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Definition of Estate Planning

“Well, what would you like to do?” Husband and wife look at each other, then back to the estate-planning lawyer. “What should we do? That’s why we came to you.”

Every lawyer has had this conversation, and frequently it wanders off into a discussion of methods and strategies – lawyer talk – and leaves behind any focus on this unique family and its hopes, fears, needs, values and dreams. Deciding first on a technique, such as choosing between a will or a trust or how to avoid probate, does not identify the clients’ objectives that one method or the other might reach. But helping clients to decide on their planning goals puts them in control of the decisions and eliminates methods that do not fit. So, I will offer a set of underlying client goals, an “Estate Planning Definition,” from the National Network of Estate Planning Attorneys. Once clients understand this definition, buy into it and make it their own, they can ask “Does our plan do all this?” and have a clear standard of success to provide their own confident answer.

“I want to control my property while I am alive and well.”

This sounds so obvious, but many people put off estate planning because they don’t want their property “tied up in trust” or taken away through a general power of attorney. Effective client education can ease some of this anxiety by showing that self-help methods such as joint ownership actually reduce their control by requiring the co-owner’s consent. Clients can achieve a measure of asset protection even during lifetime with appropriate titling of their property. Beyond that, clients want to preserve their liberty to buy and sell, change their plans, choose the helpers who will follow their instructions, and provide the liquidity to make the plan work through insurance and good investments. For most clients, controlling their assets means controlling their lives, and crossing that threshold provides the confidence to look at the many appealing choices available to people who want to express their family devotion by securing their legacy.

“I want to provide for myself and my loved ones if I become disabled.”

Married couples have a simple plan – my spouse will take care of me – but the death or disability of either spouse creates a whole new problem. Single people may ask, “What will happen to me? What will happen to my property?” Controlling the decision to surrender or take away control requires starting early – while people still have all their senses. The default plan of delegating the decision to one doctor, whether pediatrician or proctologist, leaves out the people who know and love the disabled person. A “disability panel” of family and medical input gives greater assurance that both the disabled person and financial institutions will honor the decision. Placing this process in a fully-funded living trust gives great flexibility in the standard of decision and the timing. Clients can sharpen the focus by making planning decisions about spending priorities, family responsibilities, medical care and preferences, management of property, and continuation of gifting. By deliberately planning for their own disability, clients provide the guidance and resources for their chosen helpers to care for them when they can’t do it themselves.

“I want to give what I have to whom I want, when I want, and the way I want.”

Clients don’t have options unless they know about them. Once clients learn that they can protect the surviving spouse and later beneficiaries from catastrophic creditor claims like an accident with a school bus (asset protection), provide for the special needs of a disabled beneficiary, keep their money in their bloodline (remarriage protection), assure a legacy for their grandchildren (divorce protection), and transmit their values through incentive trusts, they begin to see the expansive opportunities of pro-active preparation. And when parents bring their adult children into the process of inheritance planning, the children appreciate both the convenience and protection of receiving the assets in trust. Clients who provide their planning team with complete family and financial information as a basis of their goals can then select just the right strategies for carrying out their loving objectives.

“All with fully disclosed and controlled settlement costs to me and those I love.”

What part of the iceberg did the Titanic hit? The part that the captain couldn’t see. The unseen part of the iceberg of lifetime estate planning costs comes after death, when the size of the bill depends upon whether the estate plan actually works. Concentrating on the price of the paper documents, and ignoring what it takes after the ink dries to make the plan work for the rest of the trustmakers’ lives, insures that the plan won’t work. So, what costs can we control? The family and the team can eliminate court costs by staying out of court, and for this we need a fully funded living trust that still controls all the assets at the trustmaker’s death. We can disclose, predict and control legal fees by updating the asset information that lawyers and CPAs need for asset transfer after death and preparation of the estate tax return. We can reduce family fights by involving the family in the process from the beginning and training the trustees before the funeral in how to do their jobs. Controlling death administration costs requires sharing the responsibility for making the plan work, and eliminates the conditions that inflate the court costs, lawyer’s fees, unnecessary taxes and “incidentals” that deprive families the full benefit of their parent’s generosity.

Asking the question “Does our design stay within the Estate Planning Definition?”

gives both the clients and their planning team a bull’s-eye to aim at and decide whether the plan will accomplish what an informed family wants. Hitting the target takes responsible clients, an involved family, a skilled legal counselor, and a participating financial advisor, sharing the same expectations about the outcome. Completion of the design and funding marks the beginning, not the end, of the lifelong estate planning process.

(Special thanks to our late friend and colleague, Richard Boardman, for his assistance with this article.)