An Estate Planning Primer and Your Value Investing Portfolio

Is it estate planning for dummies?


An estate planning primer is an important exercise for stock portfolio management when value investing. But it is an area that many of us fail to address adequately.

Is it because we do not want to remind ourselves of our own mortality?

Because we may, over time, be successfully managing a large share portfolio, it can't be assumed that those who inherit our stock holdings in the future will be equally capable.

An estate planning primer is particularly important when a portfolio needs to be split among beneficiaries, or parts or all of the portfolio transferred to other names.

After our demise, an executor has to go through an exhaustive (and quite often expensive) procedure to collate our financial affairs in order that the estate can be distributed according to our wishes.

As the executor may be a person you may have never met, the procedure may be quite complex, and not a problem that we would like to leave behind.


Requirements for Estate Planning

Stock market related information that needs to be detailed in a comprehensive estate planning exercise includes ...

  • contact details of the stock broker used to action buy and sell decisions

  • details related to each share holdings
  • details of recent buying and selling activity needed for tax returns
  • how to arrange through the registry(ies) the transfer or sale of the shares
As well as the share portfolio, information would need to be available on such things as insurance policies, credit cards, details of bank accounts, power of attorney, and the will.

All important documentation, including share records and wills should be kept in a secure, portable (in case you have to get out in a hurry) and fire-resistant case.


Programs and Kits to Assist

There are ways in which this record keeping exercise can be facilitated, some of which are based around lists or folders associated with do-it-yourself 'will kits' that are available from most newsagents or post offices.

Kits are also available on the web in various countries. Here is a USA kit example and an Australian book that may act as an estate planning primer.

Commercial personal accounting software can enable the details of an estate to be brought together in a register of assets.

Also, life insurance companies produce brochures from time to time on what information you need to record to reduce the load on your loved ones.

The brochure I use came from a superannuation office.

Solicitors and financial planners may offer a service in this regard, but you still have to identify the information and keep it up to date.


To Conclude

The whole point of an estate planning exercise when value investing is that it is far easier for us to sort out our affairs in advance, regardless of the means used to do it, rather than to leave it to beneficiaries, who may be obliged to outsource the task.

I engage in this exercise as part of my financial retirement portfolio planning, and treat an estate planning primer as something of importance!

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