No one likes sitting around thinking about the consequences of their own mortality. For most of us, it’s an uncomfortable topic even in the abstract; considering the practical logistics of passing on is even harder.
But having a plan for the assets you leave behind is about more than your own peace of mind - it’s a way to provide for those you care about most, even after your death.
“The purpose of an estate plan is to protect what’s important to you,” said Peter Coughlin, a certified senior advisor at Berkshire Money Management.
Whether that’s family, a business, a beloved pet or a cause, what matters most to you in life can be protected legally and financially in your absence with a clear, thorough estate plan.
Berkshire Money Management offers robust, comprehensive estate planning services in accordance with their holistic philosophy of wealth management. Rather than sending clients off on their own to navigate the legal aspects of the planning process, BMM advisors follow along to provide guidance every step of the way.
“We work with very talented estate planning attorneys,” Coughlin said. “We will make an appointment for the client. We will go to the meeting with the client. We will ask questions with the client. At the end of the day we’ll help the client review the documents with the attorney.”
Do I really need an estate plan?
According to the 2022 edition of Caring.com’s annual Wills and Estate Planning Study, 56% of Americans believe it is somewhat or very important to have a will or living trust. However, only 33% of Americans have either of these documents in place. That number only gets smaller for younger adults: just 27% of those between 35 and 54, and 24% of those aged 34 and younger.
33% of those without a will said they didn’t have enough assets for passing on to justify creating one.
The belief that wills and trusts are only for the very wealthy is a common one, but it overlooks the many purposes of an estate plan beyond just bequeathing money and property.
“Everybody should have some type of estate plan,” Coughlin said. “If you’re a young family just starting out, and you have a little baby- if something were to happen to you, who is going to take care of your baby for you?”
Estate plans don’t have to be a ‘one-shot’ undertaking. A good estate plan will evolve as life circumstances change. Plans should be reevaluated “whenever there’s a significant change with family,” Coughlin said. “Death, or divorce, or illness, should be right at the top of the list.”
Another important life change that is often overlooked is moving from one state to another, especially if you’re moving into Massachusetts.
“There have been so many people who have moved from out of state into the Berkshires over the past several years,” Coughlin said. “Some of them have a lot of wealth, and they are not aware of the tax implications here.”
“We have one of the lowest thresholds for estate taxes in the United States,” he continued, referring to the state’s $1 million estate tax exemption, tied with Oregon as the smallest in the country. “There are so many people who are impacted by it, that are not aware of it and need to have that conversation.”
A knowledgeable financial advisor can rework an existing plan - or build a new one - with an eye on Massachusetts’ unique challenges to ensure that heirs are getting the highest possible share of the estate.
It’s about them
“With a client, one of the things we ask is, ‘what’s important here that we need to talk about?’ And oftentimes, it’s not about money, it’s about family,” Coughlin said.
With a family-focused approach to estate planning, clients and advisors look at how to best serve beneficiaries. Leaving heirs with a large amount of money all at once, for example, can sometimes lead to serious problems, especially for young people. “What you see a lot of, unfortunately, is compulsive spending issues, where the heirs just go through that money incredibly fast,” Coughlin said.
Rather than dropping a pile of sudden wealth into an heir’s lap, an estate plan can match the flow of money for recipients to what each can manage safely. “We look at what kind of safeguards should be established to protect your family,” Coughlin said, “so what you’ve worked for your entire life isn’t going to do more harm than good.”
An estate plan can also help heirs avoid some of the legal and financial headaches that come with an inheritance. For example, “having a trust will bypass probate and reduce legal fees,” Coughlin said. “It also ensures that your wishes are very, very difficult to contest.”
Even those without heirs should have a formal plan for their wealth, Coughlin said, as a way of controlling their money’s impact even after they’ve passed on. “There are some people that have no heirs,” he said. “And what do you do with an estate like that? What charities are important to you, what kind of legacy do you want to leave? Do you want to have your wealth do some good in your community that you’ve lived in your entire life?”
On film, a vague will or unexpected inheritance can make for compelling dark comedy. In real life, the lack of clarity is much less entertaining.
“Having no plan can just blow up a family,” Coughlin said. “You could have a very close-knit family, but if at the end of the day, you have spouses getting involved offering their opinions on what’s best, no plan is a disaster - and even having a plan can run into some complications. When you have transparency, it really eliminates a lot of the conflicts that potentially could arise.”
Talking to the people you love about your post-mortem wishes isn’t easy. It can be painful for everyone involved, and it’s tempting to avoid the subject altogether out of concern for the other person’s feelings.
Not talking about it isn’t necessarily a kindness, though. Leaving things unsaid puts heirs in the difficult position of guessing your wishes after you’re gone, and leaving the door open for familial conflict.
“Having transparency is the most important thing if you want to keep family harmony,” Coughlin said.
For this reason, Coughlin suggests including heirs in the planning process. “I encourage the children to have some involvement,” he said, “in the event that there’s a need for them to be involved.”
Ultimately, it eases the burden on those you love during a particularly difficult time: a final act of support even though you’re no longer there to deliver it in person.
This content was paid for and coordinated with the Adviser. Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.