Questions & Answers
Estate Planning

This month’s topic for our Q&A is Estate Planning, and here to answer some frequently asked questions and provide some expertise is Chad Baxter. Chad works in our Lafayette, Indiana office and has been working with clients in estate planning, as well as other areas of financial planning, for several years. He carries both the CERTIFIED FINANCIAL PLANNER™ and Accredited Wealth Management Advisor℠ designations, and is here to share some of his experience and knowledge with us in regards to this topic.

Hi Chad, thanks for being here. Estate planning is a big topic, what is it about helping clients with their estate planning that you find rewarding?

Well, when most people think of working with a financial planner, they usually just see it as a way to get help with their investments. But to me, it involves so much more than just a focus on investment return. Estate planning in particular is an area which is sometimes overlooked, and where I can really impact someone’s life in a positive way.

I think the biggest thing that resonates with me is the bad situations I’ve seen both clients and family members experience. An unexpected death of a friend or family member that they weren’t prepared for, and all of the sudden they have a lot of challenges to navigate that they didn’t see coming during an already stressful time. After a loved one passes, if they hadn’t had the chance to create a will or ensure their beneficiary information was up to date, the responsibility of settling the estate falls onto the shoulders of the loved ones. However, taking the time to plan properly during your lifetime can make this process so much simpler on your beneficiaries, and I love the chance to be a part of that.

What are some examples of things that are considered Estate Planning?

I think people commonly think of wills and trusts, and probably are aware there are estate taxes due for individuals with larger assets. But also falling into this category is, and in my opinion one of the biggest things that’s overlooked, their beneficiary designation. You’re usually asked to assign a beneficiary when you open an account, but when was the last time you went back and looked at who you have listed?

Things can change quickly such as marriage, divorce and children, and a periodic review can often take just a couple minutes, but can have a huge impact in the event of a premature death. Trust accounts are common, but less common now than they used to be with the current tax laws. These are still important, as they can provide an additional way to ensure your assets pass according to your wishes, and certainly if there’s a specific role of your assets in providing care, like a disabled family member. Power of attorney documents can also be included in estate planning. Not just to give someone you trust the ability to manage your assets in event you become incapacitated, but also giving a loved one the ability to make healthcare decisions on your behalf. These situations are not fun to think or talk about, but critical to organizing your wishes. Life happens.

How much money does someone need to benefit from Estate Planning?

I don’t think there’s any financial amount. The biggest thing that triggers estate planning is family dynamics or changes in your situation such as a marriage or divorce. Someone could have only a dime to their name but if they have minor children, they don’t want to have the state make decisions on their behalf.

So let’s create a simple scenario. Let’s assume a client is married, has two minor children, a home, and maybe a couple smaller value investment accounts and come to you for help. What kind of estate planning would this client need?

Sometimes it’s just a conversation to make sure they have the proper legal paperwork in place, but a big one is guardianship and power of attorney documents. If they created their will prior to having kids, they might not have a legal document specifying who is going to care for the children in the event they pass away prematurely.

If someone dies without a will or binding declaration we call this dying “intestate”. At that point, the court will make the decision about who inherits what, and when it comes to guardianship of children, this is something that no parent would want to leave up to the legal system to decide. Beneficiary designations are the first step. Anything that can’t have a beneficiary designation is where a legal will steps in. It will provide language for things that might fall through the cracks otherwise and make sure that when you pass your wishes are followed, not those of the state.

So you mentioned a good word there, intestate. So, if you die intestate, or without a will, what happens?

If this occurs, the state has intestacy laws that they follow to determine who inherits the assets. This includes assets like your investments, but also things like your home and your bank account. If you pass away intestate and it’s left to the state to decide this, it can often be lengthy and costly. Further, if there are disputes about the court decision from the friends and family, it can delay the process even longer, resulting in assets that can’t be accessed by anyone until a final judgment is made by the court.

So let’s get a bit more specific about these laws. Each state is different, but in Indiana, what would happen to the couple we mentioned above if they passed away prematurely without any beneficiaries listed or wills?

Since the above couple is married with two children, the surviving spouse would receive one-half and the children would receive the other half. The rest of Indiana’s intestacy laws depend on the dynamics of each situation. If there are surviving children, they will receive an “intestate share” with the actual amount depending on if the deceased was married and how many children there are. Without getting into the weeds, since it can get pretty confusing, the order then favors the spouse, followed by parents and siblings.

How does someone find an estate planner?

Probably the same way you’d get information about investing your savings. Talk to friends or family who have gone through the process, or if you work with a financial planner, ask them for help. For example, as a financial planner, we can’t draft the documents, but we can help you understand how your assets will pass in the event of your death. Ultimately the plan must pass to an attorney to draft the documents legally. It’s important to work with professionals for this, because using the correct language and making sure that they are drafted legally can help prevent the chances of something being misinterpreted and your wishes executed incorrectly.

So since estate planning is important, what’s the hurdle that would keep someone from seeking help with it?

One is the misunderstanding of estate planning. People might assume it’s only for people with millions and millions of dollars, or for those who have really complex situations. Another hurdle is possibly the cost of attorneys. There’s no denying that when you are getting your estate documents in order, there is a lot of work to be done. But it’s hard to put a price on making sure that someone’s minor children are cared for in the event of an emergency.

If you don’t have a will in place, you should make it a priority to meet with an estate attorney or schedule a time to discuss with your financial planner. As I mentioned above, we can’t legally draft the documents you might need for you, but we can quarterback the plan and help discuss with you what should be covered in your will. I’m probably a little biased since I’m a planner, but starting the conversation with us can be a huge advantage. You’ll be able to go into a meeting with an estate attorney and already have expectations and know what to ask.

Tough topic to think about, but you’ve provided some invaluable advice here. Let’s lighten things up before we let you go. You’re a competitive golfer and often compete in tournaments throughout the year. What is the first tip you’d give to someone who’s never swung a club before? I’m asking for a friend.

One tip- hmm. Well, golf is so different than other sports, so when you swing a club, it’s not going to feel natural. It takes time. Just remember to have fun, stick with it and eventually it will come around.


This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation. Clarify Wealth Management and LPL Financial do not provide legal advice or services.