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Home Articles Estate Law A Values-Based Approach to Preserving a Family Legacy - Part I

Planning for the wise transfer of wealth from one generation to the next is a major focus – and one of the most rewarding areas - of my estate planning practice. Virtually all of my clients with children want to pass at least a portion of their estates to their children. The question we deal with then, is how to do so wisely, so that their children not only inherit their wealth, but also inherit their values.

One of the biggest fears my clients share is that once they are gone, their children will become trust fund babies - the classic ne’er-do-wells who hang out at the country club or have money to burn on bad habits. Another fear is that a child will lose the family wealth through divorce, bankruptcy, lawsuits, or simply waste it by overspending. These fears are justified. Statistics show that the younger generation (this includes the baby boomers, too) has a one in two chance of experiencing either a divorce or a bankruptcy in their lifetime, and we probably all know at least one trust-dependent sole who lives from one trust distribution to the next, without any incentive for becoming a productive member of society.
Fortunately, we can plan for and avoid these issues with our own children (and grandchildren), by applying what I call the “values-based approach” to the thoughtful drafting and design of our estate plans.

The place to begin is with the Planning Pyramid:

The Planning Pyramid illustrates where we should focus our attention during the estate planning process. To me, the primary focus - or base - of any estate plan should be that which is most important to us, namely, taking care of ourselves and our loved ones. Next comes the security of preserving our current wealth, then growing that wealth and, finally, saving estate taxes, professional fees and avoiding probate. Often, it may be the thought of those sky-high estate taxes or time-consuming probate that initially prompts a client to call for an appointment, but when we begin discussing what is most important in their lives, the answer is always: “me and my family.” Having that as the base of the pyramid creates a strong, stable foundation on which to build the rest of the plan.

Many estate attorneys take the upside-down approach to planning. They turn the pyramid upside down, reversing the planning priorities. They focus instead on saving taxes and fees, and spend little time on drafting unique plans that address what is truly personal to their clients. They do this because saving taxes and fees is easy! Ready-made forms and formulas accomplish these tasks simply and quickly, without much thought involved. Trust mills are notorious for this lack of a client-centered, values-based planning approach. This type of impersonal, one-trust-fits-all type of “planning” is akin to one of you automatically prescribing the same treatment for every patient who presents with abdominal pain, without first taking a history, a thorough exam or actively listening to the patient describe what and how they are feeling.

Like the medical practitioner, estate planners all have the same legal tools with which to work. What distinguishes a good planner from the average, however, is knowing which tools to use for a particular client. Which club do we take out of the golf bag? In order to know which tools to use, we must first spend a substantial amount of time listening to our clients in order to discover their hopes and fears, their goals, philosophies, ideas and values. Because every family is unique, every estate plan should be unique. That’s the beauty of using a client-centered, values-based approach to estate planning. It may take a little more effort to create, but it is tailored specifically for you.

In Part II we’ll continue with how we can use the values-based approach to transfer wealth down to the next generation.



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