Getting Your Financial House in Order—Part 5: Estate Planning? Oh, Boy!


“I’m excited about doing my estate planning” … said no one … ever. No one likes to talk about estate planning. It’s not something we look forward to. Who wants to talk about death or becoming disabled? Nobody.

Not all of us will face a disability during our lives, but some of us will. And I’m pretty sure that all of us will eventually face death. As we work toward putting our financial house in order(remember that New Year’s resolution we made?), having an updated estate plan in place is an important piece. It’s much easier to have your estate plan in place before something happens than to face the tough and emotional decisions that you might have to make when the doc tells you to make sure your affairs are in order.

Some people think that estate planning is only important for rich people. If you are fortunate enough to be a member of the ultra-high-net-worth segment of society, estate planning is important to make sure that the wealth you want to pass on to your kids and grandkids is not eaten away by taxes. But what about for the rest of us?

Estate planning simply means that we are making decisions about the way we want our affairs handled when/if we no longer can. Wouldn’t it be better for us to make those decisions before something happens than to have someone else have to make them for us afterward? We can put those plans in place now, while we are healthy and of sound mind. That’s much better than forcing a loved one to make them while under emotional stress.


Making sure that you have a solid estate plan in place doesn’t have to be daunting. In most cases, you will need only a few documents. I typically recommend that you visit with a qualified estate planning attorney (not a real estate, criminal, or divorce attorney) to get these documents drafted. It’s not as expensive as you might think, and you can have confidence that it will be done properly.

Below is a brief description of the main documents you will need. Keep in mind that I’m not an attorney (and I don’t play one on TV), so this is not legal advice. My goal is to give you just enough info to get you going in the right direction.

WILL: Most of us need a will, often referred to as a “last will and testament.” This is the legal document that allows you to express your wishes for how your property will be distributed when you pass away. It also serves the purpose of naming the executor of your estate, or the person you want to assume the management of your estate until it is completely distributed. You want that family heirloom or your baseball card collection to go to a specific family member? Here’s where you spell that out. A will is especially important if you have minor children because it’s the document where you would name a guardian for them if something were to happen to you.

TRUST: Not everyone needs a trust. In fact, in my opinion, most people don’t need a trust. A trust can be necessary when you have special circumstances that go beyond what a will can do. A will is subject to probate and the public record. A trust is not. So, if privacy is an important issue, a trust can be helpful. A trust is also helpful when you have a “blended” family or you want to exert some “control from the grave” on how your assets are distributed. For example, you might want to leave your grandchildren some money, but not want to give it to them all at once at a young age. A trust can allow for them to receive distributions from your estate upon reaching a certain age (or ages). There are many different types of trusts. For the purposes of this discussion, I refer to a “living trust,” which you can change up until the time of death, when it becomes irrevocable. Trusts can be very complicated, so I strongly recommend legal guidance when setting one up.

POWER OF ATTORNEY: This is the document that allows you to name the person who will make decisions for you if/when you cannot. This process generally has two parts. You want to name someone who will make your financial decisions and pay your bills if you are unable to. You also want someone who will make your health care decisions in case you can’t. Often it will be the same person, but that’s not a requirement.

LIVING WILL: This document lets family members and medical professionals know your wishes when it comes to the level of care you desire when nearing the end of your life. It’s the document that will detail your desires regarding medical treatment. Most of us remember the drama surrounding the Terri Schiavo case several years ago. Terri was in a vegetative state for many years while her husband and parents battled over whether she should be kept alive using a feeding tube or be allowed to die. If she had a living will in place, the battle would not have occurred.


The documents discussed above are the ones I generally suggest for most people. Keep in mind that they may be named differently or be prepared as combinations, depending on where you live and the attorney you work with. The main thing to remember is that these are decisions that will ultimately have to be made. I contend that it’s better for us to make them ourselves.

As I mentioned earlier, you’re probably not going to be excited to go through the estate planning process. But once you do, you will experience a peace of mind, knowing that it’s done and knowing that you’ve taken the steps to make your financial house that much stronger.