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Estate Planning is a Process

Process: a series of actions, changes, or functions bringing about a result.

Most people think of estate planning as writing documents to say who gets what when they die. We could, perhaps, call the documents an estate plan, but creating those documents is not estate planning. Estate planning is a series of actions, changes, or functions bringing about a result.

Like Farming
It’s September. You go to your filing cabinet where you keep important documents and look for a copy of that letter you wrote last January to your children. You start reading:
“Dear Children: I have decided that in November you should each receive money equal to half of the soybeans raised on the 80 acres across from the house. Please help yourself to the funds. Love, Dad”

Can the children expect to pick up a nice check this fall? Not unless your family engages in a process to bring about that result! There are many steps in the process, from buying seed, to planting, spraying, harvesting and selling, and making sure the children know where to pick up their checks. Your letter is just a statement of the intended result.
Starting the Planning Process

Estate planning is a much more complex process. I would suggest that it involves at least the following “actions, changes, or functions” to bring about your desired result.

Step one is to find the right kind of attorney. Work with people who communicate in plain English and who won’t charge extra for every question or call (since that deters you from seeking advice). Find professionals who are likely to be around for many years yet are experienced in both agribusiness and estate planning. Use someone who follows a process to fuel creativity within an organized structure.

Next, invest meaningful time in creating a plan. Counseling-oriented (as opposed to word-processing-oriented) professionals will help you creatively design solutions that fit your family and operation. They will educate you on what is possible and assist you in developing a long-range vision. Then they’ll put the plan into writing (will, trust, etc.) as the initial statement of your intended result.

The third step is to align your estate with your plan. A critical, often-missed estate planning step is the retitling of assets to follow the trust or will. Unless the titling (named ownership) of most assets is changed, they will not follow the plan. For example, each year millions of dollars pass to “pay on death” beneficiaries and thousands of acres pass to surviving joint tenants, circumventing the deceased person’s intentions stated in their will or living trust.
Updating and Education

The fourth planning step is to commit to the routine maintenance of your plan. Laws change and plan documents should be updated to take advantage of new opportunities and to protect against shifting regulations. You obtain new or different assets… are you titling them so they will follow your plan? As your financial needs change, are you protecting your estate and heirs by taking steps to re-arrange your investments? Your estate plan is like a tractor: it won’t need an overhaul if you change the oil regularly!

Lifelong learning may be a buzzword, but it certainly applies to estate planning. The right professionals will help facilitate it. You should stay mentally engaged to avail yourself of new opportunities as they arise. Your heirs need to start learning and participating in planning with you. They are more likely to appreciate and accept your plan if they can provide some input: at least their views were considered! By starting now to learn both the legal and business issues and your reasons, your heirs will receive a more satisfying result. More importantly, they will start adopting your vision.

When death occurs and the estate plan starts delivering the intended results, planning isn’t over. Administration of a will or trust is a highly technical matter and will require professional help. The slightest, even innocent, mistake can cause unnecessary taxes or in-family lawsuits! Protection designed into the plan for your heirs (i.e. from lawsuits or divorces) will be undermined if they don’t administer the plan correctly. With appropriate assistance, however, settling the estate with a prepared family will prove efficient and harmonious.
And it continues

Finally, even after the estate is formally “settled” your planning may be continuing! If your goals included asset protection, long-range tax avoidance, or a farming heritage that lasts for generations, your heirs will continue developing, enhancing, and living out that plan for decades or generations to come! If you transfer your vision to them, they will keep building on it.

Estate planning is no minor project. Meaningful results come from a systematic process!

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©2006, revised 2014, Curt W. Ferguson, all rights reserved. The first version of this article appeared in the September 2006 issue of the Prairie Farmer® magazine.