Who Needs an Estate Plan?

The Purpose of Making an Estate Plan

Watch as Erin Kennedy and Nick Boeckman from Eikenberry Retirement discuss who needs an estate plan and clarify that it is not just for those with a lot of land or money. Boeckman explains that everyone needs an estate plan, even a simple one, as it provides instructions for when we can no longer communicate verbally. He emphasizes the importance of naming beneficiaries on assets and having the will to ensure that our wishes are carried out.

At a minimum, every adult should have a will, a durable power of attorney, and a health care proxy.  A durable power of attorney allows individuals to control their financial affairs if they become incapacitated, while a health care proxy delegates health care decisions to a third person when they cannot make those decisions. Contact Nick and the team for your retirement and estate planning needs here.

Related Articles:

Seven Key Elements of Estate Planning

How to Choose an Executor for Your Estate

Transcript:

Erin Kennedy (00:16):

Hello and welcome to Retirement Wealth Academy. I’m your host, Erin Kennedy. Thanks for being with us. The show is dedicated to helping retirees and pre-retirees answer some of the most complicated questions and topics surrounding retirement. And today we turn to a local expert, Nick Boeckman. Nick, it’s good to see you.

Nick Boeckman (00:32):

Good to see you, Erin.

Erin Kennedy (00:33):

Today I want to talk about estate plans. Who needs an estate plan? Because when I hear estate, I’m assuming it’s somebody with a lot of land or lots and lots of money. Is that right?

Nick Boeckman (00:44):

No, not technically. The estate plan is good for everybody, and the complexity of the estate plan is unique to everybody as well. Not everybody needs a trust. Not everybody needs a full-blown estate plan with multiple executors and different caretakers of multiple different aspects of their retirement, of their life and all that kind of stuff. It can be a very, very simple estate plan, but everybody needs instructions because at some point in this life, we’re not going to be able to verbally give those instructions to somebody else, so we need to have that written down on paper. And to do that through an estate plan by naming beneficiaries on assets, by having a will to be able to be carried out after our death, those are very important things that everybody needs, at least a foundational part of.

Erin Kennedy (01:39):

You mentioned beneficiaries, so what if my retirement accounts have named beneficiaries? Do I still need an estate plan?

Nick Boeckman (01:45):

You still need an estate plan at that point in time because if there are any other assets outside of those retirement plans that are not being covered by it, at that point in time, your estate plan, your will is going to be able to basically scoop all of those up and make sure your wishes are going to be carried out.

(02:01):

Now, you made an important note there with beneficiaries. Anytime you name a beneficiary on an account, it’s going to supersede whatever is set inside of a will or inside of a trust. So if you name a beneficiary on a 401K that you had 20, 30 years ago and you’ve never reviewed those beneficiaries, things change in life, you go through a divorce, unfortunately, death happens inside of the family, maybe one of those beneficiaries is no longer with us, we need to make sure that it’s updated so that when you do pass away, your wishes are going to be carried out the way that you want them to.

Erin Kennedy (02:36):

Okay. Nick, I think a lot of people assume that if they have a will, they can avoid probate, but probate, of course, can be very expensive. Is a will enough to keep your finances out of court?

Nick Boeckman (02:47):

A will is not enough to keep your finances out of probate completely. A will is basically an instruction document of how to get your finances through probate. Probate comes off as this big ugly word that nobody wants to use, and nobody wants to go through probate, but it is a court-governed process to be able to efficiently move our assets from your ownership into whoever your rightful beneficiary should be. So it can be a very ugly process overall if the beneficiaries can’t agree on this, and there’s lawsuits and everything that are being filed through this, and we want to avoid that as much as possible. So we want to have a will that is very well-defined to say, here’s what our assets are, here’s who should have those assets should there be anything left, and that will should be able to carry that through that probate process.

Erin Kennedy (03:40):

Okay. I just want to remind everybody watching, you are, of course, a small business owner. I’m assuming a lot of small business owners could really benefit from having an estate plan. Vitally important for a small business [inaudible 00:03:51]?

Nick Boeckman (03:50):

Absolutely. Yep. Absolutely. And that goes even a step farther, to be able to have other documents in place, some buy-sell agreements, different life insurance pieces to be able to fund that, buy-sell agreements. Having these pieces in place takes a lot of the weight off of the shoulders of your beneficiaries, that you’re caring for them to be able to walk them through this process while they’re still going through a grieving process as well.

Erin Kennedy (04:18):

What strategies then should I be considering today when it comes to legacy planning? Because an estate plan is taking care of your legacy, right?

Nick Boeckman (04:26):

Absolutely. You have to think outside of the box a little bit. We’ve always been taught that, hey, just put money away for tomorrow, whether that’s in a savings account, a 401k, an IRA, just start saving for that. Well, what happens if we never reach that goal? What happens if we don’t make it to retirement? Are our beneficiaries, are our loved ones going to be okay? Do we have young children still at the time? So having life insurance to be a part of that could be a very big vital plan.

(04:56):

And not only during our living time here on earth, but what happens to our assets after death? Now, all of a sudden, the government starts changing the rules around, and we have to start distributing these assets on a much quicker timeline. So you may want to start looking at, in retirement, of moving assets out of some qualified characteristics. We’ve dumped a bunch of money into our 401Ks possibly throughout our working years. Now, all of a sudden, we may be in a lower tax rate environment than what we were while we were working or what our children may be in. We may not need this money. Let’s start getting it over to some Roth IRAs or some other after tax investments to be able to mitigate a lot of that tax risk later on. There’s not very many of us that want to inherit Uncle Sam as a beneficiary. So if We can minimize that as much as possible, we’re going to try to.

Erin Kennedy (05:50):

Absolutely. Well, at least you can do that with proactive planning. That was really helpful. Nick, thank you so much.

Nick Boeckman (05:55):

Yep, thank you, Erin.