Early Estate Planning – Memphis Flyer

Combine planning for your eventual demise with engaging in a complex legal and financial planning process, and it’s no wonder why many people shy away from estate planning. Misconceptions surrounding the estate planning process can make it seem even more daunting.

However, estate planning is essential to ensure your loved ones’ long-term financial security. Stay informed about various strategies and the role they play in protecting your heirs.

Myth #1 — Estate planning is for the wealthy.

Many people think that if their assets are less than the lifetime estate tax exemption amount ($13.61 million per individual or $27.22 million per married couple in 2024), they don’t need to worry about estate planning.

Fact: Everyone over the age of 18 should engage in estate planning, regardless of assets. While a well-executed estate plan can help lower estate tax liabilities, it also provides the following benefits:

• Helping ensure healthcare decisions are carried out according to your wishes

• Authorizing a trusted individual to manage your finances should you become unable to do so

• Providing financial security for your loved ones should you pass away unexpectedly

• Naming a guardian for minor children

• Helping ensure minor children who inherit assets have a structured plan to make sure they’re financially mature enough to receive and use assets

Note that, unless Congress makes a change, the current lifetime estate tax exemption amount will revert to approximately $5 million per individual ($10 million per married couple) on January 1, 2026. That means many more families will be subject to estate tax going forward.

Myth #2 — Estate planning is for the elderly.

Fact: Estate planning should begin at age 18, when an individual becomes legally recognized as an adult.

If you experience an accident or injury at any age and don’t have the necessary estate planning documents in place, your family members may be unable to obtain medical information, visit you in the hospital, or help manage your finances.

All adults should have: a HIPAA waiver, healthcare power of attorney, living will/advanced medical directive, financial power of attorney, and a basic will. A trust may also be advisable.

Myth #3 — Estate planning is expensive.

Fact: Complex estate planning strategies can add up, but the expense is typically well worth the stress and tax liabilities your family would face without an estate plan.

In certain situations, the cost tends to be relatively low. Some simple documents are even available online for a low fee. Be sure to check in with your wealth manager to ensure your estate planning documents are in line with your overall financial plan.

Myth #4 — If I have a will then my assets will avoid probate.

Fact: A will is a great first step in developing your estate plan but a will alone doesn’t protect your loved ones from the probate process. Probate is the only way an executor designated in your will can take action. Probate proceedings are a matter of public record, which means anyone can find out who’s inheriting your assets and how much they stand to receive.

Myth #5 — My assets will automatically pass to my heirs without an estate plan in place.

Fact: If you die without a will or trust, intestacy rules will dictate who handles your financial affairs and who receives your assets. These aren’t necessarily the people you would have chosen. Also, there are significant time, expense and administrative requirements associated with dying intestate.

Myth #6 — I created a will years ago, so I’m all set.

Fact: Estate planning should be an ongoing process, not a one-time event. Your life, family and goals are constantly evolving, and your estate plan needs to keep up with your changing needs.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

You may not feel like your child is fully grown when he or she leaves for college, but at age 18, your student is considered a legal adult. This means that, unless you complete some estate planning steps, you’ll no longer have the legal authority to remain informed about his or her medical records or financial assets.

Why does this matter? Consider the following situation.

Your 18-year-old daughter, attending college out of state, is involved in a car accident. Her roommate calls you to let you know she’s in the hospital. You frantically call the hospital, asking for an update on her medical condition. Instead of reassuring you that she only suffered minor injuries, the hospital worker states they unfortunately cannot release any confidential medical information. You ask if you can make the drive to visit her and are told you’ll be turned away upon arrival at the hospital.

You also learn that if your daughter becomes incapacitated for a period of time, you won’t have access to her financial accounts to pay any of her living expenses, such as rent or utility bills.

Without certain legal documents in place, you’ll likely need to petition the court for the right to manage your daughter’s medical care and handle her financial matters. This situation only adds to the anxiety and frustration of an already stressful circumstance.

Fortunately, an estate planning attorney can help you draft several documents that can prevent you from experiencing such a scenario. Three essential documents are as follows:

• HIPAA waiver — According to the provisions of the Health Insurance Portability and Accountability Act of 1996, hospital and healthcare providers can’t legally disclose an individual’s medical information to others without the patient’s consent. By signing a HIPAA waiver, your child can ensure you have access to his or her medical information in the event of an emergency.

• Advanced medical directive — This document functions as a healthcare power of attorney, allowing you to make medical decisions for your child should he or she become incapacitated. This document also typically includes a living will, which specifies how your child would like you to handle end-of-life decisions.

• Financial power of attorney — A financial power of attorney allows your child to designate you as an agent to manage his or her financial assets. With this document in place, you’ll be able to manage your child’s finances, including paying bills and filing taxes on their behalf.

In addition to the three essential documents noted above, you may also want to consider executing the following:

• Financial Educational Rights and Privacy Act (FERPA) waiver — This allows you to have access to your child’s education records, such as transcripts, class schedules, etc.

• Last will and testament — While college students typically have few assets (no home or car in their name, etc.), your child may want to designate who would receive important items, such as jewelry, collectibles, or pets, if they were to pass away. It can make sense to execute a will at the same time as the documents above so that your family is better prepared once your child graduates from college.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.