Five Reasons Your Financial Advisor Should Review Your Will

Sep 27, 2022

Financial advisors can offer a different perspective about the legal terms in estate documents and what they will mean financially for you and those who inherit your assets.

All the events that happen over our lifetime—going to college, getting married, having children, choosing to divorce and deciding when to retire—have consequences for our finances. However, a little less than half of Americans have tied their financial planning into their estate planning: only 46% of individuals have a will that describes how they would like their money and estate handled after death, according to a Gallup News poll.

Baby boomers are expected to transfer an estimated $30 trillion to $68 trillion to their children, grandchildren and other beneficiaries over the next two to three decades. For those who don’t know where to begin in the estate planning process, typically the first step is to seek an estate attorney to work with you on drafting a will or living trust. While the attorney’s job is to ensure the legal aspects of your inheritance wishes are solidified, it’s a good idea to share your estate documents with a financial advisor.

Here are five reasons why:

  1. Your will should align with your financial goals. Your wealth advisor should already have a full-picture view of your personal, family and financial circumstances. Your advisor works with you to ensure that all your assets and liabilities are accounted for and included in your plan. Upon retirement, this plan forms how your assets will be used to support you for the remainder of life. Providing a legacy to heirs or charities is also an important part of financial planning. Advisors make sure your will aligns with your financial goals by discussing your beneficiary designations for retirement accounts and titling of nonretirement accounts. They also review specific dollar bequests versus the allocation of a percent remaining to ensure it meets your wishes. Finally, they are able to help you consider income tax differences for heirs or charities that inherit retirement funds as opposed to residual estate funds.
  2. You don’t want to forget to include any assets in your will. Because your advisor is your go-to person for taking stock of your assets, they will be able to recognize what assets are accounted for through your estate documents. Even if you do have estate documents, the title of an asset may dictate what occurs upon your death. Understanding which document or title supersedes the other upon death may help avoid undesirable results. Advisors work with their clients to create checklists to keep track of all their important documents and accounts. And most importantly, making sure funds flowing to your estate beneficiaries match up with your desires will help prevent family or legal disputes.
  3. Your advisor can help you navigate situations when your family circumstances change. Generally, it’s recommended to revisit your will every three to five years or if there is a major life event such as a marriage, divorce, birth or death in the family. Your advisor acts as a sentinel for your accounts by reminding you what will occur upon your death, ensuring that any life event can be handled either through a change in your will or a change of beneficiary or title. When financial advisors review a prospective client’s estate documents, one of the biggest surprises is often that an ex-spouse is still named in the will or in a retirement account beneficiary designation. Regular reviews of both estate documents and beneficiary designations will help to uncover issues and inconsistencies.
  4. The tax implications of what’s written in your will aren’t always the most efficient. While your CPA serves as a tax resource, financial advisors can identify opportunities for tax efficiency in the process of passing your assets to heirs. For example, including charitable bequests in your will while making family members the designated beneficiaries of a retirement account will almost always result in a greater income tax burden on your heirs. Some very simple changes may save your heirs significant income taxes on funds they inherit.
  5. Speaking with an advisor is a chance to think about your overall legacy. Your legacy is about much more than the assets you leave behind. Working with an advisor is an opportunity to decide which charities you would like to contribute to and whether to make some or all donations during your lifetime or wait until death. Furthermore, advisors can support in creating a legacy letter as a way to share values, beliefs and life lessons to heirs. Legacy letters are notes that better explain the rationale behind your choices in your estate documents and how you wish to be remembered. They are an opportunity to provide more personal context on how you would like your family to carry out your wishes and insights into the values that guide your life. Although these legacy letters may not be legal documents, they provide a more personal way for you to communicate with your heirs.

If you have questions about the benefits of sharing your will, please reach out to your advisor.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. The above is legal information is provided for educational purposes only, individuals should reach out to a qualified legal professional based on their own circumstances. Certain information is based upon third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy or confirmed the adequacy of this article. The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Partners®. R-22-4431

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