Choose Your Own Ground

Carolanne M. Chavanne, CFP

In the Pink Floyd song, Breathe, the listener is encouraged to, “Breathe, breathe in the air, don’t be afraid to care. Leave, don’t leave me. Look around, choose your own ground.” Most of us strive to build a life that allows us to live comfortably and leave something behind for our families and friends when we’ve left. Determining the most appropriate and meaningful way to pass your legacy on to the next generation is often fraught with challenges, especially when it comes to navigating the legal choices that come with estate planning.  Decisions include ways to avoid probate, as well as setting up a living trust, will, and other important planning documents.

The complexity of government rules and regulations has energized a need for estate planning that has never been greater. New tax codes and regulations currently under consideration could potentially have the ability to greatly impact the transfer of wealth from one generation to the next. Although the impact of these new tax rules is expected to be limited only to estates in excess of $5,000,000, planning ahead is still the key to making sure your heirs reduce the likelihood of being impacted and thereby receive the most that the government will allow. The time to act is now. An Estate Plan helps lead to:

Peace of Mind

Having a well-designed estate plan in place means that, when the time comes, everyone can rest easy, knowing that the necessary legal documents are in place and that requests and directives will be followed. During times of uncertainty about one’s health or wellbeing, the comfort that comes from knowing that specific wishes and directions will be carried out can have an immeasurable positive impact on one’s state of mind. Having a plan in place can bring a sense of relief and allow the focus to be on the people and things that matter most while providing a sense of serenity, confidence, and peace of mind.

Avoiding Probate

Probate is a legal process associated with the distribution of the assets of an estate where no clear direction or documentation is available. Needless to say, it is best to avoid probate, if possible, for many reasons. First, probate is a public process, which means that one’s preferences with regard to how assets are distributed are open to public scrutiny. That visibility can potentially lead to hard feelings and recriminations amongst heirs. In addition, probate can be a slow process, and the pandemic has unfortunately only intensified this.  Wills may be contested, and attorney’s fees may accumulate - reducing the potential amount of an inheritance. The best estate plans are designed with the intent to settle the distribution of assets completely outside of probate.

Naming Beneficiaries

One of the key reasons to establish an estate plan is to be sure that we’ve designated beneficiaries on all financial accounts, including IRAs and life insurance. It’s also important to attempt to name beneficiaries on taxable investment accounts and checking/savings accounts, either through joint tenancy, trust, or TOD (Transfer on Death) titling.

For assets that legally cannot have named beneficiaries, such as personal belongings, real estate, etc., it may make sense to work with an estate planning attorney to prepare a legal document, such as a living trust, to make sure your wishes are carried through. It’s also important to prepare for other life choices through legal documents that assist with financial and health care decisions.  The ‘basic four’ parts of an estate plan are listed below -

The Component Parts

Will – A will is the document that lays out who you want to give your assets to when you die and helps ensure that your assets are distributed properly when the time comes.

A will is also something that can be drawn up at any time—it could actually be a mistake to put this off until you’re older. If you currently have young children and/or pets, your will should define who you would like to serve as their guardian in the event that you become incapacitated. For this reason, drawing up a will is something that you’ll likely want to think about sooner rather than later.

Trust – A trust is a legal entity created to hold assets on behalf of a beneficiary or beneficiaries—you quite literally “trust” them with your money. There are three primary types of trusts, and the person setting up a trust can dictate exactly how and when beneficiaries receive the assets in the trust.

Revocable trusts, also known as living trusts, can help your estate avoid probate. Irrevocable trusts can also be beneficial, as they can help limit your exposure to estate taxes. Once assets have been placed in the trust, they can’t be removed or altered. In essence, they’ve been taken out of your estate, which can protect you from estate taxes on those assets.  It’s also possible to create a trust inside your will, known as a testamentary trust. However, the assets inside a testamentary trust aren’t exempt from probate.

Financial Power of Attorney – A power of attorney—often abbreviated as just POA—allows you to designate someone to step in and manage your finances if you are unable to. There are a few different kinds of POA, but they all fall under two main types: general power of attorney or limited power of attorney.

General power of attorney designates an individual to act on your behalf on all matters, including medical, legal, financial, etc. Limited POA designates someone to act on your behalf only in specific matters or events.

A POA is especially important for singles since there is no spouse to immediately jump in to serve in this role. If you are single and don’t have a power of attorney designated, a court will decide who should serve as your guardian, and it’s possible that the court may select someone that you may not view as the ideal candidate.

Health Care Directive – A health care directive functions similarly to a power of attorney. The difference is that while a power of attorney traditionally handles your financial decisions, a health care directive handles your medical decisions.

There are two main documents in this category. A living will is a written statement that provides instructions for your health care should you become incapacitated. For example, if your personal or religious beliefs are such that you can’t or don’t want to have some type of care, your living will can dictate that to medical personnel.

The second document designates a medical power of attorney, also known as a health care proxy. This person makes medical decisions on your behalf if you become incapacitated. If your family members are unaware of your true wishes or disagree about your care, it’s good to have these documents in place to ensure you are cared for exactly as you intend.

Develop a Legacy 

Giving thought to how you’d like to be remembered is another factor when putting an estate plan together. You might consider establishing a scholarship program with your alma mater or opening a donor-advised fund that can be used to support charities close to your heart. There may be some tax incentives in doing so as well. An IRA or a 529 college savings plan for a grandchild are good options to consider if you’d like to leave a lasting legacy to future generations. I invite you to make note of any estate and legacy planning thoughts or questions you may have and bring them to my attention the next time we meet.

News and Upcoming Events:

Last week we announced our transition to Microsoft Teams for all of our virtual meetings and Microsoft Bookings as our online scheduling software.  You will receive a revised meeting invitation for any future meetings originally scheduled on RingCentral, starting November 1st.  Please check out the supporting links below for any questions you may have regarding Teams and Bookings.  Remember, it is Bookings to set up the appointment or meeting, and Teams to attend it!

We are also excited to announce the New Client Portal will be available this week! Investment clients will be receiving two emails tomorrow: The first is an announcement that will contain the steps to setting up your portal.  The second will contain a link that is active for 24 hours.  Use this link to log into your portal and update your password.  If you have any problems, please reach out to any team member or schedule a 30-minute “Set Up Help” Meeting. 

Finally, just a reminder that the Client Appreciation Event scheduled for November 11th at Tin Roof Bistro in Manhattan Beach, CA, has been postponed due to ongoing concerns with the pandemic. The event will be rescheduled at some point in the future, so please continue to check here for updates as they become available.

Key Dates

  • November 1 - Affordable Care Act Open Enrollment Begins
  • November 4 – New Client Portal Launch
  • November 25 – Thanksgiving!  Happy Turkey Day!
  • November 27 – Small Business Saturday
  • November 29 – Cyber Monday

  • December 7 – Medicare Open Enrollment Ends
  • December 15 – Affordable Care Act Open Enrollment Ends
  • December 25 – Christmas Day! Merry Christmas!
  • December 31 – Last Day to Contribute for 2021
    - Charities for a tax deduction
    - 401(k) contributions

Financial Planning Articles of Interest

Estate Planning Awareness Month: Rethink These 8 Estate Strategy Myths

Gifting vs. Inheritance: Which is Better for My Beneficiaries?

How to Create an Estate Plan

As we approach the holidays, I would like to take this time to thank each of you for your trust and support. I am so thankful for your belief in my team and for the opportunity to work closely with each of you to help turn your dreams into reality. Happy Holidays to all! Here’s hoping that 2022 is a successful, rewarding year for everyone.






By Carolanne M. Chavanne, CFP

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