Many people think of estate planning as a way to save estate taxes and perhaps a way to avoid probate. There are many, more important reasons for estate planning.
For example, have you asked the following questions?: How do you want to be cared for when you can’t take care of yourself? If your wife remarries after you die, do you want to make sure that her new husband can’t spend your money? If your husband hits a school bus full of children after you die, do you want to make it harder for the judgment creditors to collect your money when they sue him? If your wife divorces her new husband after her remarriage, do you want to make sure that he doesn’t get half of your money? Do you want to make sure that your guardians know how to share your values while they finish raising your children?
I suggest that most people would answer all these questions “yes”. So how is their plan accomplishing these things?
Problem #1 with Traditional Estate Planning: Most estate plans are upside down! They focus on tax planning instead of the personal concerns, protections, and goals.
Problem #2 with Traditional Estate Planning: Most estate plans just don’t work! A plan works when all of your expectations are met. These expectations aren’t met because clients and professional advisors see estate planning as a transaction ending in documents, instead of the process ending in results. Things change. Estate plans should too.
I believe you will achieve the best estate planning results with a Three Step Strategy™ that uses clear, comprehensive, customized instructions for your own care and that of your loved ones. The instructions might include a will, a trust, a power of attorney, a living will, and other documents.
Step #1: Work with a Counselling-Oriented Attorney as opposed to a word-processing attorney. Most estate planning in the US is little more than word-processing. You don’t need a professional for that! The professional’s value comes from counsel and advice based on knowledge, wisdom, and experience.
Step #2: Establish and Maintain a Formal Updating Program. There is constant change in personal situations, both family and financial. Tax laws and other laws change every year in ways that will impact many estate plans. Finally, because attorneys don’t know everything, the attorney’s experience and expertise change. Without updating, plans won’t work the way the family intended them to. Without a Formal Updating Program, the updating rarely happens.
Step #3: Assure that Your Wisdom is Transferred Along with Your Wealth. In many families, the parents have an abundance of wisdom that has often been earned the hard way. Through Wealth Reception, an approach that prepares children and grandchildren (or nephews and nieces, or godchildren, or friends) to receive wealth; parents’ wisdom can help make their money be a benefit instead of the burden that it often is. Most financial windfalls, including inheritances, disappear within 18 months. You can avoid that unfortunate conclusion to an otherwise worthy inheritance with proper Wealth Reception planning.
(Article adapted from Planning Partners Press)
