Is Your Estate Plan Up-to-Date? Practical Estate Planning Guidance from B. Riley Wealth Management

Estate planning is one of the most important components of a family's long-term financial health, but it is often overlooked by investors unless they are close to retirement. The COVID-19 crisis has forced many to look intensely at their own mortality, and the demand for estate planning has increased since the pandemic began last March. Plans and circumstances can quickly change, yet less than half of Americans polled say they have a will or estate plan set up to protect their families should they become incapacitated or pass away unexpectedly.

It is the legal process of distributing someone's assets without a will or revocable trust that can become especially costly, stressful and contentious for surviving family members. Without a will, an individual's assets would fall under state and federal control, which can take several years to sort out.

For this reason, Estate Planning Awareness Week was adopted by Congress in 2008 to designate the third week in October to the promotion of estate planning and overall financial wellness through saving, investing and planning for the future.

A widely held misconception about estate planning is that it is only for older or ultra-high net worth investors, which explains why many Americans do not have one in place. Everyone has an estate, regardless of income level. An estate is made up of an investor's net worth and assets, liquid and illiquid; that includes cash, homes, real estate, investment accounts, pensions, debt, and any other possessions, such as artwork and furnishings.

Estate Planning Defined

Estate planning provides documentation and instructions for the way in which an investor's assets and financial obligations will be managed, preserved and distributed after the investor passes away or becomes incapacitated. A well-executed estate plan provides detailed instructions for carrying out an investor's wishes, states who will receive the assets, and when. Such plans are all-inclusive and should be created with the assistance of a financial advisor and an attorney, as they are legally binding documents.

An estate plan should include a will and the possible setup of trusts, consideration of charitable donations, the naming of beneficiaries and an executor, and instructions on how an individual's property, other assets, and minor children should be cared for. Individuals should also consult with a financial advisor who can review strategies for the reduction of tax burdens on heirs.

Why a Comprehensive Estate Plan is Important - For All Investors

A truly comprehensive estate plan concerns much more than what happens after someone passes away. Proper advance planning with a financial advisor helps investors ensure that their assets are protected, and their loved ones are cared for.

A solid estate plan will:

· Allow an investor to maintain control over his or her affairs while alive and well, and make continuous updates to that plan as life circumstances change (e.g. divorce, a move out of state, or a change in one's financial situation)

· Designate a family member to make decisions on his or her behalf should the person become incapacitated

· Allow for the creation of trusts and future charitable donations

· Ensure that beneficiaries for investment accounts like 401(k)s, IRAs, and life insurance plans are up-to-date

· Provide instructions for custody of minor children

· Transfer wealth to future generations while limiting tax burdens

Estate Planning Steps

A financial advisor can help iron out the intricacies of managing assets and designating a proper beneficiary, but to start, the drafting of a will or trust is a critical step. For some investors, a trust may be the better option if wealth is passed down a generation, and not solely to a spouse. Before choosing one, consider the steps below.

Take Inventory

Consider an inventory of possessions, brokerage accounts, investment accounts, life insurance policies, long-term care and other health insurance plans. Next, individuals should gather a list of debts and any other financial obligations that a designee may have to manage. Mortgages, auto loans, lines of credit, and any other debt will have to be handled by estate after death.

Reviewing retirement accounts, insurance plans and annuities, and the designated beneficiaries for each account is also important, because circumstances change, and all information should be up-to-date. If someone dies, the beneficiary named in the retirement account is entitled to receive the distribution, regardless of the heir to the estate, be it a new spouse or other relative. Once complete, make copies of the inventory and be sure to provide one to the executor or administrator.

Draft a Will or Trust, Select an Executor, and Conduct Regular Document Review

The cost and complexity of this document will vary based on one's wealth and assets, but that does not negate its importance. A will should be created with the assistance an attorney, and a responsible executor or fiduciary who will carry out the signatory's wishes should be present.

Last, an estate plan should undergo review at least once a year, as any life-changing events will require updating.

Get Help from a Financial Advisor

If you don't have a current estate plan and/or are unsure of your options, take time to speak with your financial advisor. To find a financial advisor or to learn more, visit