How Do Estate Planning and Financial Planning Work Together To Protect Your Assets and Your Family?

Estate planning and financial planning are different processes that help you protect your assets and plan for the future. Each process has a different purpose.

Estate planning attorneys and financial planners have distinct roles and expertise — but your estate plan and financial plan work together to help you achieve important long-term goals.

What is Financial Planning?

A financial planner evaluates your overall financial health by reviewing your financial accounts and other assets. The planner then works with you to establish specific long-term financial goals, based on your plans and needs. For example, your planner may help you prepare for retirement, pay college tuition for your children, or provide financial security for your family.

A financial plan includes a strategy for managing and growing your wealth, as well as an analysis of your risk tolerance based on your circumstances. Your financial planner may recommend changes in your investments or assets consistent with your long-term financial goals and your tolerance for risk. Your plan also provides direction for maintaining the strategy over time.

Financial planners do not need a license to provide advice. They do need a license to sell some investment products, such as life insurance, fixed annuities, and securities. A financial planner may achieve certification through a national organization, but certification is not legally required. (Arizona does require a license for an investment adviser firm (IA) and an investment adviser representative (IAR).)

A financial planner cannot provide legal advice (under state law, attorneys must be licensed) or create legal documents relating to control over your property or the disposition of your assets on your death. To address those concerns, you need to consult a licensed attorney and establish an estate plan.

What is an Estate Plan — and Why Do You Need One?

Estate planning focuses on putting the proper legal documents in place to ensure the implementation of your goals and wishes for the future, both for yourself and for your family. The documents address concerns that are different from your financial goals.

When you create a thorough, careful estate plan, you accomplish these important goals:

  • Ensure that your assets and legacy benefit individuals of your choosing on your death
  • Minimize taxes and maintain the financial privacy of your estate after your death
  • Determine whether your beneficiaries receive all your assets outright on your death (through a will), or whether a person you select manages and distributes those assets to your beneficiaries according to your directions (in a trust)
  • Designate the people who will care for your children and manage their finances in the event you are not able to fulfill those responsibilities
  • Name the individuals who will provide your personal care, make decisions for you, and manage your finances, in the event you become unable to do so yourself
  • Communicate your final wishes to your loved ones

If you do not have an estate plan, state law determines who gets your property and makes your decisions if you become incapacitated. Your loved ones may need to ask a court to decide who makes the decisions and who receives your assets. Those people may not be the individuals you would choose.

Estate planning is a process that requires assistance from a licensed attorney. Your lawyer first talks in-depth with you about your concerns, goals, and wishes for your future and for your loved ones. Then, your attorney explains how specific legal documents address all those matters. If you decide to establish an estate plan, your lawyer creates documents tailored to your unique circumstances.

While you may get the impression from advertisements that you can create an estate plan by filling out forms online (or obtained elsewhere), following that path puts you and your family at great risk. The only way to make certain your estate plan is properly established — and does what you want it to do — is to talk with an experienced estate planning attorney.

How Do Estate Planning and Financial Planning Work Together?

Although estate planning and financial planning are separate and distinct, both processes involve your financial assets. The two processes work together to accomplish your goals. For that reason, financial planners frequently refer clients to estate planning lawyers and vice versa. Their responsibilities do not overlap, but they do complement each other.

A financial plan provides you with a strategy to allocate and grow your financial assets during your life. An estate plan provides you with the necessary legal means to control your finances, make other important decisions throughout your lifetime (including in the event of incapacity), and distribute your property in accordance with your wishes after death. Working together, estate planning and financial planning enable you to protect your financial assets and your family, now and in the future.

Which Comes First — Estate Planning or Financial Planning?

While not everyone needs or wants a financial plan, everyone should have an estate plan to avoid allowing state law to make their decisions. So logically, starting with your estate plan makes sense. But the truth is that it does not matter whether you start with estate planning or financial planning.

Financial planners and estate planning attorneys are knowledgeable professionals who have a comprehensive understanding of their respective roles. Either one will ensure that you receive the assistance you need, whether it relates to estate planning or financial planning.

Schedule a Free Consultation to Talk with an Experienced East Valley Estate Planning Attorney

At Peterson Law Offices, we take pride in providing high-quality estate planning services at affordable prices. Our services also include in assisting business owners with all aspects of operations, including succession planning.

For clients who use a financial planner, we coordinate the client’s estate plan with the financial plan, providing legal guidance and documents to support the client’s financial strategy. If a client wishes to develop a financial plan, we can provide referrals to professional financial planners.

If you have questions about estate planning or about how your estate plan and financial plan work together, we invite you to schedule a free consultation with attorney Shane Peterson by calling 480-878-5998 or using our online contact form. We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler.