Bay Business Journal

Typically, I shy away from the “National this-or-that" Days that make the rounds on social media. Still, one of those recently captured my attention: August has apparently been named National Make-a-Will Month and given my work and experience as a Wealth Advisor, this is a cause I can get behind.

Let me be clear up-front that I am not an estate planning attorney; I cannot help with the actual writing of your will or give legal advice in any way. But I have built financial plans and investment strategies for hundreds of clients during the last 25 years, and this is an issue for all. I have worked with clients trying to unravel the complexities of their parents’ wishes while also grieving their loss; I have helped feuding siblings find compromises when their parents’ inheritance plans were not in place; and I have witnessed how the experience of losing a loved one was made infinitely better, thanks to a solid estate plan.

The cliché that nothing is certain but death and taxes remains as true as ever – yet less than half of Americans have a will in place, according to a 2020 Gallup poll. The number is likely much less for what should be considered the gold standard for estate planning: having a will, trust, Durable Power of Attorney, and health directives in place.

I learned this month that this was the case for a close friend, Allison, who agreed to act as guinea pig/real-life example to illustrate two points: first, that pretty much every adult – regardless of net worth, family size, age, health, anything – should have an estate plan in place. And second, that doing it right can be simple and actually quite liberating (believe it or not).

The first issue to figure out for Allison and her husband Ben is the worst-case scenario: who should take care of their children, two boys, ages 7 and 4, should both parents die unexpectedly. The answer that makes the most sense to them in the short term is for the boys’ grandparents to raise them: they are local (live only five minutes from the children) and already spend lots of time with the grandchildren. Long-term, they probably need a different solution, as grandparents, of course, have very different plans and needs for retirement, travel, and how they want to spend their twilight years. Allison was relieved to learn that they can very easily update this portion of their will in, say, ten years, when her sister and brother-in-law could take on the responsibility of raising the children.

With that big decision made, the next step is to decide how Allison and Ben’s estate should be divided between the children. Again, this is something that can – and should – be updated as time passes. It may make sense to split it equally between children, but there are many circumstances where this is not the case. For example, I have seen families divide an estate unequally according to the children’s career track. A child who is poised to become a medical doctor, for instance, perhaps wouldn't need the same financial support as a child whose chosen path is to become an artist. I have also helped families make tough decisions about leaving a smaller inheritance to a child with addiction issues, as well as put guardrails in place for how and when the inheritance can be used.

For Allison and Ben right now, they are leaning towards splitting their estate 50/50 with the plan to revisit in 15 years or so.

Creating a will is the bare minimum in estate planning, and in fact, the estate attorneys I have worked with most often recommend a revocable trust. When you put assets in a trust, your estate doesn’t go through probate following your death. Probate is the legal process of reviewing the assets of the deceased and determining inheritors, and it can be quite costly. On top of that, because it’s a legal process, your finances will be made public. By definition, a revocable trust can be changed, so this is another step where it’s smart to make decisions now and revisit in a few years or if any aspect of your or your children’s lives has drastically changed.

While it may seem odd to some for a wealth management professional to advise on matters that will need to be handled by an estate attorney, this is the kind of question my colleagues and I field every day. We often say that we are passionate about helping people with any question that starts with a dollar sign, and this is a great illustration of the difference between a wealth advisor and a financial planner or investment manager.

After all, what’s the point of growing your portfolio without a plan for how you want it to be used after you’re gone?

If you, like Allison and Ben, have felt overwhelmed and let too many years pass without making these decisions, you are not alone. But once the decisions are made, and the plan is in place, the peace of mind it brings is palpable. Embrace this manufactured “holiday” and get in touch with an estate planning attorney today.