Few people actually have estate plans in place. Even lawyers and financial professionals who know better don’t get around to planning their estates. For many people “Estate Planning” is really just a simple will written so they don’t have to wrestle with many of the real issues of their estates. Others have plans drafted but only after spending months delaying decisions and leaving documents sitting around before signing.
Estate planning is a lot like planning for nursing home care. Nobody really wants to do the planning, because it requires one to contemplate unpleasant possibilities. In addition, once estate planning begins, anyone who has more than a simple estate and an ideal family must deal with some difficult questions.
These are the most common obstacles to estate planning. Fortunately, there are ways to overcome these obstacles. Let’s take a look at some ways you can hurdle the obstacles.
Don’t plan for the longest term. Many people go into estate planning with the idea that they are making permanent decisions that will be locked in forever. They find it difficult to resolve issues based on today’s knowledge and circumstances. The prospect of a decision that locks one’s heirs in for decades can be paralyzing. As a result, they make no decisions, and the plan doesn’t get done.
A better approach is to consider only the next five years. Many things will change in that time, and the estate plan will need to be revised. Your assets will change. There will be additions to and subtractions from your family and friends. Your outlook and wishes also might change.
A better approach is not to get too absorbed in the very long term. An estate plan should be reviewed at least every couple of years and when there are any changes in circumstances. Plus, you can change the plan any time you want to. Recognize this when making decisions. Try to do what makes sense for the next five years or so, instead of thinking in decades.
For example, many people with young children would like their own parents to be guardians if anything happens to them. But they worry that their parents might not be physically able to raise the children in 10 years. Don’t worry about that. Make the best choice for today, and be prepared to change the plan if circumstances change.
There are only two times when part of an estate plan is permanent. One time is when property is given either to people or to irrevocable trusts. The other time is when the estate finally is processed. Anything else can be changed whenever you believe it is appropriate.
Recognize that no family is normal. Some people do not go to an estate planner because they do not want to talk about the family black sheep or other problems. Others cannot think of a solution on their own, so they don’t draw up any plan. Whatever your family situation, an experienced estate planner has heard something similar already. As a result, the planner probably has some proposals for you to consider. An imperfect family or an embarrassing situation is no reason to compound problems by neglecting an estate plan.
Some people consult with an estate planner but aren’t candid in their meetings. It is important not to withhold information from the planner, even if you consider it embarrassing. A good estate planner is not going to judge you or your family. The planner is an experienced problem solver. But he or she cannot solve problems without all the information.
Look for alternatives and creative solutions. Many estate planning professionals simply ask clients how they want the property divided among their children. They are given the choice between leaving the property equally or according to financial need. That leaves clients with the impression that there can be only one division, and the decision has to be made today.
Often, things aren’t that simple. The circumstances of the children can change. Or the parents might not want to essentially tell the children that they will permanently favor one over the other in their estates.
An alternative in this case is to split most of the estate equally, and put the rest in a trust. The trustee decides over time how to distribute the wealth based on who consistently has the greater need or has the need at a specific time. This approach delays the decision, takes the burden off the parents, and is based on long-term circumstances.
Other people aren’t sure how to divide up personal items or ownership of the family business. I’ve offered alternative ways of resolving these issues, and they are available in the Archive on the web site.
Almost every estate planning issue can be resolved with a similarly creative approach. If you cannot or do not want to make a permanent decision, tell the estate planner so and why. Ask for alternatives. If you have an uncreative estate planner, shop around for someone else.
Meet separately with the planner. Spouse should meet separately with the estate planner at least once each. One spouse might be willing to express some views and thoughts in such a session that would not be made in front of the other spouse. In fact, some people avoid estate planning because they are hesitant to air known differences with their spouses.
After separate meetings, the planner will have all the information and will be able to present options. A good planner will be able to introduce ideas without indicating that they emanated from a private discussion with one of the spouses. Then, the spouses are discussing ideas that seem to come from a neutral party.
If you can afford it, having children meet briefly alone with the planner also can be a good idea. If nothing else this can prevent misunderstandings. In some cases, it might produce information the planner did not get from meeting only the parents.
Consider your values and legacy. Your estate plan is a reflection of your values and the legacy you want to leave. Often, it has a significant effect on how people remember you. Consider the values that are important to you regarding wealth, expectations for your heirs, obligations to your heirs, wealth management lessons you want to leave, and charity. Some people find it helpful to draft a mission statement or to use the Jewish custom of drafting an ethical will. Then, the estate plan can be drafted to advance the values in the document. Some people involve their children in the process.
If you don’t put together an estate plan, the government and courts will decide what is done with your wealth. Your heirs might conclude that you didn’t care enough to have a good plan drafted.
Shop for a planner. Different estate planners have different working styles. Some focus on the financial details and don’t deal much with the human elements. They’ll ask you to complete a form dozens of pages long before the first meeting (a leading cause of procrastination, by the way). Other planners take a more informal and conversational approach. They will complete the form themselves after meeting with you for several hours and reviewing documents such as tax returns and investment accounts. Some even get really touchy-feeling by including psychologists in the process or having you complete a questionnaire on your values before considering any details.
Decide which type of planner would work best for you, or interview those with different styles to get a better idea of how they work. Talk to friends and associates who have estate plans to get ideas for styles and planners.
Realize that signing the will won’t trigger anything. Finalizing an estate plan does not advance the date of one’s demise. Some estate planners like to joke that, like buying insurance, signing the will means you aren’t going to need it any time soon.
There are many obstacles people put between them and their estate plans. Don’t let these obstacles deter you from putting together a solid plan. Face the obstacles and ensure the legacy you want.