You have an estate. But are you doing anything to protect it? If you’re like most people, you’ve continuously back-burnered the idea of estate planning – and removed any wealth-related safety nets.
Just how many people are in this position? A 2023 Caring.com study showed that 64% of American adults have no estate plan in place. Accordingly, when they pass away, any investment efforts they’ve made may have been in vain.
Estate plans and investments go hand in hand. No matter how successfully you’ve structured your investment portfolio, you can’t be sure of what will happen when you’re no longer around. The only way to ensure that your finances and investment will keep working on behalf of your beneficiaries is by having an airtight estate plan in place. Without one, you’re essentially gambling with all the wealth you’ve built.
That’s not something lifestyle investing expert Justin Donald recommends. Donald is a proponent of not just growing your wealth but taking steps to keep it secure. One of his investing tenets includes securing your legacy with an estate plan. As he points out, just about everyone could benefit from a will, a trust, and a power of attorney. Though it’s understandable to assume that these documents are only advantageous for the ultra-wealthy, they’re actually critical for all investors.
Of course, not all estate plans are alike. You need one that’s geared toward maximizing your investments and wealth. Try these strategies to make certain that your estate planning gets and stays on a profitable track.
1. Hire professionals.
With so many tech platforms touting investing software, you may be tempted to go the “do it yourself” estate planning route. Don’t. The problem with automated systems is that they can’t give you the personalized touch of a knowledgeable financial advisor or attorney. Will you save a little money today by leveraging technology? Probably. However, those savings could be quickly neutralized by a poorly constructed estate plan that doesn’t meet your needs.
The problem is that digital solutions may be fast, efficient, and inexpensive, but they can’t answer probing questions. From who to name as beneficiaries to understanding tax rates, human professionals will always have the advantage. They can sit down with you, look over your portfolio, and discuss your goals. In other words, you get peace of mind — not just a solid estate plan.
Another upside to hiring professionals is that they’ll be the ones getting your financial affairs in order later. They’ll be the ones dealing with your beneficiaries. No software program can do that. Nothing compares with the one-on-one touch and guidance that a financial or legal advisor can provide.
2. Evaluate your estate plan regularly.
Once you have an estate plan, avoid letting it collect dust. Depending on your investments, you may want to change the structure of your estate plan. The same holds if you have major lifestyle shifts. For example, if you have a child, get divorced, or marry someone, your estate plan should be revisited.
Even if you don’t undergo significant personal changes, set up a time to check in with your estate plan at least every couple of years. Consider if you want to switch up any trusts you’ve made for your children, or look at the beneficiaries for each of your retirement and life insurance policies. Sometimes, the decisions you made when you originally signed your estate plan no longer make sense.
A prime example of this would be an adult child who was once bad with money but has become more financially responsible. Though you might want to keep a trust in place, the specifics of the trust may warrant alterations.
3. Weigh the value of philanthropy.
Passing down wealth to the next generation may be one of your objectives. Nevertheless, stay open-minded to other uses for your investments, such as giving to charities. Philanthropic endeavors can help you carry on good deeds and support causes for decades.
Adding charitable giving elements to your estate plan could lessen your estate’s tax burden as well. You may want to create a private foundation or even name a charity as a beneficiary for one of your insurance or retirement policies. The key is to name potential nonprofits and then map out possible giving scenarios.
Once again, this is where having professionals sitting with you at the table is invaluable. Being able to work through different philanthropic options alongside an expert relieves you of the pressure to make choices alone. Together, you can look at your estate, wealth, and investments from a high level so you feel confident about your next steps.
Estate planning might not be the most appealing subject to think about. Yet if you’re serious about investing, you shouldn’t ignore it. Getting started is often the hardest part, but once you have your estate plan in hand, you’ll feel more protected.