Families get these 3 things wrong about estate planning, advisor says

In the wake of the pandemic, there’s one topic that’s suddenly a lot less taboo, according to Lee Baker, a certified financial planner based in Atlanta.

“We get more calls around estate planning,” said Baker, founder, owner and president of Apex Financial Services and a member of CNBC’s Advisor Council.

“The last 36 months shifted the mindset,” he explained. “A lot of people have taken this opportunity to reassess.”

However, there are three things families are often initially wrong about, Baker said.

They believe “it’s a daunting undertaking, it’s only for rich people and it costs a ton,” he said. “None of those are necessarily true.”

Many families dread talking about money, especially financial plans, a recent Wells Fargo report found. Roughly 26% of adult children would rather deal with their parents’ estate after they die than talk about it while they are living. Further, 19% said they don’t mind receiving nothing at all as long as they don’t have that talk with their parents. 

“It’s not as daunting as you might think,” Baker said.

A new perspective may help, he advised. “Are there people that you love?” Baker said. “If the answer to that is yes, spend the money to make their lives easier.”

“Estate planning is a lot like life insurance; it’s less about you than the people you love and care about.”

Even though most parents plan to leave at least something to their children, only 37% said they currently have a plan in place for transferring their wealth, according to a report by Edelman Financial Engines.

Some online platforms can help with the basics, such as a will, Baker said. Websites including Quicken and LegalZoom offer templates for estate planning documents and guidance in filling them out, generally for less than $100. (Here are some of the do’s and don’ts, costs and options of estate planning.)

“It’s pretty quick and fairly painless and, for most people, that kind of platform is good enough.”

Otherwise, consult with a financial advisor, accountant and attorney, particularly if you want to set up a trust for your children, designate other beneficiaries or guardians, have questions about appointing an executor and health-care proxy or minimizing gift and estate taxes.