Let’s start with what it isn’t. Estate planning is not just for the wealthy. It is not just about avoiding probate and minimizing taxes. It is not just transferring wealth at your death. It is not about which documents to use. It is not a one-time event.
It is about your family, their needs, and your goals. It is about taking care of you and your loved ones at all stages of your life. It is about results and meeting your expectations. A proper estate plan most importantly ensures and provides detailed, clear, comprehensive, customized instructions for handling your affairs in times of mental disability or death. If it is relevant, your plan should also ensure that your estate avoids the cost and delay of probate and that estate taxes are minimized. A proper plan coordinates beneficiary designations for your life insurance and retirement accounts to maximize plan benefits in accordance with your goals. If you are a business owner, your plan should also provide a mechanism for business succession. Most importantly, a proper plan keeps you in control of your estate.
Proper planning starts with a thorough understanding of your needs, goals, dreams and aspirations. It includes developing a thorough understanding of your family and its dynamics, those who you care about and who will someday receive the benefits of your success. Family can be defined in many ways. For some people, family includes children and grandchildren. For others, it may be friends or community, nieces, nephews or other loved ones. Unfortunately, most plans are built on tax planning instead of family planning; resulting in plans that don’t work. Personal family concerns and goals are given a lower priority, if they are discussed at all, instead of being the very foundation of the plan.
Plans don’t work because they are treated as a transaction rather than an ongoing process. Many people say “I did my estate plan,” and then put it on the shelf to collect dust. Because everything constantly changes, your plan must be constantly changing too. Plans that work require ongoing maintenance to fine tune them to your changing goals, family circumstances, and changes in the law. Plans that work also require education of you and your “helpers” – those individuals who will carry through with your plan when you can no longer do so. The most thorough custom tailored plans won’t work if the person carrying it out doesn’t know what they are supposed to be doing. Education is the key.
Plans also don’t work because much of what passes for estate planning is little more than word processing. You are asked a few questions and then the drafter decides which “plan” is right for you and fits you in a box. This is not planning – this is simply document preparation. You shouldn't pay a licensed professional to do word processing. Their value is in their counsel and advice, based on knowledge, wisdom and experience. A proper estate plan meets your goals and expectations, and keeps you in control of the process and the results.
To ensure a proper plan, work with a counseling oriented attorney who will educate you and your helpers, who takes the time to get to know you, your family, your desires, your concerns, your goals, and your potential problems, who will gladly and patiently answer all your questions, no matter how small, until you understand the concept or issue, and who has dealt with the problems and results caused by poor planning.