Do I Need A Financial Advisor For Estate Planning?

What will happen to all your stuff when you die? With the right estate plan, you don’t need to wonder. Among other things, it can dictate to whom different assets should go, how any debts or business obligations should be handled and where to store your wealth to maximize returns.

However, creating your own estate plan can be difficult and risky. To spare you and your family from unnecessary losses and headache, consider hiring an estate planning financial advisor.

What Is Estate Planning?

Estate planning is the process of arranging for the distribution of your assets and the fulfillment of any responsibilities upon your death. It aims to ensure your wishes are carried out, your tax burden is minimized and any confusion among beneficiaries is avoided.

Ultimately, estate planning is necessary to provide your loved ones with a secure future once you’re gone. 

What Is The Difference Between An Estate Planner And A Financial Advisor?

Though related, estate planners and financial advisors are not the same.

Financial advisors offer comprehensive financial guidance on investment strategies, retirement planning and insurance needs to build a plan tailored to your financial goals. In contrast, estate planners focus on asset management and distribution after death with specific legal tools like wills and trusts.

Using A Financial Advisor For Estate Planning

A financial advisor who specializes in estate planning can help you with estate, investment and tax planning. Note that these tasks are distinct from what an estate planning attorney does – an estate planning attorney is essential for handling legal paperwork related to estate planning. Partnering with a financial advisor, however, will ensure your estate planning process is smooth, effective and tailored to your needs and goals. This will give you peace of mind and promise a secure future for your loved ones.

What Services Do Estate Planning Financial Advisors Offer?

Financial advisors can offer a range of estate planning services:

Will preparation: Advisors can help draft and update your will to ensure your assets are distributed according to your wishes (an estate attorney may need to approve the final will).

Trust creation and management: They can help you establish and manage various types of trusts (e.g., revocable or irrevocable) to protect your assets.

Estate tax minimization: They can help minimize estate and other taxes to maximize the wealth inherited by your beneficiaries.

Gifting strategies: They can set up tax-efficient strategies for giving to charity, friends or family members.

Succession planning: They can help prepare your business for a seamless transition of ownership and management.

Life insurance selection: They can recommend appropriate life insurance policies to help provide for your loved ones after you die.

Retirement planning: They can help you preserve enough wealth for retirement while still meeting your legacy goals.

Potential Risks And Consequences: Planning Without A Financial Advisor

A solid estate plan considers all the assets you will leave behind. Without a financial advisor, considerations like property, investments, retirement accounts and insurance policies may be overlooked, resulting in serious risks and consequences for your beneficiaries.

8 Ways Your Estate Plan Will Benefit From A Financial Advisor

Here are 8 benefits of partnering with a financial advisor for estate planning:

1. Tailored investment strategies: Financial advisors can create customized estate plans based on your unique financial situation, goals and preferences.
2. Strategic asset distribution: They can help preserve and grow your wealth through strategic asset distribution, protecting it against market volatility, inflation and other potential risks.
3. Retirement planning: They can help you prepare for retirement by ensuring you have a large enough nest egg to live on after you stop working.
4. Investment management: They can help manage your investment portfolio within the context of your estate plan, ensuring your investments align with your long-term goals and risk tolerance.
5. Coordination with other professionals: They can collaborate with estate planning attorneys, tax professionals and other experts to ensure seamless integration of all aspects of your estate plan, minimizing potential conflicts.
6. Legacy planning: They can help you develop strategies for charitable giving, legacy planning and wealth transfer to ensure your values and intentions are preserved for years to come.
7. Ongoing review and adjustments: They can regularly review and adjust your estate plan to ensure it stays aligned with your changing financial circumstances, your goals and tax laws.
8. Peace of mind: By partnering with a financial advisor, you can gain peace of mind, knowing that your estate plan is well-structured and aligned with your financial goals.

Tips For Choosing An Estate Planning Financial Advisor

Now that you know the benefits of hiring an estate planning financial advisor, here are some tips for choosing the right one:

Credentials: Look for advisors with relevant credentials such as Certified Estate Planner (CEP) or Certified Financial Planner (CFP). Such designations indicate relevant training and expertise.

Experience and track record: Choose an advisor with significant experience in estate planning, especially for individuals similar to you (in terms of net worth, assets, etc.). Also check for positive reviews from the advisor’s past clients.

Comprehensive services: Aim for an advisor who offers all the estate planning services you require, such as wills, trusts, tax strategy, charitable giving and retirement planning.

Transparent fee structure: Financial advisors may charge hourly rates, flat fees or a percentage of assets under management (AUM). Choose a fee structure that’s transparent and aligns with your budget.

Clear communication: Your advisor should be able to explain complex estate planning concepts in a way you understand and always be willing to clarify any questions you have.

Regulatory compliance: Verify that the advisor is in good standing with regulatory bodies such as the Financial Industry Regulatory Authority (FINRA) or the Securities and Exchange Commission (SEC).

The Bottom Line: Yes, A Financial Advisor Is A Good Idea For Estate Planning 

Ultimately, a financial advisor can not only help you create an estate plan but improve one you already have. Their financial expertise is worth its weight in gold.

To get a head start on managing your finances, create an account on the Rocket Money^SM app today! It can help you track your net worth, keep an eye on all your accounts and ensure you leave enough behind for your loved ones.