Estate Plan Essentials

Estate Plan Essentials
12 May 2017

It has been about a year or so since the Purple One rode into the sunset.  Though a brilliant musician, there was one area that Prince was lacking.  He died intestate.  Simply put, he did not have an estate plan.

This has left his heirs scrambling through legal quagmires trying to determine what his last wishes were.  The issue is that with no will, they are at the mercy of the legal system to determine what the eventual dispersion will be.  Case in point.  There was a recent squabble between family members who were asking to have two different conservators appointed.  The arguments must have been quite moving on both sides, as the judge essentially ignored both requests and appointed someone else.  This simply underscores the importance of putting together even a basic estate plan.  It allows you to dictate what happens to your assets, rather than having the government decide for you.

Why have an Estate Plan?

First off, I am not a lawyer.  While we can speak about the process in general terms, it is up to you to seek appropriate legal counsel.  One of the reasons for this is that every state has different estate laws when it comes to the dispersion of assets. Make sure that all of your documents are executed legally in the state you live in.  Hey, I don’t make the rules.  Now that the attorney’s have been appeased…

One of the most basic tenets of the estate plan is to ensure that your final wishes are carried out.  This includes both the disposition of assets, as well as guardianship for minors if needed.  Depending on the size of an estate, good planning will also help you to conserve your assets.  This means additional funds to carry out your final wishes, and less money that goes to the government.

Don’t get me wrong, I’m not an anarchist.  I just don’t believe that giving the government any more money than is necessary is a prudent use of your resources.  You are also able to name guardians in the case of minor children.  This alone should make anyone who is a parent make an appointment with an attorney tomorrow.  The ability to dictate who gets to take care of the kids is one that will leave a lasting legacy far beyond money.

Gather the Documents

There are a few basic documents that you will need to have drawn up.  These documents combined will comprise your estate plan.

Last Will and Testament – The point of a Last Will and Testament describes your last wishes.  It is directions for the courts in how to divide and distribute your assets.  Probate is the process of determining the legal validity of the will, and then distributing the assets.  After determining the legality of the will, the courts will appoint an Executor.  The Executor’s role is to “execute” the directives of the will.

Power of Attorney – Power of Attorney documents come in a couple of different shapes and sizes.  The intention is to put someone in place to make decisions when you can’t.  These allow you to appoint someone to make decisions on your behalf when you are incapacitated.  Power of Attorneys are either durable or for a limited period of time.  They can also be general or can be arranged in a way to divide responsibilities.  An often used example would be designating a Financial Power of Attorney, and designating someone else as a Healthcare Power of Attorney.  This would allow you to divide the responsibility among various individuals.

Medical Directive – The final document is a Medical Directive.  The point is fairly simple.  You are able to make your wishes known in regards to life support.  If you can remember the legal battle that occurred in Florida with Terry Schiavo, you know the importance of this.  For those who don’t, I won’t get into details here.  Here is the Upshot. If you do not make your wishes known prior to going onto life support, you face the possibility of your Power of Attorney making the wrong decision.  This might be keeping  you on life support when you didn’t want to be.  The opposite is potentially true as well.


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Assets Outside Probate

There is one issue with taking assets through probate.  The cost to do so can be fairly high. Fortunately, there are some ways to avoid probate for some assets.  Qualified Assets such as IRAs and 401(k)s have the ability to add a beneficiary.  Assets pass directly without going through the court process.  Non-Qualified Assets can add Transfer On Death Designations or similar provisions that pass assets outside of probate.  Depending on the level of complexity required, a trust may be set up which will also pass assets outside of probate.  Named Beneficiaries on accounts will receive the assets.  The designation supersedes what the will says, even if the account is specifically mentioned.

An Estate Plan is an extension of a Financial Plan.  They are not mutually exclusive.  Decisions made in one area is going to affect how the other needs to be set up.  For example, if you are looking for equal distribution of assets, you may need to treat your assets passing outside of probate differently.  There may be advantages to distributing assets based on type and location.  Implementing some of the referenced items will help you to put together your plan for your assets.  You will even be in a better position than Prince.


Today is the day, make it count!


Casey Mushrush


Casey Mushrush

Have a question or want to see a post written about a specific subject? Send me an e-mail at I am involved in many of the educational elements of Premier Investments of Iowa, including appearances on WMT Radio, WHO Radio, KXEL Radio, and KCRG Television. In addition, I am a frequent guest host of the Premier Pulse, a personal finance education video blog. I partner with my clients to develop a specific set of financial goals based on their personal situation. We analyze their state of affairs, map out a course of action, and implement a written financial plan based on their own circumstances. We design and implement a long term investment strategy guided by the principles of asset allocation and based on personal risk tolerance. I utilize behavior coaching to help clients deal with the emotional aspects of investing and stick to their long term plan. Additionally, I am responsible for the practice management of an Office of Supervisory Jurisdiction. I aid our advisors by ensuring they are running their businesses in a compliant manner, as well as providing direction and suggestions on process improvement and implementation.