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Estate Planning

My Thoughts. 07/27/2024.

Your estate plan is a puzzle; your estate attorney has agreed to combine all the pieces. When solved, it should result in a beautiful picture of how you want to bring closure to your life. 

The Process of Making a Puzzle

It would be best if you started with the end in mind. What is the picture on the puzzle? You have the image of the puzzle in your mind.

So, you have to transfer to the attorney's mind's eye, in great detail, what the picture will look like and what it represents.

The attorney-artist paints the canvas to your satisfaction.

You then give the canvas to a six-year-old named "Life," and she cuts the canvas into 250 pieces. 

The pieces now represent the 250 challenges of your life estate. Multiple people and other entities, property, valuable stuff, multiple accounts split numerous ways, in light of multiple what-if scenarios, early gifting, trusts, provisions for a surviving spouse, and on top of these variables, most, if not all of them have potential financial and tax implications. 

The attorney will have quite a challenge putting the pieces back together perfectly because you won't hang it on the wall if you don't like the assembled puzzle picture. In other words, you will NOT execute the estate plan if it doesn't look like the picture you imagined, you don't understand how it works, or you don't trust it. The attorney will get paid, and you will have wasted your time and money and be no better off.

Just as the attorney is not an artist and probably can't mix the oil paints on his pallet to get the right colors, he is not a financial planner nor an income tax specialist. Although an estate tax specialist, he may not make the best practical recommendations for asset distributions to your heirs.

The story's moral is to surround yourself with wise and respected counselors when making large and complex decisions. In this story, a financial planner and a tax specialist who should have been at your meeting table would most likely have raised and asked questions to help you and the attorney complete and hang an acceptable puzzle picture on the wall.

Your estate plan should culminate the total of your life desires, but communicating those desires in your estate planning documents can be daunting. As your financial situation or family dynamics grow, estate planning decisions become more challenging. In determining what's best for your family, we must consider who receives what, in what form, and what the result will be once the court system completes probates your estate.

How would you respond to the following questions?

  • Do your executor, trustee, and children's guardian have the same value system as you and your spouse?
  • Do you have a will? Has it been updated in the last five years?
  • Do your current documents specify the amount you want your children to receive? Can they handle the form and amount of assets they will be receiving? Should your assets be distributed equally to your children, or should an individual's unique need, lifestyle, or character be considered?
  • Would you like to give more to charitable organizations? Could estate planning techniques allow you to contribute more?
  • Have you held a family conference to discuss estate planning issues with your children?
  • Have you developed a business succession plan? Are you taking advantage of currently available estate planning techniques to minimize your potential capital gains and estate tax associated with the transfer of your business?

These are essential questions. In conjunction with your accountant, attorney, and insurance agent, I want to assist you by providing insight into their recommendations and the associated personal financial and tax consequences.

A financial planner can be a very effective intermediary between you and your other advisors. Your planner will help ensure that each member of your estate planning team considers your estate planning desires and that the proposed solutions are understandable. You will probably not execute a plan that you do not understand.  

Finally, each professional you select as part of your estate planning team should be able to demonstrate how their part in the planning process helps pursue your desires.

Your estate planning team members (attorney, accountant, insurance representative, or tax specialist) are likely NOT planners. It is vitally important that you employ a financial professional who is by nature a leader, an organizer, and, by training a planner, to coordinate the efforts of your estate planning team.