What is the first thing that you think of when you hear or read the phrase “estate planning?” Is it a sprawling countryside compound, complete with the Bentley parked in a front and a butler to greet guests? I want for you to strike that image from your brain because, contrary to that common misconception, you don’t need an “estate” to benefit from the services of an estate planner.
No matter what you own, how old you are, or your tax bracket, an estate planner (like me!) can work with you to draft a series of documents to provide benefits while you are living, as well as once you have passed on.
Because estate planning goals and objectives vary and are dependent upon every client’s individual situation, an estate plan can be fully customizable to the extent that the law allows. For high net worth clients, the focus is often on tax planning and ongoing asset management for generations to come. But for other clients, where there may be no real tax benefits available, a planner is often drafting to ensure that debts can be paid and family members are provided for should the need arise. Variables such as your asset portfolio and family situation (married vs unmarried vs married for a 2nd or 3rd time; children under the age of 18 vs adult children; no living heirs; etc.) are balanced against what your long-term goals and objectives may be. Taking those variables into consideration, a planner can then determine what documents need to be drafted in order to accommodate all of your needs.
The process itself is consistent regardless of the client. It begins with the initial consult to identify such variables as stated above. It’s also an opportunity to educate the client on how estate planning works. I find that most people are intimidated by the idea of not only addressing their own mortality, but actually planning for it. This initial consult is intended to answer questions and set aside any reservations that clients may have.
For the sake of efficiency, I provide my new clients with a questionnaire requesting a wide range of personal, family, and financial information. This information-gathering process at the beginning of any estate planning relationship is by far the most labor-intensive period for the client. It’s also incredibly important as it provides the most accurate snapshot of the client’s situation and assists me in determining what specific documents the client may benefit from.
The most important step for any client is to identify who the players in their plan will be. By players, I mean the people that you nominate to take over for you if or when you become incapacitated or die. These designations can come in the form of trustees, executors, agents acting as the Power of Attorney for either financial or medical decisions, or the guardians of young children. With each designation comes a hefty task of managing assets, administering the estate (dividing assets, paying taxes, paying creditors upon your death), or raising children. I counsel my clients to sit with these appointments and really evaluate those whom they want to take on these responsibilities. It is not about loyalty or popularity. It is about trust.
Once I have all of the information in front of me, the drafting can begin. There are a myriad of documents that we have available to us as planners. Just to name a few, we can use a combination of trusts, wills, and power of attorney documents to create a shield to guard our clients from the unexpected.
After the documents are finalized, I am there to help my clients put these documents to work. For example, assets may need to be transferred into a trust that we have created or copies of your estate plan need to be distributed to family members. I can help with that. I also make sure that my clients take copies of the Power of Attorney documents to their financial institutions and medical providers. In this very litigious world, many financial and medical institutions prefer to have a signed Power of Attorney document on their own letterhead or prepared by their legal teams, for added protection.
In addition to being customizable, the estate planning process provides flexibility; however, an estate plan is only as effective as you allow for it to be. Just because the documents are signed and executed doesn’t mean that the process is finished. To the contrary, estate planning is an ongoing process and requires the client to review and update their plan as they go through life. Only then do they maintain the security and protection that an estate plan is intended to provide.
The trickiest part of planning is that we are doing our best to predict the future and account for just about every “what if” scenario that could present itself. In a perfect world, you plan for and prevent any disaster that may come your way. Alas, the world is not perfect and it is nearly impossible to know what will happen next year, next week, or tomorrow. This is true whether you are 25 or 85, live in a modest single family home or that sprawling country spread that we talked about earlier. With a well-crafted and maintained estate plan, just about anybody can defy the odds.
Have questions about what sort of an estate plan might work best for you, or want to schedule a free consult? Feel free to email Kate at firstname.lastname@example.org.