You've likely worked hard to plan for your long-term financial objectives, such as financing an education, providing for your children and saving for retirement. But have you taken the critical steps needed to create safeguards through estate planning?

Even though it may be an uncomfortable topic of conversation, taking proactive steps toward estate planning can benefit those who:

  • Want their estate distributed according to their wishes instead of statutory guidelines
  • Have assets that will make them susceptible to federal or state estate taxes
  • Want planned distributions for the benefit of descendants
  • Have heirs who may benefit from having their legacy managed by a professional

After taking the critical step of having your estate-planning attorney create the needed legal documents, a few more important tasks remain, such as communicating your wishes to those who will have roles and responsibilities in your estate's management. Sharing your estate plan allows you to tell your story rather than putting the burden of guesswork on your heirs.

Protecting your legacy

Putting a comprehensive estate plan in place allows you to preserve and transfer your assets according to your wishes, appoint someone to make decisions on your behalf, and help take care of the people and causes most important to you.

Having a formal plan can help ensure your wishes are followed, reduce potential delays and avoid conflicts that could arise among your beneficiaries. Conversely, if you haven’t made arrangements, the state’s laws will apply — which may not align with your wishes. Every state has statutes dictating how assets will be passed after a person’s death, how to handle the decisions for an incapacitated person and how the court will select a legal guardian for your children and related decisions.

Sharing your plan

Estate planning is about more than documenting your intentions for distribution purposes. Sharing your plan and the rationale behind it is a powerful way to pass on your values, purpose and vision for your legacy with your children and future generations.

It’s essential to communicate the roles and responsibilities to those you have named in a fiduciary capacity in your documents (such as an executor, trustee or agent under power of attorney). Those individuals should be comfortable with and prepared for the duties you’re asking them to perform.

Avoiding common estate-planning mistakes

While planning your estate, try to avoid these common mistakes:

1. Not updating titling and beneficiary designations to work within your estate plan

In accordance with your attorney's recommendations, you should annually review and update beneficiary designations (for assets such as life insurance policies, annuity contracts and retirement accounts) and account/asset titling to ensure alignment.

If your documents do not accurately reflect your desired estate strategy, your wishes may not be followed as you intended. This can occur, for example, when legal documents and/or beneficiary designations are not updated to reflect a life event (e.g., marriage, birth, etc.). This could also occur when people create trusts with the intention of transferring certain assets to the trust but then fail to do so.

2. Not updating fiduciaries to adjust for changing circumstances

To help successfully carry out your wishes, your fiduciaries, including executors, trustees and agents under your powers of attorney, will likely need to be updated throughout your life and their own.

In considering your appointees, it's important to periodically re-evaluate if they’re still willing and able to perform the responsibilities that come with the role. For example, if your parents or siblings were once designated as appointees, it might later be appropriate to appoint your children as a more capable choice to help execute your estate plans.

3. Not having contingent beneficiaries appointed within your estate plan

If the unforeseen happens and your primary beneficiary passes away, it's important that you have contingent beneficiaries named in the appropriate documents. Having contingent beneficiaries ensures that your assets are transferred according to your wishes.

4. Not having a clear understanding of your estate plan

Because estate planning can be a difficult topic to discuss, you may be uncomfortable taking a deeper dive into the strategy and asking your planning team detailed questions.

Take time to work with your team to understand how the specifics of your plan fit together. If you fail to have a clear understanding of what your plan means and how the strategy will be executed, it could lead to your wishes not being carried out the way you'd like when you pass away.

5. Not regularly reviewing your estate plan

One thing you can count on is change, be it regulatory or personal. It's important to meet periodically with the appropriate members of your professional team to review your estate strategy and update it when changes occur in your life or in the lives of those who may be impacted by your estate. Considerations may need to be taken for life changes that include relocations, births, marriages or death.

Edward Jones recommends reviewing legal documents (e.g., will, trust, powers of attorney) at least every three to five years to ensure appropriateness. 

6. Not sharing your estate plan with loved ones

Beyond being a potential source of strife to your relationship with loved ones, not sharing your estate plan can also lead to delays in the execution of your wishes as well as increased expenses.

Holding a family meeting about your estate strategy can help you achieve your legacy goals, preparing your beneficiaries for future inheritances and responsibilities. It's also important to consider whether and when to involve those affected by your estate strategy in broader discussions with your estate-planning attorney, financial advisor and qualified tax professional.

How Edward Jones can help

Edward Jones does not provide estate planning or tax advice, so it’s important to have a team of professionals working together to support your estate plan, including your Edward Jones financial advisor, estate-planning attorney and CPA/tax professional.

Your Edward Jones financial advisor will meet with you annually to discuss your goals, life events and the titling of your Edward Jones accounts to support you in keeping your estate plan current.