Why Your Financial Plan and Estate Plan Need to Work Together
Your financial plan and your estate plan are often prepared by different professionals, at different times, with different goals. When they're not coordinated, the gaps between them can be costly.
The Beneficiary Designation Problem
One of the most common misalignments involves beneficiary designations. Retirement accounts, life insurance policies, and annuities all pass directly to named beneficiaries — outside of your will and outside of any trust you may have established. That means if your estate plan says one thing and your beneficiary designations say another, the designations win. This can result in assets going to the wrong person, assets going to a minor child without a guardian structure in place, or assets creating an unintended tax burden for your heirs. A coordinated review looks at both your estate documents and your account-level designations together.
Trust Funding
Many people establish a revocable living trust as part of their estate plan — and then never transfer their assets into it. An unfunded trust accomplishes very little. The assets still go through probate, and the trust's provisions don't apply. A financial planner working in coordination with your estate attorney can help ensure that the accounts and assets you intend to be governed by the trust are actually titled correctly.
Tax Efficiency Across Generations
The way assets are structured and titled affects not just your taxes during your lifetime, but the tax burden your heirs will face. Inherited IRAs, for example, are now subject to a 10-year distribution rule for most non-spouse beneficiaries — a change that significantly affects how those assets should be planned for. Coordinating your financial and estate plans allows for strategies that minimize the overall tax burden across generations, rather than optimizing each plan in isolation.
Powers of Attorney and Financial Access
Your estate plan likely includes a durable power of attorney — a document that authorizes someone to manage your finances if you become incapacitated. But does your financial planner know who that person is? Are your accounts structured in a way that allows that person to act quickly if needed? These are coordination questions that often fall through the cracks when financial and legal planning happen separately.
What a Coordinated Review Looks Like
A comprehensive financial review doesn't replace your estate attorney — it complements the work they've done. It looks at your financial accounts, your estate documents, and your beneficiary designations together, identifies where they're aligned and where they're not, and helps you prioritize what to address.
If you haven't had someone look at your financial and estate plans together, it's worth doing. A complimentary Financial Blind Spot Review can help you see where the gaps might be — and what to do about them.
See where your plans align — and where they don't.
The Financial Blind Spot Review is a no-obligation conversation with John Adler to identify what may be missing from your financial and estate picture.
Schedule your free reviewJohn Adler does not provide legal or tax advice. This article is for informational purposes only.