Why Your Investments are a Crucial Part of Your Estate Plan

Webull 09/19/2022

Every adult, no matter what stage of life they're in, should have an estate plan. For investors, this is especially important. Throughout your investment journey, you place a lot of time, energy, and money into your portfolio. It's a significant part of your life's accomplishments, and this should not be ignored when it comes to your family's future. You may know someone who struggled to organize a deceased family member's estate after they passed without a proper will—this is likely not a situation you want to put your own loved ones in, so it's crucial to prepare in advance to make this process seamless for your beneficiaries.


Why Do You Need an Estate Plan?

Think of your estate plan as a favor for your loved ones as opposed to a documentation of your last wishes. While it may not be a fun topic, it's a vital one. Your estate plan should include:


- A last will and testament or trust

- A living will

- Beneficiary forms

- Powers of attorney

- A letter of intent


Leaving your investments to your loved ones will fall under the "beneficiary forms" category. These forms will outline who exactly will receive what of your assets in the case of your death. Without a specific plan that specifically indicates the who, what, where, and how of your investments, your family members will be scrambling to get your assets organized, released, and distributed. Depending on the situation, this could possibly lead to a lengthy, stressful process that may cause tension or distress within your family. Your loved ones should not have to deal with arranging plans for the distribution of your remaining funds without you; when you do the work in advance, not only does this make your estate management easier on the people you love most, but you can know that your assets will be handled exactly how you want them to be, putting yourself in control of what happens to your money even when you're no longer there.


Your Investments are Inheritable

An essential thing to note as an investor is that all your assets can be inherited. No matter what you own, you can pass these holdings on to someone. Keep this in mind, especially if you own any cryptocurrency. If you invest in crypto, know that if you don't leave behind explicit instructions on how this money can be accessed, it's lost forever. The decentralized structure of crypto storage keeps assets safe and secure, so no one but you has the key to your funds. While you can take steps to acquire a loved one's stock holdings without prior knowledge of how to get them, this is not the case for crypto tokens. There's been many situations in the past where investors have lost millions in assets due to losing access to their account, so it's necessary for you to leave behind your account details in order for your family to obtain your investments.


When you create your estate plan, write down all your investment information, who you'd like to receive specific assets, and the steps that can be taken to access them. There's no reason for your family members to struggle when taking care of your estate. Providing them with this information will make things much easier down the line.


How to Make One

While there are many professionals you can meet with or online services you can purchase, you can easily make your own estate plan without spending a lot of money. With a bit of research, you can have a proper estate plan put together that will save your loved ones from additional stress in the future. Be certain that you're selecting an estate planning journey that fits you, your budget, and what you want for you and your family.


Additionally, don't forget to tell those affected about your plan: if the people you leave your assets to aren't made aware ahead of time, they will not be prepared to take them on when the time comes. Even if you do leave your investments to your loved ones in your will or trust, if they aren't equipped to handle it, the end result could still be undesirable. When you make your estate plan, sit down with your beneficiaries and explain what they can expect when it comes time to execute your will. This will ensure that there are no surprises for them to encounter after the fact. Even though it may be uncomfortable to discuss, it's an important part of the process—it's better to have the difficult conversations than to avoid them and leave the people who are most important to you to deal with the consequences later.


You also need to make sure you are checking and updating your estate plan each year. If you get remarried, welcome a new child or grandchild into the world, or make new investments, these pieces of information will be needed to keep your estate plan up to date. If you die with an outdated plan, the will may not reflect your wishes at your time of death.


No matter your age or how long you've been investing, having an estate plan to protect your investments is a necessary part of being an organized, prepared investor. You should always be in control when it comes to your assets, and by keeping a regularly updated estate plan, you can stay in control, no matter what happens. If a loved one has passed on and held an account with Webull, you can check out the FAQs for Estate Accounts to learn more about Webull's estate process.


Disclosure: All investments involve risk, and not all risks are suitable for every investor. The value of securities may fluctuate and as a result, clients may lose more than their original investment. The past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss in a down market. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing.