The 3 P's: Financial, Retirement and Estate Planning: Which Comes First?

Financial, Retirement and Estate Planning: Which Comes First?

This question has been debated between the planners in each of these disciplines forever and the answer to the question is surprising to some. The answer is also simple and when you think about the question the answer is clear.

The oldest of the planning professions is estate planning. Started in feudal England, estate planning became a way of passing part of one's property to a first born son and later, a surviving spouse. Due to the low life expectancy then, there was no such thing as retirement or financial planning. If you weren't going to live beyond your 40's, then planning like we do today was irrelevant.

Modern times have brought us many medical and scientific advances. We live today twice as long as when estate planning was the only planning one could do. Many people do not want to work their entire lives, so planning for retirement is important for them. Other folks want to learn about their finances, how that industry works and how to plan for their money. That's where financial planning comes in. Lastly, an entire industry was created after the industrial revolution, life insurance, a blend of all three disciplines.

It's easy to get confused by these three different areas of planning. They all involve planning for the future, but where does one start? Which one comes first? The answer is your estate plan! Here are the reasons that completing your estate plan always comes before starting on your financial and retirement plan:

1. Your estate plan protects against the worst risks first.

The worst risk to yourself and family is an unplanned and untimely death. Only your estate plan protects against this risk. Only your estate plan can operate successfully without the passage of time, right from the moment you sign your documents.

When you work with your wills and trusts lawyer, you make decisions as if you had died yesterday. If you were gone yesterday, what are your wishes for property; decision makers and all the other issues we have discussed in the articles below. Your estate plan, your will requires no time horizon to be operable, it is what you want right now!

2. Financial and retirement plans require time to work.

When you save for retirement, college for children and start to plan your finances, all of those require time to operate. For example, you might have to save $X over Y years to be able to retire at a certain age or to have $X saved for college expenses. Retirement and financial planning are exactly the opposite of estate planning in that they are about planning for the distant future over time.

The only discipline that crosses these lines is life insurance planning as it, in most cases does not require a time horizon. It is also generally considered an estate planning tool so it fits more into estate planning than the others.

Your take away from from this is start your own planning with your estate planning, your wills, trusts and powers of attorney. Protect against the worst risks first and then add your financial and retirement plan to the mix AFTER your estate plan is completed.

Please join our conversation and let me know your thoughts on this or any of our articles. As always, thank you for your interest.

Bernie Greenberg

When You Should Review Your Will or Estate Plan: Really

As an attorney specializing in wills and trusts and estate planning, I am often asked, "when should I review my will with my attorney?"

The answer to that question will vary from client to client, but there are some guidelines to follow.

First, if you are asking the question, then it is time for a review. Merely thinking about whether your plan is current should always prompt a review meeting.

Second, here is a list of events that should prompt a review of your will or estate plan:

1. You signed the documents more than three years ago.

2. Your finances have changed by more than 15% from when you signed your documents.

3. Your relationship status has changed.

4. Your children have health issues which have arisen since signing your documents.

5. A close family member; parent, child, spouse, etc. has died or become incapacitated.

6. Your goals for your family have changed since the date you signed your documents.

7. You don't know how portability works and how it may apply to you and your spouse.

8. You are not sure how your will or estate plan works and you need a refresher.

Additionally, I recently came across an excellent article that provides another lawyer's take on when you should review your will or estate plan. That article is here:

Ten Reasons to Review Your Estate Plan Today

The best rule to follow is to review your will or estate plan every two years with your attorney regardless of whether you think you should. If you need to review your documents we can help. Call our office today at 303-688-3535 to schedule your review meeting.

At Kokish & Goldmanis we make reviewing your will or estate plan easy to ensure your plan is always up to date and current.

Thank you.

Bernie Greenberg