4 reasons estate planning is important

July 23, 2021

Most of us know how important it is to have a will, but an estate plan goes beyond deciding how to distribute your assets. 

 

According to a recent survey, COVID-19 motivated more people to see a need for an estate plan, and younger adults are now more likely to have a will than older adults. Yet only 33% of Americans say they have a will or other type of estate planning document in place.1

Many people put off estate planning either due to lack of motivation or the assumption that they have enough assets to leave to anyone.1 However, a good estate plan covers who would make decisions for you regarding your finances and your health, no matter your age or level of wealth. And when it comes to getting started, there’s no time like the present.

Here’s a look at four reasons estate planning is important.

 

1.  An estate plan accounts for your assets, health and final wishes


Many people think an estate plan deals exclusively with financial assets. But that’s only a part of it. The most basic documents should include:

  • Property power of attorney. Also known as financial power of attorney, this person will handle your property and financial matters if you're unable to do so yourself. For example, should a health emergency or accident happen, this person could pay your bills or manage other financial considerations on your behalf.
  • Healthcare power of attorney. Someone you designate to make healthcare decisions for you if you're unable to. If you’re moving away from family for the first time, it’s important that you designate someone to make healthcare decisions should something happen — preferably someone local.
  • A will. Wills document how you want your assets distributed after you die. A will can also include information like who you’d want to care for your children. Assets passed according to the terms of a will are supervised by the probate process, a court supervised process that is public record.
  • Advance directive or living will. Advance directives provide instruction regarding your end of life care if you’re unable to communicate them. They include directions like whether you want to have life-sustaining measures taken and other end of life care decisions.
  • A trust. When it comes to your financial assets, a trust can offer potential benefits not available with a will. A trust keeps your financial information out of the probate process and allows for the care of your assets during any time of disability prior to your death. A revocable trust allows you to benefit from your assets during your lifetime and is often paired with a pour-over will, which assures that any assets not held in the trust are added to the trust after your death.

 

2.  An estate plan is comprehensive


An estate plan accounts for all your assets, which may include real estate, investments, cash and savings, and other physical and intangible assets.

Some of the items you’ll need to have when you start the estate planning process include:

  • Total value of assets
    • Home and other properties
    • Vehicles
    • Life insurance
    • Stocks, bonds and other securities
    • Retirement funds
    • Jewelry
    • Artwork
  • Total liabilities
    • Student loans
    • Credit card debt
    • Mortgages and home equity loans
    • Auto loans
  • Insurance policies
  • Passwords for all online financial accounts and other digital assets
  • Beneficiary information including who will care for dependents if you’re unable to
  • Trustee information

 

3. An estate plan identifies key players


Part of estate planning includes appointing people to play key roles for “in the event of” scenarios. Consider and discuss the following roles with your attorney.

  • Healthcare and property powers of attorney. Ask yourself, “Who do I want making medical decisions and handling my financial affairs for me if I can’t?” This could be your spouse or someone else who understands your wishes and you can trust to follow them.
  • Guardian of your children (if you have any). Be sure to talk about this with your spouse or partner.
  • Trustee or executor. Being a trustee can be time-consuming. You may want to consider not only who you trust, but also who has bandwidth. A corporate trustee acting along with a trusted individual trustee(s) often provides a great balance of responsibilities. Trustee responsibilities include: 
    • Investing funds properly and in the best interests of all beneficiaries.
    • Filing tax returns on a timely basis.
    • Informing beneficiaries of anything that’s happened in the trust, including any investments and distributions that have been made.

 

4. An estate plan puts you in control


Not accounting for what happens to your assets can open you and your loved ones up to risk. If you were to face an untimely death, the statutes of the state where you reside will dictate the terms of your default plan. The courts will appoint an administrator to settle your estate, which can be an expensive process, and one that you wouldn’t have control over.

Estate planning includes many legal and financial documents. A financial professional can make the process feel more manageable by helping you account for your assets, your finances, and your life situation to. Plus, a financial professional may make your trustee’s life easier by handling many administrative burdens that can sometimes be overwhelming.

Regardless of your finances or age, talking with a professional about your estate plan can help ensure your loved ones are cared for if anything were to happen to you.

 

Review important life milestones that could impact your estate planning and learn what to account for during each.  

Related content

The connection between your health and financial well-being

7 beneficiary designation mistakes to avoid

How to access digital assets after a loved one's death

Estate planning for the LGBTQ+ community

Key components of a financial plan

Gifting money to adult children: Give now or later?

Estate planning documents: Living trusts vs. will vs. living will

Reviewing your beneficiaries: A 5-step guide

How to protect your digital assets in your estate plan

6 tips on trust fund distributions to beneficiaries

How to discuss money with your family

4 reasons estate planning is important

Resources for managing financial matters after an unexpected death

Start of disclosure content

Investment and insurance products and services including annuities are:
Not a deposit ● Not FDIC insured ● May lose value ● Not bank guaranteed ● Not insured by any federal government agency.

U.S. Wealth Management – U.S. Bank | U.S. Bancorp Investments is the marketing logo for U.S. Bank and its affiliate U.S. Bancorp Investments.

The information provided represents the opinion of U.S. Bank and U.S. Bancorp Investments and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific investment advice and should not be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation.

U.S. Bank, U.S. Bancorp Investments and their representatives do not provide tax or legal advice. Each individual's tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

For U.S. Bank:

U.S. Bank does not offer insurance products but may refer you to an affiliated or third party insurance provider.

U.S. Bank is not responsible for and does not guarantee the products, services or performance of U.S. Bancorp Investments, Inc.

For U.S. Bancorp Investments:

Investment and insurance products and services including annuities are available through U.S. Bancorp Investments, the marketing name for U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

U.S. Bancorp Investments is registered with the Securities and Exchange Commission as both a broker-dealer and an investment adviser. To understand how brokerage and investment advisory services and fees differ, the Client Relationship Summary and Regulation Best Interest Disclosure are available for you to review.

Insurance products are available through various affiliated non-bank insurance agencies, which are U.S. Bancorp subsidiaries. Products may not be available in all states. CA Insurance License #0E24641.

Pursuant to the Securities Exchange Act of 1934, U.S. Bancorp Investments must provide clients with certain financial information. The U.S. Bancorp Investments Statement of Financial Condition is available for you to review, print and download.

The Financial Industry Regulatory Authority (FINRA) Rule 2267 provides for BrokerCheck to allow investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. To request such information, contact FINRA toll-free at 1-800‐289‐9999 or via https://brokercheck.finra.org. An investor brochure describing BrokerCheck is also available through FINRA.

U.S. Bancorp Investments Order Processing Information.