Estate Planning Basics

You’ve just finished paying a few thousand dollars to an estate lawyer to draw up a will or trust. You’ve named executors and trustees and appointed a financial power of attorney. You’ve even drafted a living will and advanced directive and chosen your medical agent. You’re all finished with estate planning, right?

Not so fast.

At John Moore Associates, we help families manage multi-generational wealth and are often involved with family discussions about long-term financial planning. And all too often, we’ve found that families confuse estate documents with estate planning. In reality, getting those legal documents in order is just the first step. Just as vital are the conversations that must happen before and after to ensure your heirs and trustees are prepared and ready to assume the role you’ve given them.

The Reality of Being an Agent, Trustee, or Executor

As financial advisors, it’s our job to look at a client’s financial health holistically. For many clients, this means sitting down with multiple generations of family members to manage wealth long-term. We often discover in these meetings that clients will have their estate documents written and a plan in mind but have never properly communicated their wishes with the family members they’ve appointed for important roles.

When the time comes to make medical or financial decisions, an heir is often left floundering without guidance, education, or context to complete the tasks expected of them. Whether it’s settling an estate or helping an ailing family member manage day-to-day financial or medical needs, heirs can quickly become overwhelmed without clear direction.

These are not always easy conversations to have. When the topics of death, aging, and money come up, they can become emotional. Family relationships can be strained by conflict and disagreement. But avoiding these important conversations doesn’t make things any easier in the long run. The more clearly you communicate your wishes and plans, the fewer disagreements and misunderstandings your heirs will experience later. It’s easier for a person to make wise decisions for you and your estate if you’ve been clear with them about your expectations and they fully understand what they’re agreeing to.

Medical Power of Attorney Checklist

A medical agent is someone put in charge of handling your medical decisions if you are incapacitated. If you fall very ill or sustain a serious injury and cannot communicate your wishes to a doctor, it’s the medical agent’s job to act on your behalf, manage your care, and ensure your wishes are honored. It’s an important and potentially stressful job, especially for someone who is not usually involved in the day-to-day of your health and may not know all the details of your medical history.

You might want to create a packet of information to give to your designated agent to have on hand for an emergency. Here’s a checklist for what should go inside:

• A copy of the medical power of attorney and medical directives documents.
• A list of all medications you’re currently taking, and their dosage.
• Contact information for your primary care physician and any specialists you see.
• A list of allergies, including any medications you’re allergic to.
• A brief medical history, including major surgeries and illnesses you’ve had.

Think of the type of information you’ve been asked on patient intake forms and be sure your medical power of attorney knows the answers to those questions. You’ll also want to be sure you’ve talked through your wishes in general, so they know what to do when faced with tough choices.

You might also want to think more generally about your medical care plan. What happens if you get sick or are unable to live independently as you age? Is there a home care service you’d like to use? Do you have a first and second choice of assisted living or nursing home? It’s better to explore and vet your options now, while you’re in good health, than to hope your kids make the right choice in the midst of your medical emergency.

Financial Power of Attorney Checklist

Like a medical POA, a financial agent, or attorney-in-fact, is someone who is authorized to make decisions on your behalf if you become incapacitated. However, instead of medical decisions, they have authority to handle your finances. They may help with your day-to-day financial needs if you’re unable to do it yourself, or they may need to step in during an emergency to ensure your bills are paid while you’re in the hospital.

Here is a checklist of things your financial agent should know:

• What investments do you have and where are they held?
• Who prepares your taxes?
• What income sources do you have?
• Login information for all bill-pay information.

If you use online bill pay, it’s a good idea to set up a password manager like LastPass to manage secure account access. Otherwise, your loved one may be stuck spending hours trying to recover passwords or talking to customer service people to try to gain access to your accounts in an emergency.

Executor and Trustee Checklist

Your medical and financial agents handle your affairs while you’re alive. Executors and trustees are concerned with your estate, ensuring your wishes are carried out after you’re gone. An executor’s job is to ensure all property and assets are distributed in accordance with your final wishes. A trustee is legally obligated to ensure the terms of a trust are carried out.

At minimum, your appointed executor or trustee should have:

Access to the information noted above for a financial POA.
Knowledge of all beneficiary designations.
Contact information for the attorney who wrote the will or trust(s).
A personal effects list designating what family member gets which item.

Heirs may not realize exactly what being a trustee entails and the weight of those fiduciary duties. If they did, they may not have agreed to the responsibility. It’s a good idea to talk about this up-front and earnestly, and consider hiring a corporate trustee instead to leave this work to a professional.

The Right Documents, and the Right Conversations

As financial planners, the team at John Moore Associates can’t handle the legal aspects of writing a will or trust. You will need to work with an estate attorney to draft up those documents. However, we can help you take a more holistic look at your finances and long-term financial planning in a way that accounts for your goals, values, and the unique needs of your family members.
We can help to facilitate conversations, coach you and give basic information to prepare for estate planning, and answer general questions. By coordinating with you and your loved ones, we can help ensure everyone is on the same page and that your heirs are armed with the tools and knowledge they need to be wise stewards of an inheritance.

For more information on helping your loved ones prepare for the next chapter of life, reach out to our Arizona or New Mexico office to speak with a financial advisor today.