What is Estate Planning
Let’s start with a basic estate planning question first, what is an “estate”. Estate Planning is about saying who gets what, when and how. But also who can’t get it. But what is “it”? You’ll be surprised to learn it is more than a will.
What is Estate Planning?
Or How to Get a Great Estate Plan Without Having to Learn How to Build and Fly a Commercial Jetliner
Practical tips to make the best plan for your family.
What is Your Estate?
Your “estate” is everything you own or have control over. Your person, and your property. That means you and your stuff (assets). While you are alive and have your mental capacity, you can decide where you live, how you live, whether you accept or refuse medical treatment. And while
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you are alive and have mental capacity, you can decide what to do with your property. You can save it, or spend it or give it away. At the end of this article, I’m going to reveal 25 questions or points of good counsel, that everyone should ask themselves about their estate. The questions are designed to get the wheels turning in your head about what your goals and concerns may be. But they are no substitute for the counsel of an estate planning attorney. And if you think you already have an estate plan, think again. You may need a trust review. The law changes, your circumstances change, and many attorneys are simply not that focused on estate planning and elder law.
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Why do I need a “plan” for my estate? The Two Big What-Ifs of Estate Planning
Three things you need to get started on an estate plan:
- Planning for the two big “what-ifs?”
- How can I get started with estate planning?
- Points of Good Counsel – the right questions to ask…
Why do I need a “plan” for my estate? The Two Big What-Ifs of Estate Planning
So, if you have the right to determine what happens to you and your property, shouldn’t you provide instructions about what to do with you and your property if you lose your marbles? You should have a plan for the possibility that one day you will not be able to make your intentions known about you and your property. Imagine a possible future you in these two big what-if situations. What if you lose the ability to control you and your property? And, what-if you die? Of course, dying is not a what-if, it’s a when. But nevertheless, you have the right to make instructions for both of these situations. All you lack to make a great estate plan is the necessary guidance and expertise. But further on we’ll reveal how you can get those too in the “the points of good counsel”. Can you learn ahead of time if you qualify for Mainecare nursing home coverage? All good questions.
I teach a workshop on estate planning. At the workshop, once I’ve explained the what-ifs of estate planning, a cynic in the audience will say, “I don’t care what happens if I’m dead.” But after I ask them a few questions, inevitably they demonstrate to me that they do actually care. Why else would they spend 2 hours with an estate planning attorney learning about estate planning if they didn’t care? Obviously, if you are interested in estate planning, you probably have an estate. And most people who have an estate do care about what happens to it. Who doesn’t want to protect what they’ve earned and saved over the course of their life for the people they care about?
Why You Should Care About Estate Planning
The first thing I point out to the cynic is that in the first situation, you are not dead. You just lost the ability to make decisions. So, if you care about yourself, then you already do care about estate planning. Because the plan starts with you. Do you care about what happens to you? Do you care about what happens to your property if you have lost the ability to make decisions? For instance, should the property be used for you, to keep you at home even if it means that every last cent will be spent? Or would you prefer that something was preserved for someone else? Aging in place is important, but at what cost?
But I’ll Never Lose My Marbles
If you think that will never happen, think again. According to the Administration on Aging, 7 out of 10 people over age 65 will require some long-term care before they die. That statistic does not even cover all the many temporary periods of incapacity that people face in modern society. So it is very likely you’ll experience a period of vulnerability before you die. In my points of good counsel, you will see that when I say a “period of vulnerability” I am referring to many more situations than simply the nursing home. Once you read my points of good counsel questions, you will understand that the chances of your estate being subject to loss during a period of vulnerability is far greater than 7 out of 10. Why? Because long term care is not the only threat.
Your wealth can be greatly diminished, even reduced to nothing by many other causes. Oh, and yes, even though the plan starts with you, an estate plan does not end with you. In a good estate plan, you also cover the other people you care about. And even if you don’t experience a period of vulnerability during your life, estate planning is useful, also, because, the last time I checked, everyone dies.
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The Main Issue in Estate Planning
The main issue is this: many causes of loss of wealth can be avoided by good estate planning (as exposed by the points of good counsel). I know this because as an estate planning attorney with 24 years’ experience I have seen how it happens. One of the jobs of our law firm is to remedy the problems family’s have when a family member becomes disabled or dies, and has a bad or no estate plan. So we know. But you don’t need to have 24 years of legal experience to know this is true. You have seen it too. You just didn’t realize that the loss of wealth was a point of good counsel in estate planning. You just didn’t realize that these losses of wealth could have been prevented by a good estate plan.
What did you see that could have been avoided by good estate planning? You or someone you know lost property because of a long stay in a nursing home. You or someone you know inherited money and lost it for any number of reasons (think bankruptcy, divorce, poor judgment, substance abuse); you or someone you know lost property because of a law suit, a second marriage, bad decisions due to dementia, gold-diggers and opportunists, in-laws, bad investment decisions, no investment plan, a guardianship proceeding, needless family conflict (caused in part because there was no plan), a probate proceeding; you or someone you know was supposed to inherit money, but strangely, a person who only knew the parent the last six months of their lives got everything instead. The point is, you had something of value, that could have been used to improve your life, or the lives of the people you care about, and it got lost. Or worse, it caused a family conflict.
Why Don’t You Have an Estate Plan? Because You Don’t Know How to Build and Fly a Commercial Jetliner!
When confronted with all the potential causes of loss to their estate many people get intimidated. I get this reaction all the time when I’m teaching the estate planning workshop. The workshop attendee will tell me “I can’t deal with all of that! It’s too complicated!” But is it really that complicated to get a great estate plan? Is it too difficult to get a plan that protects against all the many threats I outlined above? The fact is, despite the complexity, the goal is really very simple. Everyone’s goals in estate planning can be summed up in a brief sentence. “I want to preserve what I have for my use, and the use and protection of the people I care about.”
Focus on the goal, not the complexity of the vehicle
The problem is, instead of focusing on the goal, most people get lost in the complexity of the vehicle needed to arrive at that goal. They realize that the best vehicle to arrive at that goal is going to have to be a bit complicated – kind of like the legal equivalent of a commercial jetliner. But instead of getting that vehicle, they quit. But just because the vehicle is complicated does not mean that the goal is unattainable. And the goal is also an important one. I’m going to prove to you that you can get a great estate plan, one that covers all those threats, without having to learn to build and learn to fly a commercial jetliner.
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If You Can Figure Out How to Get From Maine to Miami in Around Five Hours, You Can Get A Great Estate Plan
If you can figure out how to get from Maine to Miami in around five hours, then you can make an estate plan that tackles even the most complicated issues. I will demonstrate with an analogy. Let’s say that your goal is to travel from Maine to Florida and you want to travel no more than five hours. That’s a pretty ambitious goal, right? But around February or so, it feels like a really important goal too!
You Have a Goal, But You Don’t Know How to Reach It… So You Go to a Workshop
So, in furtherance of this intention, you decide to go to a travel planning workshop entitled “How to Get to Florida in About Five Hours”. In the workshop, the instructor says this: in order to get from Maine to Florida in around five hours, you have to have a vehicle that can travel 575 miles per hour. This vehicle needs to travel over any obstacle on the ground, including bodies of water. This will be a very complicated vehicle. Maybe it should fly? But instead of continuing to listen to the instructor, you start thinking in your head, “Whoa! I’m going to need engineers – aeronautical engineers, a factory. But not just a factory, I will need special metals, and special instruments, oh, and special fuel. Ordinary gas for a car isn’t powerful enough. Oh, and once I’m finished with the vehicle I’m going to need someone who can operate it. I’m thinking that the pilot of a vehicle like that would require a lot of training – maybe years of training. Maybe I will need two such pilots, just in case!” So instead of waiting to hear the solution, you say, “Forget this plan, I’m not going anywhere! That’s too complicated. I’m not going to do all that just to get to Florida in around five hours!”
You don’t need to build an airplane to buy a ticket to your chosen destination
Well, it’s the same with estate planning. Many people get intimidated by the technical knowledge required to make a good estate plan. But they forget that the goal is simple. They forget that they don’t need to invent the airplane to get to Florida. It’s the methods and techniques that are complicated and require training. But here’s the good news. You don’t need to invent, build or learn how to fly a jet plane in order to get from Maine to Florida in around five hours. All you need to do is to have the goal and buy a ticket. Estate planning attorneys already have the vehicle and the pilot. For instance, you don’t need to know how to create structure in an estate plan to get structure for your beneficiaries.
How Do I Get Started With Estate Planning?
Okay, so, now you know what estate planning is. You also know that you can get a great estate plan even if it’s a bit complicated without having to become an estate planning attorney. But what in the heck are “points of good counsel”? Good counsel is the special sauce that a trained, experienced estate planning attorney brings to the process of creating a plan. Creating an estate plan requires a conversation about you, about your personal goals, about your personal concerns. Because, even though we can sum up the goal of every estate plan in a simple sentence, every plan is unique. Why? Because every family is unique. The points of good counsel are some of the ways that a trained professional estate planning attorney will attempt to learn from you the unique situation that may call for unique plan features. These are questions. But how the attorney counsels the client depends upon not just the answers to those question, but on the attorney’s matrix of legal knowledge.
Estate Law Includes Tax, Asset Protection, Elder Law
The estate planning attorney has within their thought matrix many different elements of law that aid in making a great plan. They need to learn tax law, and asset protection law, and public benefit law, and contract law, and will law, and trust law. That is what the attorney is referencing in their thoughts when you answer a question. There are some basic questions that can draw out answers that lead the attorney to the right area of law to apply. In a true estate planning design meeting, the conversation will lead to other questions, and make take some unexpected turns. But the ultimate goal, a great estate plan that accomplishes your unique goals based on your unique family situation, will be accomplished. Remember, these are only starter questions. They are meant to get to the real questions about what your goals and concerns really are. We have standardized our process of good counsel in something we call LifeCounsel®. And coincidentally the entire process takes about as long as it takes to get from Maine to Florida. And it starts with knowledge. We like you to start with educating you and end up with a great plan. But let’s get you started on your own with estate planning right now with some self-examination.
Points of Good Counsel Sample Estate Planning Questions
- Have you considered the benefits of adding asset protection to your estate plan?
- Are you selling a business?v
- Are you in a high-risk profession?
- Are you concerned about having to spend a significant portion of your estate on nursing home care?
- During a period of disability or mental incapacity do you wish to remain at home even if the cost of remaining at home would likely completely deplete your entire estate?
- During a period of disability or mental incapacity do you wish to give authority to your trusted advisors to shield assets either for your surviving spouse, or the ultimate beneficiaries of your estate even if that means you would be placed in a nursing home?
- Would you like to give your surviving spouse asset protection?
- Do you have a concern that your surviving spouse may leave the entire estate to a new spouse?
- Are you concerned you or your surviving spouse may be vulnerable to elder abuse in later years?
- Are you single and not certain who would manage for you if you became incapacitated?
- Do you wish to ensure that the children of your first marriage receive some share of the estate?
- If, at the death of the first spouse, the surviving is about to go into a nursing home, or is already in a nursing home, would you like to protect ½ of the estate from the cost of care?
- Do you wish to give the gift of asset protection to your child(ren)? How about a “parental prenuptial” agreement?
- If you should die unexpectedly while one of your children is still a minor, do you want to ensure that child gets the same benefit as your older (perhaps emancipated) children got?
- Do you have a child who is incapable of handling their finances?
- Is money a danger to any of your kids (the beneficiary)?
- Does your child (the beneficiary) have a very controlling spouse?
- Do you fully expect that your child (beneficiary) will get a divorce in the future, but they don’t realize it yet?
- Is your child (beneficiary) disabled (receiving SSI or SSDI or otherwise has been found to be disabled by an insurance company or government agency)?
- Does your child (the beneficiary) have a tax judgment against them?
- Does your child (the beneficiary) have any kind of judgment against them?
- Is your child (the beneficiary) being sued? Do they own a risky business? Is their business in financial distress?
- Are there charities you would like to benefit with your estate?
- Do you have highly appreciated assets that are not income producing?
- Are you considering selling your professional practice (highly appreciated medical, dental, etc)?
- Do you wish to ensure that your charitable gift endures over a long period of time?
- Is it important to you that your personal intentions for the charitable uses of your gift be carried out?
- Is the value of your estate at or near five million dollars?
- Is the value of your estate at or near eleven million dollars?
- Do you have highly appreciated assets?
- Do you have family land that should remain in the family?
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