Financial Perspectives: Everyone needs estate planning


Many folks have a preconceived notion that only wealthy people need to do estate planning.  This could not be further from the truth.  Everyone needs to do some level of estate planning, and it often goes deeper than you think.

The average family in the Northeast has to address estate planning in at least four (and possibly more) areas.  Specifically, their plan needs to address these types of questions:

•    Where will my assets go upon my death?  How will the assets be transferred to that person or entity? •    How can I minimize the administrative effort and potential tax burden of my estate? •    If I am unable to care for myself who will make legal and/or medical decisions on my behalf? •    What types of measures do I want taken if I am deemed to be in an irrecoverable medical state? •    What are my final instructions/wishes as it relates to funeral services and burial? •    How do I evaluate which pension option to select to help insure that I provide sufficient income in retirement and provide a benefit to my spouse in the event of my death?

The easiest way to ensure that your assets go to the people or entities you intend is to make sure your beneficiary designations are up to date on your retirement accounts or IRAs, in addition to your insurance policies.

This is especially important if you have recently gotten divorced or your spouse passed away.  In some cases, people forget to make changes in these situations and the assets can wind up with an unintended person.  A second way to ensure that your assets reach the intended parties is to have a will in place.  A will can distribute assets that do not have beneficiary designations.  These could include real estate, miscellaneous personal property and bank accounts.

It can be very beneficial to your estate to place as many of your assets as possible into accounts where you name beneficiaries.  One way is to hold accounts under joint ownership with rights of survivorship, or designate the accounts as Transfer on Death to a named beneficiary.  By doing this you can reduce the amount of your estate that could be subject to probate, which reduces the cost of settling the estate.

Proper estate planning also involves how you would want your affairs managed if you became disabled or incapacitated. Assigning a power of attorney for financial and health care decisions can be a powerful tool to aid in such an event.  Along the same lines, you should also consider drafting a living will, which directs the level of medical intervention you want administered in the event you suffer a life-threatening injury or suffer from a terminal condition.

Some may think it’s morbid to document your final wishes via a letter of instruction around funeral services and burial, but this can ease the burden on your family and friends in trying to figure out what you would want.

Finally, when you retire, it is very important to carefully evaluate your pension options to help ensure that your spouse would be covered in the event of your premature death.  If you mistakenly selected the life-only pension option, your spouse would not receive any pension if you passed away.  This is a retirement planning consideration with estate planning implications.

Jim Heisler is a Certified Financial Planner with Family Wealth Services in Holmesburg. You can read all his Financial Perspective columns here.

Registered Representative, Securities offered through Cambridge Investment Research, Inc., A Broker/Dealer, Member FINRA/SIPC and Investment Advisor Representative, Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor.  Family Wealth Services, LLC and Cambridge are not affiliated.

Jim Heisler, CFP®, CDFA™, CASL™ Family Wealth Services, LLC is located at 8275 Frankford Ave. (215-332-4968)

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