Personal Succession Planning – Part I

I recently gave a presentation to clients regarding personal succession planning.  I prefer to call it personal succession planning versus estate planning because many people view estate planning as only being important should one die, but it also comes into play should you become disabled or unable to make decisions for yourself.  Failing to plan for future responsibilities may make a difficult situation even more challenging; treading softly around “uncomfortable” issues often results in worries and complications. 

The presentation stemmed from a client conversation and subsequent meeting.  My client (let’s call her Mary) lives here in Michigan and her parents live in California.   Mary’s mother has been in charge of the finances, but is having health issues and will likely be unable to continue in this role beyond the next few years. Her father has no interest in taking over the responsibilities.  Mary asked if I might be able to guide the three of them and discuss the different responsibilities and roadblocks that might exist (geography is obviously going to be a factor). 

As I built the meeting agenda I had not anticipated how long and involved it would become; I work collaboratively with my clients to build their financial roadmap and this process is an integral early step in the planning process.

The first part of succession planning is to get organized!  Gather all of your important documents and have them available to those that might need access.  A sampling of some of the documents would include:  Wills, Trusts, Durable Powers of Attorney for Health Care and Financial decisions, Deeds, Tax Returns, Marriage Licenses, Checking, Savings, and Investment account statements.  The mistake often made is keeping these documents in a safety deposit box or home safe without providing the necessary authorization or information to your agents should they need to have access and act.

The second mistake I see most often is the lack of documentation of online access credentials.  Make sure you keep a record of your login credentials secure, but accessible in case someone needs to step in for you.  Understand that this planning is not just for those who are likely to need help in the next year or two; making these plans now while you are still young is equally important. 

After you have organized your documents, consolidate your accounts.  There is simply no need to have accounts scattered from custodian to custodian, and yet, I see this on a regular basis.  However, when consolidating accounts you should be mindful of FDIC insured limits. 

Over the next few weeks, we will share other important steps in the personal succession planning process.  Part II of this blog series will outline the various documents that may be part of your estate plan.

All comments and suggestions are welcome.

Suzanne M. Antonelli, CFP®