June Brings Caps, Gowns and a Tough Financial Conversation

Senior CFP Board Ambassador Jill Schlesinger, CFP® offers a guide to the key elements of an estate plan for your changing family

Smart Americans use life events, including births, deaths and marriages, as spurs to help them create or update an estate plan. The graduation of a child from high school, college or graduate school is another milestone that calls for re-doing or creating an estate plan. When children are small, estate plans need to name a guardian in the event parents are gone. When children are grown, estate plans need to answer the questions of whether and how to distribute assets to them.

Only about four in 10 Americans have estate planning documents, according to a survey of 1,003 adults conducted for Caring.com. A well-planned estate is one of the best graduation gifts a parent could give a child.

“Instead of untangling a mess when you’re gone, your heirs can follow concrete steps you’ve laid out for them, while they have the time and space to mourn,” said Senior CFP Board Ambassador Jill Schlesinger, CFP®.

There is more to a well-crafted estate plan than many people realize. In her latest contribution to LetsMakeAPlan.org, Schlesinger offers the following list of the documents Americans need to discuss with advisors including CPAs, attorneys and CFP® professionals.

• Will: Ensures assets are passed to designated beneficiaries, in accordance with your wishes. In the drafting process, you name an executor, the person or institution that oversees the distribution of your assets. If you have minor children, you need to name a guardian for them.

• Letter of Instruction: This may appoint someone who will ensure the proper disposition of your remains. This sounds creepy, but it’s important if you choose a method of internment contrary to your family’s tradition.

• Power of Attorney: Appoints someone to act as your agent if you are incapacitated. That person can act for you in a variety of circumstances, like withdrawing money from a bank, responding to a tax inquiry or making a trade.

• Health Care Proxy: Appoints someone to make health care decisions on your behalf if you lose the ability to do so.

• Trusts: Revocable (changeable) or irrevocable (not-changeable) trusts may be useful, depending on your family and tax situations. In 2017, the first $5,490,000 of an estate (twice that for married couples), is exempt from federal estate taxes. If an estate is above the threshold you may want to consider a trust.

To give their loved ones the gift of a well-planned estate, Americans can consult a CERTIFIED FINANCIAL PLANNER™ professional, who can help craft a plan for families’ changing needs.