Advanced Markets: The Importance of Wills in Financial Planning

You’ve heard the adage, “don’t put off until tomorrow what you can do today.” The meaning rings especially true when it comes to preparing a will.

“It’s human nature to put things off, especially planning for what happens after death,” says Dave DeBoer JD, CLU, ChFC, CLTC, Advanced Markets Specialist with Mutual of Omaha. “A huge misconception rests with the terms estate and will. Because they go hand-in-hand, people feel they need to be wealthy to have a will, but that’s not true. A will simply outlines who or what gets your stuff when you die.”

Despite the importance of this planning concept, approximately half of all Americans die without a will. This is called intestate, which means a local probate court will appoint an administrator to distribute estates based on state law. The administrator will also designate a guardian for any minors. “The court, not your clients, decides what happens to assets and children,” DeBoer said. “I think when people realize the implications of not having control, they want to start talking about a will.”

As an advisor who has sold life insurance or annuities, there are steps you can take to encourage those same clients to make sure their overall financial plan is protected. Since an attorney usually draws up a will, it’s wise to have solid relationships with a few attorneys to which you can refer your client. He or she should reciprocate the business.

Outlined below is DeBoer’s five-step plan to get you and your client acclimated to the world of wills.

Step one: Your client should know what a will does and doesn’t do

By understanding the basics of what a will does or doesn’t do, you’ll identify any voids other forms of estate planning can fill (i.e. life insurance, charitable giving, and trusts).

What a will does for your client:

  • States, in detail, where assets go after your client dies
  • States who the executor is and outlines powers so he or she can administer the will
  • Designates a guardian for children if there is no surviving parent

What a will doesn’t do for your client:

It can’t void the terms of a trust or other financial planning device, like a life insurance policy, with a beneficiary

Step two: Your client should inventory assets

Have your client break up assets into two categories: 1) assets he or she holds as an individual, like savings accounts, stocks, bonds and real estate – typically things that will pass through a will, and 2) assets that have a named beneficiary, like a life insurance policy or annuity.

Step three: Your client should list desired beneficiaries

Your client can start with his or her inventoried assets from step two. Anything your client owns that he or she wants someone to have needs to be listed. Make sure your client states the full name of each beneficiary and the relationship (cousin, uncle, etc.) so the administrator knows exactly who gets what. It’s a good idea to list debtors, too.

Step four: Your client should name an executor

The executor your client names should be trustworthy because the most important job he or she has is to carry out your wishes via the terms of your will. If your client doesn’t name an executor, the court will.

Step five: Your client should name a guardian for minors

This could be one of the most difficult, emotional decisions to make because people can’t imagine someone else raising their children. But emotions only reiterate the importance of this decision. Make sure your client talks in depth to loved ones they want to name as a guardian.

After your client’s will is drawn up, it needs to be executed. Depending on your state’s requirements, your client may need to sign in front of witnesses. Advise your client to store the will in a safe place and tell a family member or trusted friend where to find it. Finally, DeBoer has one important, yet overlooked, reminder: “Tell your client to keep the will current. If anything needs to change amending a will is easy.”

Brought to you by Mutual of Omaha’s Advanced Markets team. The team provides value-added services in estate, retirement, distribution and business planning.

2 Responses to “Advanced Markets: The Importance of Wills in Financial Planning”
  1. Amelia Barney says:

    Having a current will is something that should be updated every-so-often to insure that the financial planning you have been doing all along will be the thing that will not allow issues to come up between your family. I know this from past experience and a place i found really helped me find a lot of peace.

  2. As they say it, “If there’s a will
    there’s a way.” So does when we talk about finances. Clear wills is the right way to set things accordingly should our life has ended.

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