Estate Planning: What is it? Who needs it? Is it important? - Carroll Financial
May 3, 2021

Estate Planning: What is it? Who needs it? Is it important?

Author: Bill Trahan, CFP®, CRC®, RFC®

When we were younger, the topic of estate planning rarely came up. We thought estate planning was only for the wealthy. We have learned that this is not true at all so I have outlined some common questions about Estate Planning below:

What makes up an estate?

An estate is everything comprising the net worth of any individual including cash, cars, real estate, and securities.

What is an estate plan?

Simply put, an estate plan is a collection of documents that protect your assets and personal property and explains how you want them distributed upon your death. An estate plan may also help you and your family pay less in taxes, fees, and court cost.

Who needs an estate plan?

Just about all of us.

Why is estate planning so important?

A good plan can stop the family fights before they start.  A good estate plan will enable you to choose who controls your financial assets at your death or if you become mentally incapacitated.  The most important reason is that your estate plan protects your beneficiaries. The main component of any estate plan is designating beneficiaries for your assets. Without a plan the court will decide who gets the assets, which is a process that can take a very long time and be very costly. With proper planning you can also reduce much of the Federal taxes, State taxes and Inherited taxes that may be due.

How do you know if you have a good estate plan?

You will know if you have a good estate plan if your plan and instructions as to how you want your affairs to be settled is easy to understand.

Is an estate plan tailored to meet your needs?

It should be. Make sure your plan is personalized for you. Your plan must address more than what will happen with your assets after you pass away.  Your plan must also address your estate if you become disabled or if you become mentally incapacitated.

What is needed in an Estate Plan?

  • Last will and testament – A will gives you the power to decide what is in the best interest of your children and pets after you are gone. It typically names an executor, who is someone who will be in charge and follow your directions.
  • Revocable living trust – A Revocable living trust is a tool that helps with passing assets to the beneficiaries and avoiding probate cost.
  • Durable power of attorney (DPOA) – A durable power of attorney allows someone to act on your behalf, financially and legally while you are still alive. Once you pass away the DPOA ends immediately.
  • Health care power of attorney (HCPOA) – A health carepower of attorney gives someone else the ability to make decisions for you regarding your health care. Unlike a living will, it applies to both end-of-life treatment as well as other areas of medical care.
  • Living Will (also known as an Advanced directive) – A Living Will is a legal document that is only valid if you are unable to communicate your wishes. It lets you give directions to your family and doctors regarding what kind of medical treatment you would like in the event of a terminal condition. 
  • Digital asset trust – Digital asset trusts are relatively new to the estate planning process. This trust decides what to do with your electronic property, including your hard drive, digital photos, information stored in the cloud and online account such as Facebook, Google, and Twitter.
  • Final Bequests Bequests are gifts that are made as part of a will or trust. A bequest can be to a person, or it can be a charitable bequest to a nonprofit organization, trust, or foundation. Anyone can make a bequest—in any amount—to an individual or charity.
  • Organ Donor registration – Signing up on your state registry means that someday you could save lives as a donor—by leaving behind the gift of life. When you register, most states let you choose what organs and tissues you want to donate, and you can update your status at any time.
  • Beneficiary Designations (which is often overlooked) – Beneficiaries are named persons you want to inherit the proceeds when you die. Typically, these would be named for life insurance proceeds, IRA or retirement plans.
  • A list and location of all important documents – A list of important documents is critical. Make sure you and your family know where the documents are located.  A few examples include life insurance policies, retirement accounts, bank accounts, birth certificates, real estate deeds, and any stock or bond portfolio’s you may own.
  • Letter of intent This letter contains instructions for important personal and financial information that does not belong in your will. No attorney is needed. Just write a letter to convey your wishes for things that you hope will be done.

In summary, avoiding probate is by far the most common reason why people want to have a sound estate plan. Reducing federal estate taxes or state inheritance tax is another great motivator for many people. It’s important to choose someone to be in charge if you become mentally incapacitated or die.

An estate plan allows you to decide who will get what, when they will get it, and how they will get it.

This will go a long way in avoiding family fights and costly probate court proceedings.  Asset protection planning is also becoming more and more popular. The process begins with a sound financial plan coupled with a comprehensive estate plan that will protect your assets for the benefit of both you, during your lifetime, and your beneficiaries after your death.

How we can help

If you have any questions about this article, please reach out to Bill Trahan, CFP®, CRC®, RFC® at (704) 553-8006 or

For a comprehensive view of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

Securities offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory services offered through Carroll Financial Associates, Inc., a registered investment adviser. Carroll Financial Associates, Inc., and Cetera are not affiliated.

4521 Sharon Road, Suite 400, Charlotte, NC 28211

Estate Planning, Financial Literacy
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