When most people think of estate planning, they picture a mahogany desk, a stack of legal documents, and an attorney. While the legal “blueprint” is essential, a plan is only as strong as the assets that fuel it. That is why you need your financial advisor to be part of the process.
Think of your estate plan like a high-performance vehicle: your attorney builds the car (the legal structure), but your financial advisor provides the fuel and ensures the engine is tuned for the long haul.
If you’ve been treating these as two separate tasks, you might be leaving your legacy to chance. Here is why working with a financial advisor is the “secret sauce” to a truly effective estate plan.
1. Beyond the Will: Aligning Your “Paper” with Your “Portfolios”
A common—and costly—mistake is having a beautifully drafted Will that is accidentally overridden by how your accounts are set up.
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The Conflict: Did you know that beneficiary designations on 401(k)s, IRAs, and life insurance policies usually trump what is written in your Will?
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The Solution: A financial advisor performs a “sanity check” across all your accounts. They ensure your asset titles (individual, joint, or trust-owned) and beneficiaries align perfectly with your legal documents.
2. Tax Efficiency: It’s Not Just What You Leave, But How You Leave It
Estate planning isn’t just about who gets the house; it’s about minimizing the “tax bite” for your heirs. A financial advisor looks at the tax nature of your assets to optimize the transfer:
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Strategic Gifting: They can help you utilize annual gift tax exclusions to reduce your taxable estate while you’re still here to see the impact.
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Roth Conversions: They may suggest converting traditional IRAs to Roth IRAs, allowing your heirs to inherit tax-free income.
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Charitable Giving: If philanthropy is a priority, an advisor can set up a Donor-Advised Fund (DAF) or a charitable trust to maximize your tax deductions today.
3. Solving the “Liquidity” Problem
An estate plan might look great on paper, but what happens if your wealth is tied up in real estate or a family business? If your estate owes taxes or debts upon your passing, your family might be forced to sell a beloved asset quickly (and likely for less than it’s worth) just to get cash.
Pro Tip: Financial advisors use tools like life insurance to create “instant liquidity,” ensuring your family has the cash on hand to pay expenses without dismantling your legacy.
4. Planning for the “Living” Years
Estate planning isn’t just about death; it’s about incapacity. If you become unable to manage your finances due to illness or injury, who steps in?
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Your advisor helps identify the right “financial power of attorney.”
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They ensure your portfolio is structured to fund long-term care or medical needs without draining the inheritance you intended for your kids.
The “Dream Team” Approach
The best estate plans are born from a triad of professionals: your attorney, your financial advisor, and your CPA. When these three collaborate, you get a 360-degree view of your world.
Don’t wait for a crisis to start the conversation. Whether you’re just starting your career or looking toward retirement, bringing a financial advisor into your estate planning process ensures that your “blueprints” actually result in the home you intended to build for your family.
WE CAN HELP
The estate planning attorneys of the Penzien Legal Group, PLLC have been helping families and business owners with their estate planning needs for more than two decades. If you are looking for a compassionate professional that can help you through the estate planning process, conduct a review of your existing estate plan, or if you would like additional information about our services, give us a call at (586) 464-1900 or complete our contact us form.