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In the first article in this two-part series on estate planning, I shared the three foundational financial pillars you need to have in place before even creating your estate plan. This article also comes in threes — the three-step process for executing an effective estate plan.
When most people think about estate planning, they picture it as signing a will or trust and checking the box as complete. The documents are drafted, notarized and filed away, and it feels like the job is done.
But in reality, estate planning is not a single event. It's a three-step process: design, structure and funding. And while the first two steps get the most attention, the third is often overlooked. That's the problem, because without funding, even the most carefully drafted trust may not accomplish what it's supposed to in the first place.
Understanding how these three steps work together can mean the difference between an estate plan that functions as intended and one that only exists on paper.
This stage is less about legal language and more about understanding goals. It also requires a broader look at your financial life. Your investments, retirement accounts, tax considerations and long-term care planning all influence what type of estate plan makes sense.
For example, if you're someone who wants to control how assets are distributed over time, you may need a trust. On the other hand, if you're comfortable with direct transfers, you may want to rely more heavily on beneficiary designations. These decisions should not be made in a vacuum. They depend on how assets are structured and the outcomes you're trying to achieve.
This is where many people must decide between a will and a trust. Though frequently used together, there are distinct differences between the two. A will directs how assets should be distributed after death, but it must go through probate, which is the legal process that oversees the division and distribution of assets among beneficiaries.
A trust is a separate legal entity that can own assets during or after your lifetime, often avoiding probate and allowing more control over how assets are managed. Because trusts offer additional flexibility and control, many people choose to go that route. But signing trust documents does not automatically place assets into the trust.
Funding requires action. Depending on the type of asset, this may involve changing ownership or updating beneficiaries. Assets commonly found within a trust include real estate, after-tax brokerage accounts and bank accounts. For example, if you want your home governed by your trust, the deed must be updated so the trust becomes the owner instead of you.
Other assets, such as an individual retirement account (IRA), cannot be owned by a trust. These accounts must remain in an individual's name while they are living. However, they can name a trust as a beneficiary in certain situations, allowing assets to flow into the trust upon death.
Estate planning is most effective when all three steps — design, structure and funding — are completed one after the other. The design clarifies your goals. The structure puts legal documents in place, and funding is what makes the entire plan work. Without it, your wishes may not be carried out the way you intended.
If you've already created a will or trust, it may be a good idea to review it alongside a professional to determine whether your assets are properly aligned with your wishes. A trust that owns the right assets can help ensure your plan is executed without heartache and financial hardship.
Conversations around your finances and estate should never occur separately. At Blue Ridge Wealth Planners, we take the complexity out of financial planning, helping clients create a plan for everything, from investments, income, taxes, healthcare and your legacy.
Disclosures: The information contained herein and any opinions expressed are provided for informational purposes only and should not be construed as a solicitation to buy or sell any security, or as personalized investment, tax, or legal advice. Originally published at https://www.kiplinger.com/retirement/estate-planning/three-steps-to-estate-planning.
As a former football player at the University of Tennessee under Coach Phillip Fulmer and a high school state champion wrestler, John Vandergriff brings a team-first mindset and disciplined approach to serving clients at Blue Ridge Wealth. After spending five years in ministry and coaching, he joined the firm in 2012 and has since become a trusted advisor and leader, helping individuals and families pursue their financial goals with clarity and confidence.
John is a dually licensed Insurance Agent and Investment Advisor Representative. He holds a Bachelor of Arts in Psychology from the University of Tennessee, combining his understanding of people with a thoughtful, relationship-driven approach to financial planning.
Outside the office, John remains active in his church through teaching and enjoys golfing, exercising, watching sports, and spending time with his wife, Ashley, and their two children.
