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Planning Your Estate: How to Create Your Estate Plan
February 6, 2024
Adam Yale, Partner and Portfolio Manager
Bruce Van Kooten, CFA®, Partner and Portfolio Manager

Key Takeaways:

  • Regardless of the size of your estate, having a well-thought-out plan is essential. A thoughtful plan can reduce potential confusion and costs for your family in the event of your passing.
  • The three main types of estate plans are wills, trusts, and living trusts.
  • Life circumstances can change quickly, making your estate plan something you should regularly review with your financial advisor.

What is an Estate Plan?

The term “estate” typically refers to your total financial picture at the time of your passing. It encompasses all your assets, like real estate, investments, cash, businesses, intellectual property, and outstanding debts or liabilities.

An “estate plan,” on the other hand, consists of a set of legal documents, including wills, trusts, powers of attorney, and beneficiary forms. These documents outline how you want your assets to be managed and distributed after you pass away or if you cannot make decisions for yourself. Regardless of the size of your estate, having a well-thought-out plan is essential because it can help simplify the process and reduce any potential confusion and costs for your family in the event of your passing.

Regardless of the size of your estate, having a well-thought-out plan is essential because it can help simplify the process and reduce any potential confusion and costs for your family in the event of your passing.

What Do I Want to Achieve?

Before diving into estate planning, it’s crucial to set some clear goals regarding the legacy you want to create. Try to be specific in your objectives, as vague goals may hinder your ability to achieve your desired outcomes. Being specific ensures you have prepared the proper legal documents for your wishes to be executed as intended.

What do we mean by specific goals? Start by considering your overall plan. Are you aiming to minimize taxes, preserve wealth, ensure that certain assets stay in the family, or perhaps support charitable causes? Here are a few examples of specific goals: “I intend to leave $100,000 to each of my grandchildren for their college education,” or “I plan to allocate ten percent of my estate to my local parish.”

When crafting these goals, think about who should inherit portions of your estate, how much they should receive, the distribution method, and the timing of the bequests. To ensure that these objectives are carried out correctly, establish clear instructions and name beneficiaries. Enlisting the support of a wealth manager working with a lawyer or accountant can help ensure that you have the appropriate documentation in place. This professional guidance can be invaluable in achieving your goals.

Download our Comprehensive Guide to Estate Planning

What Are the Major Types of Estate Plans?

There are many types of estate plans, but there are three main types: wills, trusts, and living trusts.

WILL — A will is one of the most critical estate planning tools. It is a document that outlines your desires regarding the distribution of assets and property after your passing. With a will, you can name an executor to manage your estate, appoint guardians for children, and specify who will receive certain assets and property. A will provides numerous benefits, such as establishing priorities, preventing family disputes, and including an advanced medical directive

TRUST — A trust creates a fiduciary relationship that allows a third party, the trustee, to hold assets or property for the benefit of another. Trusts offer numerous advantages, including avoiding probate, maintaining privacy, minimizing state or federal taxes, and providing flexibility to adapt to the changing needs of beneficiaries. Furthermore, trusts establish clear guidelines for asset distribution and usage. However, creating a trust can take time and effort to understand.

LIVING TRUST — One type of trust is a living trust. It is a legal arrangement that outlines explicit instructions for asset distribution after your death. Living trusts come in two forms: revocable and irrevocable. The grantor can change a revokable trust at any time they are alive, assuming the person is competent. Alternatively, an irrevocable trust usually cannot be changed without a court order or the approval of all the beneficiaries.

There are many estate plans, but the three main types are wills, trusts, and living trusts.

Do I Have the Right Documents?

An estate plan includes various types of documents, like a will, trust, medical directive, financial power of attorney, insurance policies, and financial records, among others. Once you’ve gathered all these financial documents, it’s wise to create an inventory and think about storing them securely, perhaps in a safe deposit box. You should also share copies with individuals who may require them – for instance, your financial agent should have a copy of your financial power of attorney.

Because life is always evolving, it’s important to revisit these documents regularly to ensure they stay up-to-date and aligned with your current situation.

What Legacy Do I Want to Leave?

Leaving a legacy is about passing down something meaningful and treasured to those who will remember you. It’s not just about divvying up your bank accounts and house. When you’re getting started with estate planning, take a moment to reflect on how you’d like to be remembered.

For some, it means specifying how sentimental items should be shared among family members. Others want to leave behind charitable donations to organizations close to their hearts. Many opt to provide for their family’s future needs, which is one of the most common ways to leave a legacy. This could include setting up a trust fund to support a grandchild’s education or help them purchase their first home.

How Do I Monitor My Plan’s Performance?

Life circumstances can change quickly. That is why estate planning should not be a “set it and forget it” plan. Review your plan with your wealth manager, accountant, or attorney every few years and after significant life events such as buying a home or marriage is important. These events may serve as a catalyst to change the way your estate plan has been structured. It is also important to monitor your plan against your goals. For example, if you want to leave a certain amount to charity, you may need to start investing a bit more aggressively.

Life circumstances can change quickly, making your estate plan something you should review with your financial advisor, accountant, or attorney every few years.

How Can a Wealth Manager Help?

When you’re working on your estate plan, it’s a good idea to have a discussion with your wealth manager if you have one. Your wealth manager isn’t just there to assist with your estate plan; they can also serve as the leader of your team, bringing in an estate attorney or a tax specialist if necessary. With a wealth manager in the mix, everyone can get a full picture of your financial situation as well as your long-term financial goals.

Final Thoughts

At Lawson Kroeker, we spend a significant amount of time thinking about our clients’ future goals, their financial plans and our role in helping them get to where they want to be. We know our clients have many retirement planning and wealth transfer options available. We also understand sometimes life happens and that you need your resources at hand in case of an emergency.

It is important to take all of these considerations into account when thinking about how to grow your money for retirement. We construct a custom retirement plan just for you.

About Lawson Kroeker

Lawson Kroeker Investment Management, founded in Omaha, Nebraska is a third-generation wealth management firm that helps a select group of high-net-worth clients achieve their life goals by providing investment advice and building custom investment solutions.

Lawson Kroeker provides a broad, thoughtful, prudent, and ongoing financial roadmap tailored to each client. We focus on and understand each client’s risk tolerance and needs—whether growth, capital preservation, tax mitigation, or special situations. We also help clients with trust and estate management and philanthropy services.

Adam Yale, Partner and Portfolio Manager—Mr. Yale started his investment career in 1997 with First Manhattan Co., an investment advisory firm in New York, NY as an analyst of publicly-traded real estate securities and direct real estate investments. From 2006 until the 2022 merger with Lawson Kroeker, Adam was the sole Principal at Red Cedar Capital, LLC, a Registered Investment Advisory firm he founded that employed a fundamentals-based investing strategy. He earned a B.A from the University of Michigan and a Master’s in Accountancy from the University of Denver.

Bruce Van Kooten, CFA®, Partner and Portfolio Manager—Mr. Van Kooten has been a Lawson Kroeker Partner and Portfolio Manager since 2006 and has more than 45 years of institutional and private investment management experience. Bruce has worked as a trust investment officer with First National Bank of Omaha and as a senior investment portfolio manager in Denver at KPM Investment Management, which became Wells Fargo Private Asset Management. Bruce earned the Chartered Financial Analyst (CFA®) designation in 1987 and is a member of the CFA® Society of Nebraska. He has a Bachelor of Science degree in Business and Economics from Iowa State University.

Download our Comprehensive Guide to Estate Planning