A large percentage of estate plans fail to achieve one or more of their goals, and many of them fail for a surprising reason.
One cause is the most surprising and perhaps most frequent reason estate plans fail: The estate owners do not implement their plans.
The failure to implement an estate plan is surprising.
Having an estate plan created can be expensive and time consuming.
Attorney’s fees and perhaps other costs are incurred whether or not the plan is implemented.
In addition, those who undertake the estate planning process presumably did so because they understood why they need a plan and the consequences of not having an estate plan.
Yet, after incurring the costs and knowing the consequences of not following through, many do not implement their plans.
It is unknown how many people fail to implement their plans, but many in the business believe it is a significant percentage of the plans created.
The problem is so widespread that the magazine Private Wealth in 2003 and again in 2008 surveyed both attorneys and high net worth individuals to study the problem from the perspective of both sides of the transaction.
The magazine found consistent answers in its two surveys, and also found the situation is growing worse.
An estate plan is not implemented if the client fails to sign the wills and other documents.
A failure to implement also occurs when assets are not transferred to trusts or other entities or planned gifts are not made.
Often documents are signed in the attorney’s office and transfers are made with the attorney’s help, but the attorney’s participation is not essential to implementation of all plans.
So, the attorney might leave implementation of most of the plan in the client’s hands.
The interviews with attorneys revealed that most are unconcerned about their clients’ failures to implement the plans, and they acknowledge the failure is not unusual.
Apparently the attorneys believe they have earned their fees from those clients and they are generating enough new business they do not worry about unsatisfied clients and unfinished plans.
In addition, pressure from their partners to be profitable discourages attorneys from taking additional time to ask clients why they have not signed their documents, transferred assets to trusts, or taken other actions.
The comments from high net worth clients who have not implemented plans are more interesting.
These clients have net worths of at least $10 million.
Over 95% of the clients who did not implement plans said that the plans did not satisfy their goals, wants, and objectives.
In addition, over 93% said the attorney made them “uneasy.”
And 55% said their estate plans were too complicated.
All these complaints probably are the result of two problems: poor communication and a poor working relationship.
They also provide clues to steps you can take to ensure having a successful estate plan you will implement.
Most clients know they need an estate plan and have general ideas why a plan is important.
Their goals are to avoid unnecessary taxes, high probate costs, and long delays.
They also want to provide for loved ones.
But they usually have only general goals.
They are looking to the estate planner to help them refine their goals and define their needs.
Most estate planners, on the other hand, seem to expect people to know what they want in their estate plans and to tell the planner what they want.
Or the planners have put together a lot of estate plans and assume people generally want the same things and need similar plans.
We’ll pick back up on this discussion in next week’s edition of Retirement Watch Weekly. Until then, I urge you to read my note below…
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