The Bogart Wealth Guide to Estate Planning

Estate plans may be one of the most misunderstood areas of financial planning, yet they can be a critical component in protecting your finances, providing for your family, and leaving a lasting legacy. Before we get into how, let’s briefly recap what an estate plan is and debunk a few of the big misconceptions around estate planning.

What is an estate plan?

An estate plan can vary by person but in general it includes:

  • A will;
  • Trust(s);
  • Durable power of attorney;
  • A healthcare directive;
  • Beneficiary designations; and
  • Guardianship designations.

Estate plans contain multiple legal documents, so we recommend Bogart Wealth clients work with an attorney that specializes in estate planning. A focused attorney can help you build a plan that’s optimized for your state (since states govern probate laws) and your personal circumstances.

It’s important to note that an estate plan is different than the estate tax. The estate tax only applies to estates worth more than a certain amount (in 2023, the threshold is just under $13 million) while an estate plan is just that—a financial and medical plan for yourself before and after death. These plans are incredibly important if and when you cannot communicate your wishes. 

The components of an estate plan

The will is probably the most well-known component of an estate plan. It designates who receives your assets—both physical and financial—when you die. Most wills document named beneficiaries (recipients) as well as an executor to carry out the instructions contained in the will. 

If you have minor children, your will should include guardianship designations, or who you want to take care of your kids if something happens to you. Consider outlining a plan for any pets you have as well.

When you die, your will may go through probate, which is a public process involving a judge. Depending on where you live, this can be incredibly simple–or complex and pricey. Beyond the process itself, though, some people may have concerns about their assets and financial information becoming part of the public record.

Trusts do not go through the probate process, so many people use trusts as part of estate planning to help them efficiently pass assets on to beneficiaries. There are a number of types of trusts (revocable and irrevocable) for different purposes (legacy, charitable giving, etc.), so we won’t spend too much time here. Just remember that trusts can be a helpful tool both when you’re alive and in terms of planning your estate.

A power of attorney gives someone (the agent) the right to act on your behalf. A durable power of attorney lasts after you’re incapacitated. Essentially, if you are hit by a car and unconscious, the person with your durable power of attorney would make decisions on your behalf.

There are different types of powers of attorney. Medical powers of attorney are often granted as part of a broader healthcare directive (sometimes called an advanced directive), which details your wishes if you’re unable to make medical decisions. You can tell your agent what you’d like them to do. The rules and forms for these directives vary by state.

You’ll also want to make sure you update the beneficiary designations on any insurance policies and retirement plans on a regular basis.

Making an estate plan

Once you compile an estate plan, it’s important to follow through on the details. Establishing a trust, for instance, is only the first step. Once the trust is created, you need to retitle your assets to put them in the trust’s name.

You should also write a letter of instruction. This letter helps supplement your will by clarifying your wishes. A good letter of instruction includes a date, a list of your assets and where to find them, credentials (such as passwords to online and financial accounts), and instructions to the executor of your will. The more detail you include, the more likely it is your wishes will be carried out the way you want.

While estate planning isn’t fun—it requires you to think about a lot of worst-case scenarios—it can help protect your family if those worst-case scenarios occur. To help you simplify the many moving parts involved in the process, we created an estate planning checklist to help you get started.

If you’re interested in support beyond the checklist and the information in this article, including help managing a trust or questions about how an estate plan fits into your broader financial plan, contact us today.

Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.bogartwealth.com
Please Note: Bogart Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bogart Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. 
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