Financial Planning // Part 3: Legacy Planning

If you’ve followed along with Part 1: The Accumulation Strategy and Part 2: The Distribution Strategy, you know we have found ourselves at the finale of our three-part series focusing on the strategic decisions an educator must make throughout their financial planning life homes in on the legacy planning strategy. Estate planning, like every other aspect of financial planning, has very specific intricacies that require it to be customized to you, your family, and your situation.

Common Mistakes Educators Make

The most common mistake I see educators make with their estate planning is the gap between updates. This can be problematic, because as your life changes, so must your plan. Educators, more specifically at the University level, will often move from state-to-state as they climb the ladder that is higher education. Having an estate plan completed in Florida in 2005, then moving to Nebraska in 2020, should trigger an automatic review with your financial planner . If you own a piece of farmland or a rental property in Iowa, you live and work in Arizona, and your estate plan isn’t coordinated, you run the risk of something called ancillary probate. This means your beneficiaries are settling your estate in two different states at the same time. A nightmare for your loved ones, and something that can be avoided if properly addressed.
As with any new topic, it’s important to start at the beginning. Estate Planning can become extremely complex, yet it can also be very basic, and what you or your family needs could be anywhere in between. Today, I’ll work through the basic sets of estate planning strategies everyone should be considering.

Estate Planning – 101

Last Will and Testament: We’ve all heard of this instrument, known simply as a Will. It is the most basic estate planning document, used to outline your final wishes. A Will is simplistic and basic for a reason, and doesn’t necessarily cover everything.

  • Pros: You have something legal and documented, outlining the final wishes of your estate and how you’d like it to be executed. This allows you to avoid what is called – intestate – or dying without a Will or an estate plan. Intestate can be headache for your heirs and loved ones, as it will ultimately be determined by the state in which you reside, how your estate is distributed. Yes you read that right – the state gets to determine how your assets are distributed. Creating a Will , at minimum, allows you to have input in the matter.
  • Cons: Wills go through probate. The probate process should be very streamlined if your Will is current, your assets are correctly accounted for, and you have beneficiaries titled correctly, but the probate process will still be required to settle your estate. This means your beneficiaries, in most cases, will have to take assets from your estate to pay the fees associated with probate. The more complex and expansive your estate is, the more expensive it is to settle. There’s also the issue of the Will being contested. This means certain individuals in your family, if they can bring forth specific information as to why the Will should be invalidated, can contest its terms – only drawing out the probate process and the expense even further.


Revocable Trust: The Revocable Trust[1], also known as a Living Trust, is the more flexible estate planning option, when choosing between a Will or a Trust. A Living Trust is an entity, created while you are living, which acts as a house for your assets until your passing. Upon your passing, since the assets are already in the “house” they flow to your beneficiaries according to the instructions that were drawn up in the documents.

  • Pros: As I mentioned, Living Trusts are flexible. You create them while you’re alive, your social security number identifies the trust (so no extra tax return is needed during life), and since it’s titled “Revocable” it allows you to revoke the instructions at any time in your life and change them. Trusts, if funded correctly[2], avoid the probate process. If the execution and placement of your assets is sound, there is no reason your beneficiaries would have to go through the probate process.
  • Cons: Living Trusts require a lot of thought. Since they are so nimble, they allow you as the grantor (creator of the trust), to add a number of different provisions to your plan, outlining your wishes. These provisions can include charitable distributions upon your passing, spendthrift rules for your children, what age(s) you’d like your children to inherit your assets, etc. A Living Trust is not created in an hour, and requires you to seriously think about your own death, and a lot of the details that follow. Composing and executing a trust can be a very sobering process and can be an uncomfortable discussion and decision making process, but they are decisions that need to be made.

Healthcare and Financial Powers of Attorney: These are the essential add-ons to any estate plan. They are the documents that allow you to name individual(s) to act for you, in the event you cannot act for yourself. Example: you are incapacitated – who would you like to designate to handle your financial affairs and your medical decisions while you are in this state?

  • Pros: You have a designated individual or two (ideally more than one) that you know and trust to step in and talk with doctors, pay your bills, work with your advisor, etc. in case something tragic happens, and you’re still living. Making this choice of who you’d like to designate, while you’re of sound mind and body, is very important. If you have bills to pay and someone needs access to your bank account, your banker cannot give them access without the proper legal document. If a power of attorney is not already drawn up, getting the right legal document in place will be a rushed process that can be avoided with proper proactive planning.
  • Cons: From a planning perspective. None.


Getting Started – 101
An estate plan, much like a financial plan, is entirely dependent upon your situation. This is why financial planners take so much time advising on estate plans – they should fit together. You’ve invested heavily into your own accumulation strategy and you’ve planned endlessly around your distribution strategy. It would be an absolute shame if your strategy to pass on assets was in shambles. A customized financial plan will always include all three.

Our team of wealth advisors here at BerganKDV are fee-only fiduciaries who are dedicated to helping you navigate all areas of your financial life. Want to learn more about what we can do for you? Start here.


Diversification and asset allocation do not ensure a profit or guarantee against loss.

The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The views expressed are those of BerganKDV Wealth Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investment advisory services and fee-based planning offered through BerganKDV Wealth Management, an SEC Registered Investment Advisor.


[1] Not to be confused with an Irrevocable Trust. Very serious differences reside between the two.

[2] Just because you create a trust, doesn’t mean you automatically avoid probate. There is still work to be done once the instrument is created. Your attorney and your financial planner should work together to make sure all your assets are correctly titled.

CATEGORIES: Wealth Management
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