How to Tackle Estate Planning with Loved Ones This Holiday Season

Estate planning can be a tricky topic to bring up with loved ones, especially when distance is part of the equation. Luckily, the holidays bring families together and offer the perfect time to begin these vital conversations. Families often reminisce about major life changes that have transpired, and such events serve as reminders that certain practicalities should be addressed. Local First Interstate Wealth Advisor Tommy Walke outlines a few priority items to help families get started on important estate planning conversations this holiday season.

1. Review Beneficiary Designations

Anyone who holds assets like savings or investment accounts, including retirement accounts, and insurance policies likely designated a beneficiary upon establishing their account. Such a designation provides the institution with direction on who should inherit the assets. Usually, a contingent beneficiary is named in case the primary beneficiary predeceases the account holder, and multiple beneficiaries can be named.

Life events, such as marriage or the birth of a child, may warrant updating beneficiary designations to ensure a spouse is taken care of or that children have equal interest. While some institutions have default beneficiary designations, it’s important for individuals to ensure those designations are consistent with how they want assets distributed.

Typically, assets with beneficiary designations are distributed outside of a will, and they may avoid the public process of probate. However, depending on the assets, tax treatment may vary, so talking to a financial professional or tax advisor can provide greater insight.

2. Establish Power of Attorney

Power of attorney (POA) is a critical document that allows a person to identify who can make decisions on their behalf if they are incapacitated. An individual may grant that power to a trusted family member, such as a spouse or child. If relations are strained or family members don’t have the bandwidth, enlisting a neutral party, such as an attorney or financial professional, can ensure efficient management according to the individual’s wishes.

A POA can take several forms. For example, a durable POA takes effect immediately and does not expire, while a non-durable POA is valid for a limited time. Additionally, a medical POA tasks someone with making health-related decisions, while a financial POA does the same for financial matters. POA can be assigned to one or multiple people. It’s best to consult an expert to determine which combination suits an individual’s situation.

3. Consider a Will or Trust

To ensure their property is distributed as they desire, individuals should outline their wishes in a will or trust; otherwise, assets will be handled according to state laws. A will is a common choice. It allows a person to indicate their heirs and any terms for the disbursement of assets and is filed through the courts.

With a revocable living trust, an individual places assets in a trust and appoints a trustee to oversee management and distribution when the time comes. Unlike a will, a trust is generally handled privately and outside the court system. While trusts can hold various assets, it’s important to consult a professional to understand any potential tax implications in the near term and for heirs.

Seek Professional Guidance

No matter which combination of estate planning tools are used, it’s important for individuals to keep their loved ones apprised of where and how documents can be accessed to ensure decisions are aligned with the individual’s wishes. Those who need guidance with updating or initiating estate plans should consult with an attorney or a qualified financial professional, and First Interstate Wealth Management can help. For more information, connect with Tommy at [email protected], stop by a local branch or visit First Interstate’s website.