Plan Your Estate Like a Billionaire

Plan Your Estate Like a Billionaire by John Brinkley, GoalInvestor

As John Lennon said, “Life is what happens to you while you’re busy making other plans.” Not to be morbid, but the same could be said about death.

If you’re under 40 and unmarried, you probably haven’t thought much about planning for your family’s security after you pass away.

If you’re over 40, you’ve probably thought about it and said to yourself, yep, I’ve got to get to that someday.

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An estate plan is a set of instructions about how to distribute your assets and take care of your loved ones after you’re gone. If you don’t make these decisions, your state government will—and not necessarily in a way you would have wanted. If you have minor children when you die, and no spouse, you’ll need to designate a guardian for them. If you don’t, a court will. That could be emotionally painful for your family and cost them unnecessary legal fees.

You may think estate planning is only for those in Warren Buffet’s league. But everyone has an estate, of sorts. Even if you don’t own your home, you have possessions—cars, furniture, clothing, computers, televisions, family keepsakes—and you’ll need to decide who gets them.

Estate planning consists of some obvious steps and some that aren’t so obvious.

The obvious steps include having a life insurance policy and a will that specifies how you want your assets distributed, i.e, who gets what. They may also include a trust, which we’ll explain in a minute.

The less obvious steps include recording passwords to on-line banking and brokerage accounts, instructions for your funeral and disposition of your remains, and collecting the documents the executor of your estate will need to deliver to your state’s probate court and to file your estate’s tax returns. Often, when people die, their family members have to search for life insurance policies, on-line passwords and other things they’ll need to handle your estate. You might want to save them that trouble, though you’ll need to make sure these are stored very securely.

Here’s a rundown of the basic elements of an estate plan:


Let’s start with the will. This is a simple declaration of how you want your assets distributed. People traditionally have hired lawyers to write their wills. Today, you can do it yourself; the forms are on-line along with lots of information on how to fill them out. Be careful, though. If you make a mistake, or if you’re not clear about your wishes, it can cause problems for your heirs and drag out the probate process for a long time. If you’re unsure, a lawyer may be helpful. Most states require that wills be notarized. Even if your state doesn’t, it’s smart to do it anyway.


In certain circumstances, you’ll need more than a will. For example, you may have a minor child or grandchild to whom you want to leave money. Or, you may have an heir who is not responsible enough to handle the money you want to leave to him. In cases like these, you’ll need to set up a trust. For the minor child, the trust could say she doesn’t get the money until she turns 21, or graduates from college. For the troubled heir – let’s say he’s got an addiction problem – the trust could stipulate that he gets no money until he’s been clean and sober for five years. If you create a trust, you’ll need to designate a trustee to manage it. This can be anyone you choose. Trusts also should be notarized.

There are certain things you can’t do with a trust. For example, you can’t stipulate that your daughter only gets money if she marries someone of the same ethnic heritage as you. You can’t say a beneficiary gets no money unless s/he practices a particular religion.

Trustees vs. Guardians

Again, you should designate someone close to you to act as guardian for your kids, should you pass away before they reach adulthood.

If you have a trust set up for the kids, you might be inclined to name the same person as guardian and trustee. But that might not be wise. You’ll want a guardian whom you can trust to raise your children with love and care. And you’ll want a trustee with a good head for finance. One person might not have both those skills.


After you pass away, the executor of your estate will have to present your will, death certificate, and any other relevant documents to the clerk of your state’s probate court.

You can designate whom you want to be the executor, but if you don’t the courts will choose one for you. In most cases, it will turn first to your spouse, if living, or to your heirs, letting them decide among themselves who should serve. If that doesn’t work, the court will choose a person or institution (like one of your creditors) to serve as executor.

Each state has its own probate laws, and you (or whoever has the initial task of disposing of your estate) should check the law in your state of residence to learn who can serve as executor, and what s/he needs to do.  Some states, for example, require that the executor be represented by a lawyer.

If you own real estate in more than one state, your executor will have to file with the probate courts in each state. Not everything you own is subject to probate. For example, a jointly-owned IRA or 401(k) or insurance policy is not.


If you’re single, there is a 40 percent federal tax if your estate exceeds $5 million in value. If you’re married, the threshold is $10 million. The tax is on the part of your estate that exceeds the threshold. If the tax applies to your estate, it will be taken out during the probate process.

And since we’re already dealing with uncomfortable subjects, here’s another set of decisions to make as a part of this planning process: What happens if you’re incapacitated? Clear instructions about what to do if you can make decisions on your own protects both you and your loved ones.  Here are the critical documents to put in place:

Power of Attorney

First, you should give someone close to you, someone you trust, power of attorney. Every state has power of attorney laws. While not all state laws are the same, they do all acknowledge these levels of authority:

  • Specific power of attorney gives your designee authority to handle one issue, managing your medical treatment, for example.
  • General, also known as durable, power of attorney gives that person the authority to manage all you affairs.

Your “attorney in fact”—the person to whom you grant power of attorney—will need access to your bank and brokerage accounts and the usernames and passwords you use to gain access to them on-line.  S/he should also get to know your doctors and other healthcare providers and, in the event of your incapacitation, let those professionals know that s/he will be acting as your advocate.

It’s wise to have a lawyer help you prepare your Power of Attorney document, which has to be notarized.

Living Will

As unpleasant as it may be, it’s important to leave explicit instructions about what you want done – or not done – in the event that medical intervention is needed to keep you alive and you can’t make your wishes known.

Following are questions you’ll need to answer when you write your living will. You should discuss them with your doctor, and have your living will notarized.

  • Resuscitation: if your heart stops, do you want doctors to try to re-start it?
  • Mechanical ventilation: If you are unable to breathe on your own, do you want to be connected to a ventilator?
  • Tube feeding: If you can’t eat normally, do you want a feeding tube inserted?
  • Antibiotics: If you’re near the end of your life, do you want to fight infections with antibiotics or let them run their course?
  • Comfort and pain management: What do you want doctors to do to alleviate pain? Do you want to be allowed to die at home?
  • Organ donation: Do you want to make your vital organs available to others who need them?

No matter how young you are or how minimalist your lifestyle, leaving instructions for handling your death or incapacitation is a gift to the people you love. And if you have children, it’s a parental responsibility you shouldn’t postpone. Get a plan in place now. Yes, your life is bound to change and you may want to rethink those decisions at some point.  But failing to plan puts those decisions in the hands of people who may not make them with the care you would wish.

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Neither SEI nor its affiliates provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein: and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.

This information is for general educational purposes only and should not be relied on as legal advice or financial or estate planning.  You may wish to seek the assistance of professional services for further guidance.