The Importance of Estate Planning

Earlier this summer, a mentor of mine shared a story about how another advisor ended up needing to deal with a very difficult situation with one of her clients – one that could have been easily avoided. Instead, the family of her client found themselves with additional stress, emotional strain, a ton of paperwork, and mounting legal costs.

It was an older couple that had recently updated their Wills. Sadly, the husband was in a serious car accident resulting in severe head injuries which left him incapacitated. Of course, his wife’s immediate concerns were with his health and well-being, but she had to shift her focus to the ongoing affairs related to their life, wealth, and family. Much of this was new to her as she relied on her husband to manage a great deal of this - so it was creating additional stress for her on top of an already very difficult situation. I’m sure you can imagine.

It was at that time the wife discovered that although she had made her husband her Power of Attorney (PA) when they updated their Wills recently – for whatever reason, he had not made her his Power of Attorney. Well, this was the beginning of a long, frustrating, stressful, and grueling legal process. Can you imagine what it’s like to get a Power of Attorney for someone AFTER they are fully incapacitated and unable to represent themselves? It’s a nightmare.

As a Certified Financial Planner® professional, my obligation is to help our members whom I work with in the six fundamental components of financial planning. Those six being: Financial Management, Tax Planning, Asset Management, Risk Management, Retirement Planning and Estate Planning. Today, I want to highlight the topic of Estate Planning.

Most people know the importance of planning for a vacation, the purchase of a new vehicle and other such major expenses. Yet many do not take the time that is needed to do their estate planning – deciding who will inherit their assets after they’re gone or, more importantly, who will become guardian of any dependents should they no longer be around or capable of caring for them themselves.

In most situations, a complete estate plan consists of three important documents:

A Will, which is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children. If you die without a will, those wishes may not be carried out. Further, your heirs may end up spending additional time, money, and emotional energy to settle your affairs after you're gone.

A Power of Attorney (POA), which is a legal authorization that gives a designated person, known as the attorney, the power to act for another person, known as the principal. The agent may be given broad or limited authority to make decisions about the principal's property, finances, investments, or medical care.

And finally, a Personal Directive, which allows you to determine in advance who will make personal, non-financial decisions, i.e. health care decisions, on your behalf if you ever lose the mental capacity to make these decisions due to illness or injury.

If you want your assets and your loved ones protected when you can no longer do so, you need an estate plan. Without one your heirs could face big tax burdens and the courts could designate how your assets are divided—and even who gets to raise your children. A good estate plan will achieve the following:

Members of Christian Credit Union’s Financial Planning team can have peace of mind knowing that the topic of estate planning is on our agenda each time we meet with you to review your financial plan. It is our pleasure to provide you with estate planning advice, to help ensure that you have a plan that is up to date and meets the needs of your current situation.

If you want to discuss estate planning with a financial professional, please reach out to our Financial Planning team.

David van Berkel, CFP^®, CKA^®
Financial Advisor
Christian Credit Union
Credential Asset Management Inc.