Why Plan At All?

Estate Planning is for people who want seamless control of their assets while they are alive and who want to leave a legacy after they die.

Among reasons to have an estate plan, three of the best in my view are:

  • Assets held in a grantor-funded revocable trust pass to trust beneficiaries outside of Probate, with no court oversight.
  • A well-written Trust provides CLARITY and CERTAINTY.
  • A properly prepared and funded Living Trust avoids court interference at incapacity.

When you think about putting together an estate plan, however, remember the trust itself is only one part of a multi-pronged approach to achieving the clarity, certainty, and seamless control I’m talking about.

A good estate plan will also include what’s referred to as a “pour-over” will, or a document that will allow those you leave behind to more easily clean up any mistakes you may have made in properly funding the trust during your lifetime.

A second important piece which helps fulfill the third of the best reasons to plan mentioned above is a document called a “Power of Attorney for Asset Management,” which automatically (or on the certification of your doctor, if you prefer) confers authority on a specified, trusted individual to manage your financial affairs in the event of your disability or incapacity without first having to seek the approval of a court.

Finally, a good estate plan is incomplete without a document called an “Advance Medical Directive.” Like the power of attorney for asset management, an AMD allows you to nominate a specified, trusted person – who can be but does not have to be the person specified in the power of attorney for asset management – to carry out your predefined wishes regarding medical care, long-term life support, pain management, and other healthcare-related choices in the event of your disability, catastrophic illness, or incapacity. Should you have no such predefined wishes, the AMD can give your nominee authority to make those decisions on your behalf, with or without a doctor’s intervention as you choose, all without needing to get a court involved in such personal decisionmaking.

Of course, any plan or course of action may have drawbacks. Things to consider when deciding on an estate plan include, for one, the reality that estate planning is not cheap. Depending on your asset makeup and plan complexity, the initial outlay for a Trust Portfolio is likely to exceed a few thousand dollars. In addition, funding a trust can be difficult. Assets not properly funded into your Trust will have to go through Probate, which is time-consuming, can be confusing, and is even more expensive than estate planning. There’s paperwork and hassle involved in transferring assets into a Trust. And once your plan is drafted and in place, you’ll incur ongoing costs to review and make necessary changes to it as your life progresses, your assets, circumstances, and relationships change, and as new developments in the law take place.

Obviously, I’m self-interested here but I honestly believe the investment of time, money, and energy you make in planning for estate management is one of the greatest gifts you can give to yourself and to those you love.

Posted on 08/01/2018 by Lon Lazar