Estate Planning Strategies

Estate planning: a matter of control

You might associate estate planning with famous people you see in the news. In fact, estate planning could be appropriate for everyone.

Consider your assets: bank accounts, investment accounts, 401(k) or 403(b) plan accounts, house, cars, jewelry, and heirlooms. This is your estate, and your estate plan can define what you want to happen to these assets when you die.

An estate plan can also take care of you as you get older or if you become ill or incapacitated. Being wealthy has little to do with it.

If you don’t make a plan, the State may be required to decide how your assets should be distributed upon your death. Additionally, the transfer of your wealth may become a public matter. Furthermore, probate entails legal expenses and can delay the transfer of funds to loved ones for an extensive period of time. Bottom line: if you don’t decide, someone will decide for you.

Five essential documents

These five documents are often essential to an estate plan:

  • Will - Instructions for distributing your assets when you die. You will name a personal representative (executor) to pay final expenses and taxes and distribute remaining assets. Name a guardian to raise your minor children if both parents die.
  • Durable power of attorney – You give a trusted individual management power over your assets if you can’t manage them yourself. This document is effective only while you’re alive.
  • Health care power of attorney - You choose someone to make medical decisions on your behalf if something happens and you can’t make them yourself.
  • Living will – Shares your intentions about life-sustaining medical measures if you are terminally ill. No one is given the authority to speak for you.
  • Revocable living trust - You can provide for continued management of your financial matters while you are alive, after your death, and even for generations after.

Beneficiary designations matter

The assets in your estate can avoid probate if titled correctly. But if you didn’t complete beneficiary designations or haven’t updated them, they can cause issues with your estate plan.

Designations on forms are often filled out without much thought – but they’re important and deserve your attention. Beneficiary designations on forms like your insurance policy and 401(k) take priority over other estate planning documents, like your will or trust.

However, opportunities to name beneficiaries are sometimes missed, creating the legal presumption that the account owner had no desire to name a beneficiary. This can result in account assets becoming subject to probate. Additionally, outdated beneficiary designations can result in bequests made to individuals that the account owner no longer wishes to benefit (such as an ex-spouse). For these reasons, it is important to periodically review the titles used on your accounts and your beneficiary elections. We can help with this.

Turn to a team of professionals

Making the decisions involved with estate planning may seem overwhelming. It doesn’t have to be. You can start by organizing your important documents.

Turn to a team of trusted professionals, including your financial advisor, an estate planning attorney, and your accountant. They know the questions to ask and can help you avoid potential pitfalls.

If you currently don’t have relationships with an attorney and an accountant, we can make some recommendations. We can also discuss our role in the planning process and how you can get started.

Next steps

  • Make an appointment with us to talk about your estate planning goals.
  • Start gathering your financial documents.
  • Check the beneficiary designations on your financial and investment accounts.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Wells Fargo Advisors and its affiliates do not provide legal or tax advice. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.