Before I entered the financial planning industry, I had dreams and aspirations of becoming a chief medical examiner.  For those of you who aren’t Law & Order or C.S.I. fans, a medical examiner is a licensed medical doctor who does physical examinations of people who have died in order to determine the cause and the manner of death.  People in this field work on cases involving homicides, suicides, and “accidental” deaths; therefore, they often become instrumental in solving crimes.  The how or why a person died is not what a financial planner needs to focus on, but they do have another puzzle to solve.   Planners need to help their clients understand the importance of preparing for what happens to their assets in preparation for when they die (estate planning).  Because of this parallel, I couldn’t help but be drawn the topic of estate planning and why it is so important for our clients. 

Just as the physical examination of a body is an important piece of the puzzle in solving crime, estate planning is an essential part of comprehensive financial planning.  For some, any interest in death (planning for it or otherwise) is morbid and uncomfortable, and some people don’t even want to talk about it.  However, below are a few reasons why estate planning is something that should be discussed and implemented with a financial advisor sooner rather than later.

  • #1:          To Maintain Control.

Death happens, and we don’t always get a heads-up.  We can try to prolong our lives by eating a proper diet, exercising and maintaining a healthy lifestyle but sometimes that is just not enough.  I’ve heard several stories of people who have collapsed and died right after working out or others who have had tragic accidents at the age of 25 and died.  Unfortunately, we can’t look into the future and see how much longer we have on this earth or if/when we will become incapacitated.  You could drop dead now…or 50 years from now.  We just don’t know.   You can’t control when you die or become incapacitated, but with proper estate planning documents, you do get to decide the “who, what, when, and how.”

Estate Planning enables you to decide who gets your assets:  You could keep them in your estate to provide liquidity to pay for various expenses, you could give some or all of your assets to charity, or you could have it go to a friend, family member or domestic partner.  You get to decide what assets you will gift to whom.  It could be a house, securities, cash, a collectible, you name it.  You get to decide when your heirs or a charity will receive your assets.  You may gift while living or after death.  Finally you will decide how your assets are distributed.  For example, there are trust provisions which will allow you to distribute assets for “Health, Education, Maintenance or Support” only or will allow income beneficiaries to take a set percentage or amount of the trust assets each year (5 and 5 power) or a trust which allow the income beneficiary to have access to the trust corpus at a specified age (like a 2503c trust).  In addition, the type of estate document implemented determines whether or not you distribute your assets at death privately (by putting assets in a trust for example) or publicly (when assets are distributed via a will).  It all depends on what you want and the documents you set up.

Without proper documents in place, you are giving up control of everything.  The courts decide everything from where your assets go to who gets guardianship of your minor children.  Dying intestate (without a will) means that assets often are divided in some percentage to your spouse, children, parents or other lineal descendant depending on state statute.  The courts do not take into consideration spendthrift children or non-traditional relationships.  In a non-traditional relationship for example, often nothing will go to your life long partner without proper documents in place (in this case it is best to put assets in a trust to avoid potential will contests from family members).  You know your family and your desires better than the court system so make sure you have the say in what happens to your money.

  • #2:          To make things easier for friends and family members.

In preparing for incapacitation, it is important to have a living will or a medical power of attorney.  Since we never know when an accident or illness will strike, these documents act as a risk mitigation technique so that your plans are known well in advance and while you are of sound mind.  It’s like insurance in that you might never need it but better safe than sorry!  If you don’t have these types of documents, another member of your family is forced to make life or death decisions on your behalf (for example: Do Not Resuscitate).  You don’t want to put that sort of pressure on your loved ones.

When a family member passes away, there is often so much to deal with in addition to grieving: funeral arrangements must be made, bills must be paid, and houses must be cleared of belongings.  As if that isn’t enough, family members often are in the middle of their daily lives dealing with the stresses of work, school, and or children when death/incapacity strikes.  Having an estate plan in place doesn’t eliminate the stress or grief caused by the death of a loved one.  However, preparation does make your wishes known so that bickering and other divisive behavior is kept to a minimum. Sometimes the autopsies performed by medical examiners provide closure to the family members in that they can finally know the truth about what happened to their loved one.  Proper estate planning provides similar closure for families in that those close to the deceased aren’t left wondering what your final desires were.

  • # 3:         To minimize taxes and other expenses.

Benjamin Franklin is quoted as saying “in this world nothing is certain but death and taxes.”  This year, if you die with over $5,120,000 in your estate and you haven’t utilized proper estate planning techniques, you could be taxed at flat rate of 35%.  You are taxed on this money first and then whatever is left over goes to your heirs. For example, take a look at Elvis Presley’s Estate:  He died with $10,165,434.  Taxes and other costs ate up $7,374,635 so he was left with a net estate of only $2,790,799 (Dalton Langdon, 34).  Thus his heirs only received 27% of his assets.  Proper planning (such as lifetime gifts and spousal gifts) can completely eliminate the estate tax in some cases and in others can minimize the estate taxes significantly.  It can also help you avoid probate which is another pesky fee charged by the courts on the total assets of your estate.  Given the uncertainty of the tax laws and changes that might ensue in 2013, it is often our recommendation not make complex additions to your estate documents until some time next year.  However, for those who have no estate documents in place, a will is probably the best starting place at the very least.

Just as performing an autopsy is only one piece of the puzzle in solving a crime, estate planning is only one piece of the puzzle for comprehensive financial planning services.  It is important to look at all aspects of the client’s life to determine the best method of estate planning.  For example, is a client charitably inclined?  Do they have children they would like to provide for after death? Are they married? The list of questions could go on and on.  Since one of the first steps in developing an estate plan is discussing the goals and desires of the client, it is important to include your financial advisor on discussions with your lawyer when documents are actually drafted.

Unfortunately there are still many people who have yet to draft estate planning documents.  According to a recent survey, 71% of adults under the age of 34 do not have a will and even 41% of aging Baby Boomers do not have one (US Today 2012). In another statistic, 51% of parents and 41% of adult children haven’t talked about the location of assets because they “haven’t gotten around to it” (Hirshman, pg. 235). Don’t be a statistic!  No matter the reason, the time upfront spent planning for the transfer of assets at death is time well spent.


Dalton, Michael A. and Thomas P. Langdon.  Estate Planning. 2011.

Hirshman, Susan L.  DoesThis Make My Assets Look Fat? A Woman’s Guide to Finding Financial Empowerment and Success.  2010.