What happens when we die? Ask that question to a financial advisor and you’re likely to get a very non-philosophical answer - a financial answer. Here’s why estate planning is so important.
When a person dies, or “graduates”, an estate goes into probate to disburse its assets to all the relevant beneficiaries. This includes all bank accounts, investment accounts, insurance policies, etc. etc. Many, many factors can influence how smooth this process plays out, or vice-versa.
Some bank accounts or insurance accounts will have a clear beneficiary already listed on the account. Other accounts must pass through the probate process, which is why it’s so very important to have a clear will or trust with a designated executor.
A clear estate plan means the Executor can much more easily receive a letter of testamentary from the probate court. It is this letter that the Executor shows to the various accounts in order to be able to move or manage the money according to the Will and/or Trust.
Without a clear plan, the probate court, though guided by decades of precedent that favors immediate family, is free to give this letter of testamentary to whomever it sees fit. This can obviously introduce painful or financially disastrous uncertainty at a time when emotions are raw and cool heads are sometimes hard to find.
While we aren’t estate attorneys at Coign, we can connect you to a network of trusted advisors for estate planning. And we can help you plan your business strategy and investment plan to prepare better for “graduation”.
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During the holiday season, consider donating to qualified charitable organizations that qualify as an itemized deduction when making your holiday gifts.