Estate planning is one of the most critical yet often overlooked aspects of personal financial management. Studies show less than one-third of Americans have a will, and even fewer have a comprehensive estate plan. Proper estate planning ensures your assets are distributed according to your wishes and may minimize tax burdens and provide financial security for your loved ones. Proper planning also allows a person who you have proactively chosen to serve as your agent to make financial and/or health care decisions if you are unable to do so yourself.

What prevents people from creating an estate plan? The most common reasons are…

·        Procrastination, “I’ll do it later”.

·        Indecision and uncertainty, “We can’t agree on guardians, executors, or anyone else”.

·        Cost, “It’s expensive and we don’t want to spend the money now”.

Keep in mind that not completing an estate plan IS a choice. It is choosing to allow the rules in your state of residency to determine who will be designated as guardians of your minor children and how certain assets will pass at death.

In the sections below, we will provide an overview of estate planning, the importance of designating beneficiaries, and introduce the concept of legacy planning.

What is Estate Planning?

Estate planning is the process of creating legal documents and strategies to manage and distribute your assets after death or if you become incapacitated. The foundation of any solid estate plan rests on four key documents that work together to protect your interests and those of your beneficiaries.

• Last Will and Testament

A will is the document where you designate one or more executors to manage your estate and identify guardians for minor children. This document is also where you specify the distribution for your assets that will not otherwise be distributed based on ownership structure or beneficiary designation. Without a will, state intestacy laws determine how your assets are divided, which may not align with your preferences.  Here are the Intestate laws for Illinois.

According to the American Bar Association, a properly executed will can significantly reduce family conflicts and ensure your wishes are honored. Estate Planning Information & FAQs

• Revocable Living Trust

A revocable living trust works in tandem with a special type of will (a “pour-over-will”) to manage and distribute assets owned by the trust without requiring a probate proceeding (which can be a time consuming and expensive process). Another benefit to including a trust in your estate plan is that trusts, unlike wills, remain private and do not become a matter of public record. A living trust may also provide continuity if you become incapacitated, as your designated successor trustee can immediately step in to manage your affairs.

• Financial Power of Attorney

A Financial Power of Attorney is the document where you designate a trusted individual (the “agent”) the authority to make financial decisions on your behalf if you become unable to do so. These decisions may involve important areas such as banking, investment, tax, and real estate transactions. Without a financial power of attorney, your family may need to seek costly and time-consuming court-appointed guardianship to access your accounts and manage your affairs.

• Healthcare Power of Attorney

A Healthcare Power of Attorney is the document where you designate a trusted (the “agent”) to make medical decisions for you, including end-of-life decisions, and obtain medical information on your behalf.

Some individuals may also have a living will, a more limited document, which can be used to provide specific information about life-sustaining treatment due to a terminal condition.

Together, the Healthcare Power of Attorney and the Living Will are collectively referred to as healthcare directives. Formally designating an agent to make decisions on your behalf, and communicating your wishes in advance, can significantly reduce family stress during medical crises and ensure your healthcare wishes are respected when you cannot communicate them yourself.

Beneficiary Designations

Beneficiary designations on retirement plans, life insurance policies, annuity contracts, and bank and brokerage accounts supersede instructions in your will and revocable living trust, making them crucial components of estate planning. The IRS notes that properly designated beneficiaries allow these assets to transfer directly to heirs without going through probate, potentially saving significant time and money. Retirement topics – Beneficiary | Internal Revenue Service

Primary and Contingent Beneficiaries should be named for all applicable accounts. Primary beneficiaries are the first in line to receive the assets, while contingent beneficiaries serve as backups if primary beneficiaries predecease you. Financial planning experts recommend reviewing these designations annually or after major life events such as marriage, divorce, or the birth of children. Beneficiary Designations in Estate Planning | Trust & Will

Per Stirpes vs. Per Capita Designations determine how assets are distributed if a beneficiary predeceases you. Per stirpes distributions pass the deceased beneficiary’s share to their descendants, while per capita distributions divide the share equally among surviving beneficiaries. Understanding these distinctions helps ensure your assets flow to intended recipients. These designations are especially important if you also plan to name contingent beneficiaries.

Trust as Beneficiary considerations become important for larger estates or when beneficiaries may not be capable of managing significant assets. According to estate planning attorneys, naming a trust as beneficiary can provide ongoing asset protection and management for minor children or beneficiaries with special needs. For clients with state or federal estate tax exposure, naming a trust as beneficiary may also provide tax planning opportunities.

Legacy Planning

True legacy planning extends beyond asset transfer strategies documented in a will or living trust, or handled via beneficiary designations, to encompass values, traditions, and family governance that can preserve wealth across generations.

Family Mission Statements and Governance help establish shared values and decision-making frameworks for multi-generational wealth management. Studies have shown that 70% of families will lose inherited wealth by the second generation, and more than 90% of families will have lost their wealth by the third generation, a conundrum known as the “third-generation curse.” I’m a Financial Adviser: You’ve Built Your Wealth, Now Make Sure Your Family Keeps It

Education and Preparation of Heirs significantly impact long-term wealth preservation. Passing down wealth is one part of the equation; passing down financial literacy is the other. This education should include both technical financial knowledge and personal development in areas like communication, conflict resolution, and leadership.

Charitable Giving Strategies can bring families together by identifying and supporting charitable organizations that align with a shared vision. Such giving can be structured as a Donor Advised Fund, a charitable trust, or a private foundation, all of which combine philanthropy with the potential for significant tax savings.

Generation-Skipping Strategies using dynasty trusts and lifetime exemption planning can minimize estate taxes over multiple generations. In 2025, the amount which can pass free of estate, gift and generation-skipping transfer tax is $13.99 million. The Great Wealth Transfer: Essential Steps for Giving Wealth | Comerica . However, these strategies require careful coordination with tax professionals due to complex generation-skipping transfer tax rules.

Action Items

Create or Update Your Will immediately if you do not have one or if your current will is more than five years old. Ensure your will reflects your current wishes, names appropriate executors and guardians, and complies with your state’s legal requirements.

Review All Beneficiary Designations on retirement accounts, life insurance policies, bank accounts, annuity contracts, investment accounts, and employer benefit plans. Inaccurate and outdated beneficiary designations can complicate your carefully considered estate plan and cause your assets to pass in unintended ways. Beneficiary Designations, SECURE Act, Estate/Gift Tax Exemptions | Phillips Lytle LLP. Update any outdated information and ensure contingent beneficiaries are named.

Assess Your Estate Planning Team, including an attorney specializing in estate planning, a tax professional familiar with estate issues, and a financial advisor who can coordinate with your other professionals. Regular communication among team members ensures your plan remains cohesive and current.

Prepare a Summary of Your Important Information, such as where to find estate planning and other legal documents, websites and logins for financial accounts and insurance policies, phone numbers for medical providers, and contact information for your professional advisors. Once the summary is prepared, tell your family members and/or agents where the summary is located.

Estate planning is not a one-time event, but an ongoing process that should evolve with your changing circumstances, family situation, and applicable laws. Regular reviews and updates ensure your plan continues to serve your goals and protect your loved ones.

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Sources:

• American Bar Association Estate Planning Information & FAQs
• IRS Retirement Topics – Beneficiary
• IRS Publication 590-B (2024), Distributions from Individual Retirement Arrangements (IRAs)
• IRS Publication 559 (2024), Survivors, Executors, and Administrators
• Trust & Will – Beneficiary Designations in Estate Planning
• Kiplinger – I’m a Financial Adviser: You’ve Built Your Wealth, Now Make Sure Your Family Keeps It

Mosaic FI, LLC is a State of Illinois registered investment adviser. The opinions expressed herein are those of the firm and are subject to change without notice due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of Jenifer Aronson, Tammy Wener, and Leslie Meisner, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes September 29, 2025.

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