The ABCs of Estate Planning

There is a common misconception that estate planning is something only the affluent need to do before they die. However, estate planning is important for everyone, regardless of income level or net worth. Planning for the disposition of assets upon your death can provide benefits to all the parties involved.

The greatest benefit may be in the knowledge that your wishes will be fulfilled. Naming your heirs, and relieving them of unnecessary expenses and stress by designating which assets they will receive, may be preferable to having a court make such decisions for you.

In addition to designating your heirs, the estate planning process may include developing strategies to preserve your assets, such as establishing a trust. Proper planning can help ensure that your assets go to the people you choose, and in some cases, it can help minimize taxes. An estate plan can also include advance directives to be carried out during your lifetime. For example, a durable power of attorney grants authority to another person to make legal and financial decisions on your behalf, in the event of your mental incapacity; a health care proxy grants authority to a person you choose to make health care decisions for you if you become unable to express your wishes; and a living will generally allows you to state your preferences regarding the giving or withholding of life-sustaining medical treatment.

Put It in Writing

A will is the basis of any estate plan. In drawing up your will, consider obtaining the guidance of an attorney. Although you may think you can do it yourself, an estate planning professional has the experience to ask questions you may not have considered. For instance, would your minor children or grandchildren be able to manage an inheritance? Would you want your children’s spouses included in your estate? If your estate were affected by a divorce or the death of a child, how might your wishes for the distribution of your assets change?

Name Names

The first name to settle on is that of your executor, who will be appointed to administer your estate. Next, consider the beneficiary or beneficiaries of your insurance policies. Beneficiaries and contingent beneficiaries of assets in retirement accounts such as pensions, 401(k) plans, and Individual Retirement Accounts (IRAs), are kept on record with the retirement plan administrator, and these nominations take precedence over your will. Retirement assets pass directly to the beneficiaries, bypassing probate court, unless the executor of the estate is named.

What about Estate Taxes?

Assets transferred to a spouse will not be subject to estate taxes, regardless of value. However, transfers to other beneficiaries, such as children, may be subject to Federal estate taxes if they exceed the applicable exclusion amount. In 2013, Federal estate taxes have an exclusion amount of $5.25 million and a top tax rate of 40%.

Certain vehicles can be used to fund the payment of estate taxes, such as life insurance policies and trusts. For high-value estates, a gifting program is often used to reduce the value of the estate, thereby minimizing taxes. For specific guidance, be sure to consult your tax and legal professionals.

Regardless of your net worth, consider taking steps now to help ensure that your intentions will be followed as directed, and that provisions will be made for your loved ones.


Nothing prepares us for losing a loved one. The shock, pain and grief can feel debilitating, and it can be difficult to focus. Bereavement can make it feel like everything familiar seems absent – and you don’t know what to do next. Our Life After Loss checklist is designed to help guide you or your family.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Liberty Publishing, Inc.


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Keri Pugh
Author: Keri Pugh
Keri Pugh is a Wealth Advisor with Fusion Financial Group, an independent financial planning firm and fiduciary based in Denver, CO. Keri has over 20 years of experience in the industry, as both a financial advisor and Principal. She obtained a bachelor’s degree in Finance from the University of Northern Colorado and is an alumna with national sorority Delta Zeta. Keri holds a variety professional licenses, carries the esteemed mark of Certified Financial Planner (CFP®), meeting rigorous education and experience requirements in key areas of financial planning, as well as the designation of Accredited Investment Fiduciary (AIF®), a symbol of her dedication to upholding the fiduciary standard for clients. As a wife and mother to two young children, Keri is particularly drawn to working with thriving families and women. This is not only reflected within her practice but also in her regular sponsorship of the local PTA and volunteer work with the elementary school. Outside of the office, Keri enjoys traveling, skiing, and the Colorado great outdoors with her family. She often lines up movie marathons for the family and, in line with many clients, is a beginner golfer and a wine enthusiast. To learn more about Keri, connect with her on LinkedIn.