Estate Planning 101: Planning, Preparation And Process

January 20, 2017

As a financial advisor, I work with my clients in all phases of their lives – estate planning, retirement, inheritance, sale of business, death of a spouse, and divorce. I do all I can to prepare clients for these events and to think ahead of steps they can take to minimize risk, minimize taxes, and ensure a smooth transition. 

Only recently did I personally experience one of these events myself when my mother passed this year, and it made me think of what aspects of estate planning I did right and what I could have done better, to prepare her estate, and for her beneficiaries.

The Background

My mother was age 95 when she passed away, but about 15 years earlier my father had passed away, and that is when I tiptoed into the role as her financial advisor. It wasn’t that she was incapable of managing her affairs, and she was proud to do so. But, it was a way I could help her with some of the finances that she was not as knowledgeable on, and as she got older, I could be that second set of eyes to be on top of her affairs. I knew that the estate planning process would start much earlier than when it's needed. And, when she became sick and was in the hospital, I could step in and pay her bills and track her income. Also, I had started to change the address on many of her accounts to my address, but I always gave her copies of any important documents so she was informed and every year I gave her an update on all of her accounts, which I do for all of my financial planning clients. And, I had online access to many of her accounts and went paperless where possible, as she was never one to get comfortable with a computer.

The Financial Advisor's Role in Estate Planning

The children come to me hoping the parents will also become clients and let me be that second set of eyes, guide them through their finances, and help map out their future and their ultimate estate plan. This role I was playing is very similar to the role that I have with many of my financial planning clients, where they want to help their parents, but the parents are reluctant to engage their children for privacy or other reasons. As I now work to administer my mother’s estate, the beneficiaries on her life insurance, annuity and IRA were reviewed a few years ago and are correct, so distribution is easy. Her trust assets are all properly titled, and most of it is liquid, so administering those assets are simple. Yet, two years ago I did a thorough review of my mother’s trust document, along with her attorney, and found several mistakes that were extremely important and needed to be fixed. If I had found those mistakes now, I would have a lot more work to do, and possible legal issues and costs to clear them up.

Estate Planning: Considering Taxes and Working with a CPA

I have engaged my mother’s CPA to assist with some tax issues, and ensuring that there are no tax implications with any actions I take. I can see where extra CPA time and effort would be involved if I had not asked the appropriate questions early in the process. So, engaging the estate planning attorney and the CPA early on is a smart move and can avoid future mistakes. I alerted those companies where she was receiving pensions just in time so there were no benefits that were paid after her death that had to be returned. I alerted her credit card companies so no further auto debits could occur that were not appropriate, and I will be alerting the credit bureaus of her death, so no one can try to get credit illegally in her name.

Estate Planning: Custodians and Cash Flow

Lastly, I am careful to keep cash flow moving in her estate and not immediately alerting all custodians that hold her assets about her death, as many times those accounts are frozen once you alert them. It can take a few weeks for the custodians to open up new accounts with new tax ID numbers, so be ready for a gap when cash may not be readily available. I have kept all beneficiaries in the loop as far as the estate value, and the steps I am taking to administer and distribute the assets.

Estate Planning: Illiquid Assets

The only thing that I might have addressed earlier is what to do with any illiquid assets. Considering how we might deal with illiquid assets, how are they valued, and who might want them versus getting other types of assets.


In summary, I can’t imagine how anyone who does not have the financial knowledge that I do, could administer an estate without leaning heavily on an attorney or CPA for guidance. And, as the trustee, one has to take into account the time it takes to document and track all activities, and hold yourself accountable to the beneficiaries. All of the prep work I did in advance has paid off, as would any time spent with a financial planner ahead of a loved one’s passing.