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Estate Planning Basics for Everyone

Jennifer Liebel
Manager | CAPTRUST Marketing

While many people may believe that it is the exclusive domain of the super-rich or only a concern for people with large or complex financial holdings, the need for estate planning — or wealth transfer planning — applies to almost everyone. Your estate encompasses everything you own; cars, real estate, checking and savings accounts, investments, life insurance, furniture, collections, and other personal possessions are all considered part of your estate. If you’ve taken steps to save and invest well, you probably have something to leave the next generation — children, grandchildren, or maybe a charitable organization meaningful to you. It is, therefore, important to take the time to prepare an estate plan to help ensure that your wealth transfer wishes are fulfilled.

In the words of founding father Alexander Hamilton, “In the general course of human nature, a power over a man’s subsistence amounts to a power over his will.”1 These words still ring true and are perhaps even more relevant. None of us know exactly what the future holds; we can’t determine how long we will live or exactly how much we will have left at the moment our life ends, but we can focus on what we do know.

If you’re like most people, saving and investing well — or if you’re in retirement, day-to-day expenses — are top of mind rather than the prospect of transferring wealth in the future. That makes sense, of course; people want to make sure their retirement needs are met before they start worrying about transferring what’s left over to others. In addition to a sound retirement income plan, you should also anticipate other significant expenses that may impact your bottom line during retirement. The cost of things like caring for aging parents (surprisingly, eight of ten U.S. families do not have a plan for this2), traveling, and the likelihood that healthcare expenses will increase as you age are all examples of expenses that could impact your retirement portfolio.

Interestingly, we often see clients experience retiree paralysis.3 Individuals who experience this phenomenon tend to be so concerned about not having enough money to maintain their lifestyles that they underspend during retirement and are surprised by what they have accumulated when the time comes to discuss wealth transfer. In the end, if you plan, save, and invest well — perhaps with the help of a financial advisor — your thoughts can comfortably turn to wealth transfer.

So where should you start? What should you do? 

If you’re nearing retirement, or are already in retirement, it may be wise to consider consolidating accounts — checking and savings accounts, brokerage accounts, and individual retirement accounts (IRAs). Send all of your income sources, like Social Security, dividends, interest, systematic withdrawals, and pension benefits, to a single, core checking or savings account. This not only simplifies access for you and gives you a clear idea of your income (and therefore what you can spend) but will also simplify matters for your beneficiaries.

Next, think about who or what you want to leave pieces of your estate to. If you’d like to leave something to the people in your life —perhaps your children or grandchildren —consider their current ages, as well as the ages they will be when they are likely to receive it. Are there college educations to be funded? Is your grandson about to buy his first home? Is your granddaughter about to start a business? If you have a favorite cause or charitable organization, does it have a present capital need or fundraising drive that you can assist with? If so, it may make sense to make measured gifts or transfers to beneficiaries while you are alive for these special circumstances.

Also, think about your beneficiaries’ ability to manage the wealth you transfer to them. It may be wise to create trusts for those you feel may need some structure around the wealth you leave them, as well as a plan for maintenance on collections or personal property if you will be transferring such assets.

Formally documenting your wishes will help ensure they are fulfilled:

Check and update the beneficiary designations on your IRAs, retirement accounts, life insurance, annuities, and pension accounts to make sure they properly reflect your wishes.

If you have not done so already, draft a last will and testament (or will). Your will should indicate how you would like your property and assets distributed upon your death, name an executor for your estate, and provide for payment of any costs incurred in settling the estate. If you already have a will, make sure it is up-to-date and accurate.

You should also prepare advance directives, including a living will and medical power of attorney (also known as a health care proxy). These documents direct medical and end-of-life care in the event you become incapacitated and cannot make decisions for yourself.

Compose a letter of instruction. This informal document that you write to those named in your will should describe your wishes related to funeral arrangements, list all of your accounts and contact information for attorneys, financial advisors, insurance agents, and other relevant service providers, and outline a plan for your personal property. 

To help those named in your will or listed as beneficiaries avoid sudden wealth syndrome — which affects people of all walks of life and all sizes of wealth transfers — you might consider establishing an incentive trust or limit access to your transferred wealth to annual interest payments, with principal to be paid out at a specified age (or ages) in the future. Once you’ve done all of this with the help of a qualified attorney, congratulations, you are on your way to having a solid estate plan and ensuring your wishes are fulfilled.

Thinking about our own mortality makes many of us feel uncomfortable. You may feel like you have plenty of time left to develop a plan, or you may simply just not know where to start. Whether you pass some of your wealth on through gifts or donations while you are alive or choose to do it through bequests in your will, it’s important to make sure your goals and intentions are known. Developing a solid wealth transfer plan helps ensure that your wishes are fulfilled, as well as setting clear expectations for your beneficiaries.


1 Hamilton, Alexander. “The Federalist No. 79.” Independent Journal, June 18, 1788
2 U.S. Trust Bank of America Private Wealth Management. “2013 U.S. Trust Insights on Wealth and Worth.” 2013
3 Center for Retirement Research at Boston College. “Retiree Paralysis: Can I Spend My Money?” Chestnut Hill, MA, July 11, 2013