Monday, May 11, 2009

The Three Secrets to an Effective Estate Plan

There are many elements that can make up your estate plan. However, there are really only three secrets to know to make your estate plan effective. Here I discuss those three secrets and how you can use them to make your estate planning better, more current and effective to protect yourself, your family and your property.

Secret No. 1: Think Family First.

Thinking family first is the first and most important of the three secrets. Sometimes we lose sight of the forest for the trees in all endeavors, sometimes especially in estate planning. You want to take planning out of the ivory tower and bring it home to make sure it applies to your family and situation. Here's what I mean.

The reason to do an estate plan always starts with family. That is the reason we plan, to protect our families and ourselves. Does anyone really think that the reason to plan your estate is to pay MORE money to your attorney or accountant? Of course not!

By planning your estate effectively, you are seeking to create for your family the following benefits:

1. Certainty. We want to make certain that our families and ourselves know what will happen if something happens to us. What will be the living arrangements? What are the education and care arrangements? How will it be paid for? There are hundreds of similiar questions that apply to families.

2. Replacing resources and income. An element of your estate plan should be financial. How can your resources be protected? How can future resources and income be provided to the family if something happens to you? What will the family's financial needs be going forward and how can you make sure those needs will be met?

3. Making future dreams happen. We have goals and dreams for the future. So do our families. By working on your estate plan, you can do much to make sure that these future goals and plans have the best chance of coming true. I have written before that estate planning allows us to create a bridge between the known present and the unknown and uncertain future. Make sure you have built your bridge to the future with your own estate plan.

This is how we make sure that the tax tail never wags the family dog! While taxes can be an important element to be considered in every estate plan, they never predominate over our wishes and concern for family. By putting family first, you will have discovered the first secret to an effective estate plan.

Secret No. 2: Work with qualified estate planning counsel.

There are lots of attorneys out there doing lots of different kinds of law. I recommend that you view attorneys the same way you view doctors. For example, if you have a problem with your tooth, you don't go a foot doctor. This same principal works for dealing with lawyers. When it comes to estate planning, work only with a qualified estate planning attorney.

How do you know if you have one? Well, here are some minimum standards you should insist upon.

1. Make sure the attorney has at least seven years of full time estate planning practice as experience. Estate planning is something you don't want to leave to rookies.

2. Make sure that the attorney has an AV rating from Martindale-Hubble. This is a peer ratings achievement and a measure of what other attorneys think about the particular attorney you are considering.

3. Make sure the attorney is a member of their local estate planning council and a member of the Trust & Estates Section of the state bar association.

By insisting on at least these three minimum qualifications, you can go far to make sure you are represented by qualified estate planning counsel.

Secret 3: Keep your estate plan current.

Nothing messes up an estate planning faster than being out of date. Here are just two important examples:

1. John and Sue had named guardians for their kids in their estate plan. However, the initial guardians were no longer friends of the family. John and Sue didn't update their plan and were very upset when they finally read their plan after a serious illness.

2. Mary had an older Power of Attorney that did not contain HIPAA provisions. When she experienced a disability, her agent was not named as Mary's HIPAA Personal Representative for obtaining medical information. This made her agent's job difficult during Mary's diability and was completely avoidable had Mary only updated her estate plan.

How can you make sure your estate plan stays current? Follow these simple suggestions:

1. Review your estate plan with your estate planning attorney at least every two years.

2. Review your estate plan with your estate planning attorney if any significant events happen in your family. These would be things like any deaths or disabilities of your future and successor decision makers; issues with your spouse or kids effecting long-term health and viability; changes in your goals and objectives; and any questions that come to mind when you take your documents out periodically and read them over.

By following this review schedule you will make sure you are always current with your estate plan.

So, here are three secrets to having an effective estate plan. Have you followed each of the three?

1 comment:

  1. Very nice Bernie, enough can not be said about keeping the plan current. JP


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