Wednesday, February 18, 2009

Building Your Estate Planning Foundation with Core Values

In every estate plan, there are certain elements that make up the foundation for that plan. I have always believed that building this foundation is the most crucial component of each client's estate plan.

You can illustrate this in this way. Consider building your dream home and using a ruler as the foundation. Not a good idea, is it?

Well the same thing is true in estate planning. To steal from the brilliant Steven Covey, in estate planning, we always start at the beginning and begin with the end in mind. In this way, we can be sure that everything else we do with the client's plan rests on a rock solid foundation.

So what are these elements? How do we fashion and build the foundation using core values? We start by considering the following:

1. What are the goals of the client?
2. What protections are already in place?
3. Have the client's existing estate plan documents been reviewed and brought current.
4. Are any existing documents synchronized with the client's goals.
5. What is the family structure?
6. Who is on the client's current advisory team, if anyone?
7. What are the client's assets and insurance coverages?
8. How are beneficiary designations currently drafted?
9. Has the client's insurance coverages been recently reviewed.
10. Has the client's property and casualty insurance coverages been recently reviewed.

After this data is gathered, then the following elements are designed, drafted and executed by the client and counsel:

1. Some form of Will (also known as Last Will and Testament).
2. Drafting necessary to protect the surviving spouse if the client is married and drafting to protect children in accordance with the client's goals.
3. Consideration of the need for estate tax planning.
4. Durable Financial Powers of Attorney and Durable Health Care Powers of Attorney, including the very important HIPAA provisions.
5. Personal Property Memoranda
6. A marital agreement if necessary for the efficacy of the plan.
7. Living Wills.
8. DNR's if necessary, or at least a discussion of DNR's.
9. Proper drafting for beneficiary designations for insurance policies; IRA's and 401(k)'s.
10. Necessary coordination with the other members of the client's advisory team.
11. Retitling of ownership of assets between spouses.

While these two lists are not meant to be complete for every client, they demonstrate the thinking that should be part of every estate planning foundation for every client. Each client's plan design will be different, but the process for each client is similar. In this way, we can use the client's core values to design and construct for the client a rock solid estate planning foundation.

Is your foundation sound and rock solid? If you are not sure, then take steps to review your plan, or your situation as soon as possible. You'll be glad you did.

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