Find the Right Rung on the Legacy Planning Ladder

If you’re hoping to leave behind some sort of legacy for your family, friends or favorite charity, you aren’t alone.

In a 2019 survey by Caring.com, 53% of respondents said they’ve talked to a loved one about needing a will or living trust, and 76% said having a will or living trust is important.

But when it comes to follow-through, there’s often a breakdown. Only 40% of the survey’s respondents said they actually have a will or living trust in place.

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Most (50.4%) blamed procrastination for their lack of planning. But cost, time and not knowing how to go about it were also factors named, and nearly a quarter (21.6%) of the respondents said they simply didn’t have enough assets to leave something to someone else.

Estate Plans Aren’t Just for the Rich

I get it. For some people, “estate planning” may seem like something only rich people need to do. They can’t imagine there will be much of a problem disbursing what’s left when they’re gone, especially if they’ve talked to a friend or family members about who should get what.

I believe those folks couldn’t be more wrong. Just as with anything related to your finances, leaving a legacy takes planning. And, for most people, protecting that legacy takes professional assistance. At Scott Tucker Solutions, Inc. we have a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice since our firm’s financial professionals are not able to give tax or legal advice.

If you’re wondering what estate planning should look like for you and your family, it can help to think of each step as a rung on the “legacy ladder.”

If you’re doing nothing, you’re on the bottom rung of that ladder, and you’ll pass away “intestate” (without a will). That means your family will have to go through the probate process, and instead of an executor you’ve designated, a court-appointed administrator will organize your assets, pay any debts, and distribute what remains to anyone deemed a beneficiary according to state law.

Take the First Step Up the Ladder

If you have beneficiary designations on your bank accounts, certificates of deposit, investment accounts, etc., you’ve moved up a rung on the ladder. Your beneficiaries won’t have access to these accounts while you’re alive, but the transfer on death (TOD) instructions you put together now will help them avoid probate when you die. (If you’re married, most state laws require that your accounts go to your surviving spouse first, and the TOD beneficiaries won’t get the funds until your spouse passes.)

Although it won’t take care of all your estate-planning needs, this is one way to help make sure your money goes to the people you choose without a long delay. Just make sure you keep your beneficiary designations up to date. It’s easy to overlook an old account or a new marriage — and that can make for an awkward memorial service.

Some Pros and Cons of Wills

The next rung on the ladder is for those who put a proper will in place. With a will, you can outline exactly how you want your assets disbursed — and that’s a plus. Unfortunately, a will doesn’t make your plan bulletproof. It’s important to note that wills don’t bypass probate, and it will be up to the court to decide if the will is valid or not. This process could be a problem for your family members in a few ways.

They’ll likely have to hire an attorney to represent their interests, which, depending on how complicated things get, could eat up some of the money in your estate. They’ll also lose privacy. The will and all probate proceedings will be published, so anyone who’s curious can take a look. And it opens up your estate to claims from people who aren’t even named in your will. (Be sure to consult with a qualified attorney for decisions regarding your will.)

Your executor and your beneficiaries also may lose time if they have to keep going back to court as the proceedings drag on. If, after checking out the pros and cons, a will sounds like the right fit for you, make sure you’re working with a competent attorney. Yes, you can find the forms online and do it yourself, but if your goal is to take care of your family, why risk leaving them vulnerable to any more grief than they’ll already be experiencing?

Climbing All the Way to the Top

The top rung on the legacy ladder is a trust. It isn’t the cheapest way to go — at least not upfront. A trust could cost thousands of dollars in legal fees. But your heirs will dodge the time and expense of probate, which could cost as much, if not more, in the long run. And your family will keep its privacy by staying out of court.

The idea of using a trust may seem silly to those who have only a small estate — maybe a house, some jewelry or art, and $100,000 or $200,000 in various accounts. But if you have an estate worth more than $100,000 — or any complications that could keep your will from moving easily through probate — you may find you’ll benefit from consulting with an attorney and going with a trust instead. The last thing you want is for your kids to argue over Grandma’s ring or the family cabin on the lake.

In a nutshell, some reasons why you might want to go with a trust over a will:

• Wills don’t avoid probate.
• A will costs less now, but then you have to pay legal fees to go through probate later.
• Wills cause your loved ones to go through probate while they’re mourning.
• Also, wills are published (a loss of privacy).
• The probate process opens your estate up to claims from people not named in your will.
• Estates settled with wills take longer to settle than those settled via trust.

The Bottom Line

If you have a larger estate, a professional who specializes in estate planning may be able to help you minimize taxes with a trust and offer other strategies that could further protect your money and your loved ones. Your financial adviser may be able to help you identify when considering a trust may be beneficial, and he or she likely can refer you to an attorney to assist you. (It’s helpful when these professionals work together.)

If you decide not to go with a trust, you still should work with an experienced and knowledgeable adviser who can consult with your attorney to help avoid a complicated probate process and get your money, your keys or Grandma’s ring into the right hands as quickly and efficiently as possible. I believe it’s best to do this sooner than later. Don’t let procrastination — or any other excuse — keep you from getting your wishes down on paper.

Kim Franke-Folstad contributed to this article.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Scott Tucker Solutions, Inc., are not affiliated companies.

Scott Tucker Solutions, Inc. has a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 390397

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.