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How Estate Planning is an Important Part of Your Financial Plan

How Estate Planning is an Important Part of Your Financial Plan

June 29, 2021

One essential part of all my financial plans for EVERY client is estate planning recommendations. There are two primary reasons for this:

FIRST – In order to assure that your financial priorities for your family are achieved, you need to have basic documents in place in case one of the partners dies prematurely. Most of a family’s financial goals are based on the expectation that their will be two incomes over the next few decades, or that their will be one earning partner and one childcare partner. If either partner is gone, or disabled, the plan is severely compromised. So, basic documents assure that the surviving partner has the tools to move forward.

SECOND – If both partners are gone, or disabled, any minor children will need a place to live and somebody to be responsible for their money until they reach adulthood. Basic estate documents set this up based on the parents’ wishes.

THIRD – If your children are grown you may have a couple more reasons. You may have assets that you want to direct to specific heirs, maybe the grandkids. And, you may want to be sure your end-of-life wishes are clear.

Many people think they can put off an estate plan. Partly, it’s because most of us don’t like to think about being dead. If you will never die, then you never need an estate plan. But, of course, we all die. And, we all need an estate plan.

Estate Planning is an Important Part of Your Financial Plan

The four basic estate documents everybody needs are:


A will, also known as a last will and testament, is a legally enforceable declaration of how a person wants their property and assets distributed after death. In a will, a person can also recommend a guardian for their minor children and make provisions for any surviving pets.

Advance Health Care Directive:

An advance directive, also called a living will, is a document expressing a person's wishes about critical care when they are unable to decide for themselves. With an advance directive, individuals have the power to make future decisions about their own critical care without outside influence. A person who wishes or does not wish to be placed on life support can create an advance directive that hospital staff will follow should the person become incapacitated. Take note that this “estate planning” documents is needed BEFORE you die.

Healthcare Power of Attorney:

With a healthcare directive you name a person to act on your behalf regarding healthcare matters should you become incapacitated. This person must be willing to ask challenging questions and needs to put aside emotions about a medical procedure or option to ensure the incapacitated person's end-of-life wishes are fulfilled. Openly communicating with one’s medical power of attorney about potential situations is important in clarifying end-of-life care preferences. Stating one’s opinion on tube feeding and hydration, receiving antibiotics, mechanical ventilation and aggressiveness of CPR are important topics. Other points of discussion are the person’s fears regarding medical treatments and under which circumstances the person might want more or less aggressive measures taken.

Financial Power of Attorney:

A power of attorney (POA) is a legal document giving one person (the agent or attorney-in-fact) the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal's property, finances, or medical care. The power of attorney is frequently used in the event of a principal's illness or disability, or when the principal can't be present to sign necessary legal documents for financial transactions.

A power of attorney can end for a number of reasons, such as when the principal dies, the principal revokes it, a court invalidates it, the principal divorces their spouse, who happens to be the agent, or the agent can no longer carry out the outlined responsibilities.

Conventional POAs lapse when the creator becomes incapacitated, but a “durable POA” remains in force to enable the agent to manage the creator’s affairs, and a “springing POA” comes into effect only if and when the creator of the POA becomes incapacitated.

Trust (maybe):

Depending on what you own, and your preferences, sometimes a trust can be very helpful with estate matters. A trust sets up a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.

Here are a few reasons to use a trust:

  • If you own property in more than one state, like a lake home, you might consider a trust to avoid having to probate your estate in two states.
  • If your state has expensive, or lengthy, probate. A trust can skip probate and avoid both the cost and the delay.
  • If you value your privacy highly, you can use a trust to keep your estate details private.
  • If you have an heir that needs extra supervision, like a minor child, an heir with a history of substance abuse, or an heir who currently receives government assistance for a disability. A trust can allow you to make special plans for each heir.

Everybody should have estate documents. Everybody should review those documents every few years to assure they conform to current law and to your current situation. And every situation is a little different. A free consultation with an estate planning attorney is great idea to be sure your documents fit your needs.

As a CERTIFIED FINANCIAL PLANNER™ professional I know enough about estate planning to understand how an expert can help you and to help you find the right expert for your situation. I do NOT give legal advice.

If you would like to talk about how your estate plan fits your other financial goals, follow this link and we can find a time to talk. I am happy to help you.

Yes, I am a CFP® professional. I’m always a fiduciary and I only work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice. 

If this article has you thinking about your own circumstances, contact my office at I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.