The Four Pillars of Proper Estate Planning

Dan Mckenzie • Sep 20, 2023

Many people think that estate planning is simply about documents. Getting a will in place and maybe a trust. There is way more to it than that, though, and we often advise our clients to think of their estate plan as a house built on four pillars. Each pillar is essential to support the structure and protect your legacy. Here are the four pillars of estate planning and why they matter.


Pillar #1: Up-to-date instructions

The first pillar is up-to-date instructions. These include a will, powers of attorney, and designated beneficiary instructions. A will tells the court how you want your property distributed after death. Powers of attorney allow you to appoint someone to act on your behalf in financial and medical matters if you become incapacitated. Designated beneficiary instructions let you name who will receive certain assets, such as life insurance or retirement accounts, without going through probate. Some people may also benefit from creating and funding a trust, providing more control and flexibility over managing and distributing your assets.


Pillar #2: Putting the right people in the right jobs

The second pillar is appointing the right people to the right jobs. These jobs include personal representative, financial agent, medical agent, and maybe a trustee. A personal representative is the person who will carry out your wishes in your will. A financial agent is the person who will handle your finances if you are unable to do so. A medical agent is the person who will make health care decisions for you if you are unable to do so. A trustee is the person who will manage the assets in your trust for the benefit of your beneficiaries.


These jobs require skill and knowledge, and not everyone is suited for them. Many choose family members to fill these roles, but that may not be the best option. It would be best to consider the abilities, availability, and compatibility of the people you choose and ensure they are willing and able to serve. It is also critical that the beneficiaries of the estate trust that person.


Pillar #3: Organization

The third pillar is keeping your financial affairs organized. This means having a system allowing someone else to understand and access your financial information without your instructions. You can use software like Quicken, Mint, or You Need a Budget to track your income, expenses, assets, and liabilities. You can also keep important documents like insurance policies, deeds, titles, contracts, and tax returns in a safe place where your appointed fiduciaries would know where to look for them. Additionally, you should make sure that any documents stored in safes or safe deposit boxes can be accessed by the people who will need them. This will save time and money for your estate and reduce the risk of confusion or conflict.


Pillar #4: Liquidity

The fourth and final pillar is ensuring that your estate has sufficient liquidity. Liquidity means having enough cash or readily convertible assets to pay for the expenses and obligations of your estate. These may include funeral costs, taxes, debts, legal fees, administration costs, and beneficiary distributions. If you have illiquid assets like real estate, business interests, or significant personal property, you may need to sell them or find other sources of funding to cover these costs. Also, if there are disputes among your heirs or creditors, having cash available can help resolve them more quickly and peacefully.


I use these four pillars of estate planning to help my clients create a solid and comprehensive plan for their future. If you have any questions or need assistance with your estate plan, please get in touch with me today for a consultation.


What next?

If you think it might be time to think through your estate plan, you can:


  1. Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
  2. Visit our estate planning page to learn more about how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
  3. Learn more by reading our blog or watching our videos.

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