Planning for the Unexpected: Estate Planning 101 Book Review & Takeaways

Michael QuanEducation, How to, Misc2 Comments

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Estate Planning 101 Book Review

I was 9 years old when I first felt the impact of mortality. My uncle and 2 cousins were returning home from a fishing trip in Mexico and flying back to LAX on a commercial flight. They were a few minutes from the airport when a small single-engine plane collided with their DC-10 jet. Sadly everyone on board perished as well as scores of individuals below.

“How could my uncle and 2 cousins who lived 5 minutes away from us suddenly be gone in an instant?” I pondered. What will happen to my aunt who was not with them?

I share this story with you because there’s a universal truth that we naturally want to avoid – we’re all going to die at some point. It’s an inevitable outcome that’s the same for you as it is for me. We may not know when or how it will happen, but we can make plans in advance and mitigate the pain and confusion for those we leave behind.

Like a lot of you, I crave certainty. That’s why I plan. I like to know how my actions will lead to specific results, and how to position myself for optimal success.

So, when it comes to estate planning, I want to make sure that my family is taken care of even when I’m no longer around to provide for them.

That’s why today I’m sharing an incredible book with you called – Estate Planning 101: From Avoiding Probate and Assessing Assets to Establishing Directives and Understanding Taxes, Your Essential Primer to Estate Planning

Yes, it’s a bit of a mouthful, but captures the essence of the book perfectly. After reading this book last week, I felt compelled to share some key ideas I took away.

What’s an Estate Plan?

To better understand an estate plan, let’s first discuss the word “estate”. An estate refers to your personal assets and belongings. This could include, cash, equities, bonds, real estate, cars, or other possessions. It’s everything that you will pass on at the time of your death.

Now that we know what an estate is, let’s now focus on the word “planning”. It seems straightforward. However, there are many planning intricacies to consider depending on the assets you own. We’ll cover some of the basics here and I’ll refer you to the book for the details.

Your estate plan is a way for you to intentionally organize and distribute your estate after you die, or are incapacitated.

Typically an estate is for the benefit of your designated heirs or beneficiaries. You may not get to decide when you die, but you can be prepared when you do.

What goes into an Estate Plan?

An estate plan is going to get personalized a little bit different for everyone. However, there are some key elements that Estate Planning 101 touches upon.

  • Providing financial security for you, a spouse/partner, immediate family, etc.
  • Naming a representative to handle financial or medical matters
  • Financial gifts/support or possessions to others
  • Funding education for children or grandchildren
  • Structure to minimize tax exposure or probate fees
  • Clarity of final wishes to deter disputes and in-fighting
  • Transferring ownership of business interests, etc.

What others would you add?

What are you protecting?

When establishing an estate plan you are taking back control of what happens in your absence. You are protecting YOUR wishes and choices even beyond your ability to choose.

Consider what would happen if you don’t have an estate plan.

If you were to die or become incapacitated, your estate would have to follow state guidelines (US reference). This will vary amongst states, but many place your estate into what’s called, “probate”. This is the process by which your estate is settled through a set of defined laws/rules.

For example, if you die without a will and/or trust, then the state will decide who should get your property if a properly designated beneficiary is not named. This may or may not be as you intended AND there is a time element involved for the parties who are going to receive any of your assets.

An estate plan will avoid many of these hassles by already defining a clear set of rules as set forth in a living revocable trust and will. I can also provide clear instructions on who are your trusted advisors and the sequence of actions upon your death.

Furthermore, your estate plan may include an advanced healthcare directive to protect you in the event where you become incapacitated. You can pre-decide what occurs in these situations or who you’d like to make decisions for.

So again, your estate plan is going to protect your choices hopefully well in advance of your ultimate passing.

Estate Plan Tools

A large part of an estate plan is looking out for the interests of loved ones once you’re no longer here.

This could be a spouse/partner, children, parents, siblings, pets, or others who are important to you.

And in order to take care of them through your estate, you’ll want to use some or all of these tools.

I’ve already touched upon a couple of tools above (living trusts, wills, & advanced directives). There are others as noted below:

  • Living revocable trust
  • Will
  • Healthcare Advanced Directive
  • Power of Attorney
  • Life insurance
  • Team of professionals (CPA, attorney, etc.)

Living through Your Legacy

Although we all must die someday, our impact can live on well beyond our time here on earth.

With a solid estate plan, your decisions will be put into action and your distributions could have far-reaching impact.

Although it’s great to take care of family and friends, don’t forget to “share the wealth” with organizations that you’re passionate about. Maybe you are interested in helping to eradicate a specific disease. There are charities that are working diligently to make this a reality.

You can also gift appreciated assets such as stocks while not triggering capital gains taxes. Speak with your tax professional for more details.

What do you want your legacy to be?

Final Thoughts

There are a lot of decisions and considerations to be had when creating an effective estate plan. So, take your time to do it properly, but go and DO IT!

If there’s one thing that 2020 taught us, it’s that we don’t know how much time we have on earth. So, it makes sense to be efficient with our time and money, and ultimately become a blessing to someone else.

The majority of this post was pulled from ideas straight from Estate Planning 101. But, there’s so much more to know. This book is written by both Vicki Cook and Amy Blacklock of Women Who Money. They are well respected in the personal finance community and have helped so many people already to become empowered with their money.

So do yourself and your family a favor. Pick up a copy today and make the commitment to build an estate plan that your family deserves.

I will tell you it’s an ongoing process, but once you knock out the core components, your ability to breathe and sleep peacefully at night goes up exponentially.

 

Readers, have you started your estate plan yet? Why, or why not?

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2 Comments on “Planning for the Unexpected: Estate Planning 101 Book Review & Takeaways”

  1. Whoa, I had no idea of your story with your uncle and 2 cousins.. It’s one thing if you hear about death on the news and read about it but it’s another when it starts hitting close to home. Estate planning is so important.

    However, I think Peter Thiel and/or Google is researching ways to cheat death so…. Death may not be as certain as it is today? 😉

    1. There will always be a market for those who are looking to cheat death. I certainly think we’ll be able to slow down aging in the future, in which case, FIRE is going to be 50X+ your annual expenses.

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