You face the challenge of planning your future: retirement, college for the children, and security for your family should anything happen to you. Who exactly do you call to discuss making the best financial decisions for your situation?
Many aspects of your financial life may require you to work with multiple professionals from important disciplines, such as estate planning and financial planning. CERTIFIED FINANCIAL PLANNER™ or CFP® professionals and estate planning attorneys have distinct responsibilities and expertise. Some overlap is expected but it is necessary for both disciplines to understand your needs.
How do estate planning and financial planning complement each other to protect your assets and achieve long-term goals?
What Financial Planners Do
CFP® professionals organize your financial life and set forth a road map to help you best accomplish identified goals. They create a financial plan, including a net worth statement, retirement projections, and a risk tolerance analysis based on your circumstances.
Once the plan is complete, your portfolio can be invested. Your CFP® professional should analyze your existing investments and make recommendations on how they could be changed to better align with your financial plan. Also, your financial planner should continuously monitor your investment portfolio, adjusting course as needed based on changes in your financial plan or market conditions.
A CFP® professional’s role is to educate and empower you to manage your finances in a clear and understandable way. If you feel you are being sold to rather than taught, you may not be with the right financial planner.
What Estate Planning Attorneys Do
Estate planning attorneys help you plan for the efficient distribution of wealth at the end of your life. They will guide you in evaluating your goals and needs with respect to the transfer of your assets.
Your estate planning attorney will put together a customized strategy to potentially avoid probate, reduce taxes, and provide security for you and your family. If you have children, an attorney will create documents related to any necessary wills or trusts to help control when they can possibly receive funds in the future and for what purpose.
What happens if you were to develop dementia or get into a sudden debilitating accident? Estate planning also includes preparing for this possible incapacity during your lifetime, especially if you could no longer make financial or medical decisions because of an illness or disability. A complete plan incorporates selecting legal guardians for children under your care, as well as choosing health care agent(s) and attorneys-in-fact for you.
Trusting the Process
The process of creating a financial plan will help identify estate issues you may not have known before designing a financial plan. Most of the upfront work is done by the CFP® professional through the implementation of a comprehensive financial plan. Your estate planning attorney may use much of the financial plan’s information, including a net worth statement, current investments, a listing of your current beneficiaries, and income and expenses.
Your financial planner will already have assembled and organized your financial information, such as current estate documents, tax returns, and financial account statements, by going through this process. Having this already in order will save you money and your estate planning attorney’s time.
Estate Planning and Financial Planning Working Together for You
While CFP® professionals and estate planning attorneys have separate roles, the work of one complements that of the other. If would be best if you kept your financial planner apprised of your estate plan and your estate planning attorney informed about your financial plan.
It is your CFP® professional who is responsible for investing your money for your child’s college education or your loved one’s care. Your estate planning attorney is accountable for drafting actual legal documents, such as wills and trusts. Once these legal documents are executed, your estate planning attorney and financial planner will have to make certain your assets are appropriately titled to match what is in the estate plan.
Life events, such as a divorce or the birth of a child, will most likely affect your financial and estate plan. Your team of professionals needs to communicate to make sure that your financial and legal plans reflect these changes.
Estate planning and financial planning are not just one-time events or “set it and forget it” strategies. Changes can be implemented thoughtfully and efficiently once the groundwork is laid and you and your professional team members effectively communicate changes among each other.
Get Started on Your Overall Financial Plan
The bottom line is that when your CFP® professional and estate planning attorney work together, great things can happen.
Your wellbeing is a team effort. You do not want to go it alone.
Get started with a CFP® professional at Team Hewins to build a financial plan or strategy around estate planning.
Team Hewins, LLC (“Team Hewins”) is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas.