Estate Planning – what is it?

Posted on: February 5th, 2012
When I tell people I am an Estate Planning attorney I often get head nods and affirmations that generally include something like, “OK, so you write Wills for people?” I’ve even had some respond. “Well, I don’t have an estate, but if I did I would call you.” Or, they may even ask if I can help them with their investments. To this last response I quickly answer that I am not a financial advisor so I do not give investment advice, but I can introduce them to the appropriate people.

I have come to believe that most people have a limited view of Estate Planning and they equate it with one of the following: (1) Drafting Wills; or (2) Something done only by the wealthy. In reality, both views are misguided. My view of Estate Planning is much more broad and comprehensive. For example, the definition I teach to my clients is as follows:

“We want to manage our property while we are alive, take care of us and our loved ones if we become disabled, and give what we have to whom we want, the way we want and when we want. Furthermore, if we can, we want to save every last tax dollar, professional fee and court cost legally possible.”

I believe this comprehensive definition encompasses all aspects of Estate Planning and communicates that it is more than just having a Will or plans in place for when you or a loved one passes away.

There are three components to Estate Planning that I work through with my clients: (1) Incapacity Planning; (2) Wealth Transfer Planning; and (3) Beneficiary Protection Planning.

Incapacity Planning

A vitally important part of Estate Planning, and one that is often overlooked, is planning for one’s incapacity, whether it be temporary or permanent. It is here that we determine how the client’s assets will be managed if the client is unable to do so himself. For example, who is going to make sure the bills get paid on time? Who will make investment decisions? Or, what type of facility will the client move to if long-term care is needed?

Some of these decisions can be made by an agent under a Power of Attorney, but in my experience a successor trustee is in a much better position to handle these issues. Furthermore, this is one area where a Will based estate plan falls short because a Will does not take effect until the Testator (the one who created the Will) dies.

Wealth Transfer Planning

This is the area that most client’s think of when they hear the term “Estate Planning.” This is the part of the plan that determines how the assets in the estate will be distributed. There are many hurdles that must be navigated in this phase. For example, who will be responsible for administering the estate? Is privacy a concern? What assets will go to what beneficiaries? And, will estate tax be due and how will it be paid?

Beneficiary Protection Planning

Like incapacity planning, this too is an often overlooked area of Estate Planning. I like to help my client’s accept the following description of Beneficiary Protection Planning: “We will do whatever it takes to ensure that when we are gone: (1) Family harmony is realized; and (2) The inheritance we leave protects, improves, and enhances the lives of our beneficiaries.”

Therefore, I work with my clients to make sure that what they are leaving to their beneficiaries will be protected and preserved for as long as possible. After all, you, the client, have spent a lifetime building your estate, and it should not be blown in an instant by a careless beneficiary.

So, I encourage you to broaden your view of Estate Planning and seek a qualified professional who can assist you in planning for these three important components that can affect everyone regardless of the size of the estate.

If you have any questions about estate planning, contact me.

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