The concept of financial planning incorporates a lot of elements – budgeting, investing, tax planning, risk management and insurance, saving for children’s education, saving for retirement, philanthropy, and estate planning.
These things are – and should be – closely interrelated.
Estate planning is one area of financial planning that’s often done in a silo, even though it has the potential to affect, and be affected by, every other area. Without involving your estate planning attorney in the financial planning process, and your financial planner in the estate planning process, problems and opportunities are often overlooked.
One way to view estate planning is as a set of documents, but it’s really more than that. It’s the who, what, when, why and how of passing assets to the people and things you care about.
It’s looking at your assets, income and debt, considering the people who rely on you financially, envisioning the kind of legacy you want to leave behind, spotting the risks that could deplete or derail your legacy, spotting opportunities to enhance it.
And then it’s the practical work of drafting the documents and integrating them with your financial life.
Take a closer look at that expanded definition of estate planning and you’ll notice it has elements of all the other areas of financial planning: budgeting, investing, tax planning, risk management, education planning, retirement planning and philanthropy. The estate planning attorney’s focus is how those elements intersect with legacy.
Do you have enough saved to make sure your dependents are taken care of when you pass away? Are you protecting assets you leave behind for minor or disabled beneficiaries? Can you live a comfortable lifestyle in retirement and still leave something behind for your children?
Do you have a clear idea of what estate tax and income tax liability your heirs will face, and are you doing all you can to minimize taxes or provide your heirs with enough liquid assets to pay the tax? These are questions that you probably cannot answer alone.
In fact, it might take both a financial planner and an estate planning attorney, sharing information and ideas, to get you to a confident “yes” for each question.
When you’re choosing a financial planner, ask about the process for working with other professionals, such as attorneys. When choosing an attorney, ask how he or she works with financial planners.
Look at it as assembling a team where cooperation is key to achieving your goals.
Luke Gawronski, a financial planner with Barnum Financial Group, is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. firstname.lastname@example.org