Done correctly, comprehensive estate planning involves the analysis and balancing of numerous and complex laws, tools and objectives. In the process of creating and executing a plan, there are some critical considerations that, even though they may seem obvious, get overlooked. But when you take a ground up approach to planning, where the client’s needs, goals, and circumstances are considered before anything else, these considerations become . Here are 5 of the top considerations to think about:
No. 1: Nurturing Your Personal Network. Once you get into the planning process, it doesn’t take long to realize just how important people are to both the creation and, ultimately, the execution of your estate plan. But while those people you designate to execute your plan are the most important aspect of your plan, people can, unfortunately, be highly unpredictable. That is why it’s critical to your estate plan that, throughout your life, you nurture your relationships with those friends and family your loved ones will turn to when they can no longer turn to you.
No. 2: Building a Team of Trusted Advisors. Coming up with the right plan is a function of give and take between the various aspects and goals of the plan. For example, while a particular legal planning tool (an irrevocable trust, for instance) might work well to protect your personal assets from creditors, it may have a less than desirable effect on your plan’s ability to manage taxes in the long run. To make sure that your plan strikes the right balance between all of the competing interests, it is important that your estate planning attorney work with you to build and manage a team of professionals who, working in sync, can make sure that all of the various parts of your plan work together.
No. 3: Putting YOUR Goals and Objectives First. One roadblock that commonly arises for many people who are in the process of preparing their comprehensive legal plan happens when they begin focusing more on what others, including their children, heirs or other beneficiaries, want their legacy to be rather than what they themselves would like their legacy to be. That’s why it’s important to remind yourself that, by the mere fact that your spending a significant amount of time and, perhaps, money putting your plan in place, you’ve already spent an entire lifetime building a legacy that will benefit them not only today, but well into the future. Your estate plan shouldn’t be a diversion from that legacy that you’ve already begun creating, but instead should be a continuation of that effort.
No. 4: Considering Disinterested Fiduciaries. Some of the most important decisions you will make during the course of planning your estate involves who you designate to serve as the fiduciaries of your personal, financial and health care matters while you’re alive and after you’re gone. While naming family members may be an obvious and even appropriate choice depending on the circumstances, naming related fiduciaries can have very unwelcome, unanticipated results. For instance, naming related fiduciaries to administer your affairs can sometimes result in more conflicts between children when one child is appointed to manage their sibling’s inheritance. These tensions may be latent or manageable while you’re may become more pronounced or difficult to manage when you’re not longer here to lead your children through them. On a more legal note, the appointment of related fiduciaries can have unintended tax and ownership consequences that can wholly derail your plan. So, although there can be a role for related fiduciaries in your comprehensive estate plan, the designation of those fiduciaries should be well thought out to make sure that they are consistent with the goals of that plan.
No. 5: Balancing Flexibility with Certainty. As mentioned above, the best laid estate and legal plans result from the consideration and application of what can be various competing interests, concerns, and goals. Among these competing interests is, on the one hand, the desire to create a plan that is flexible enough to address unforeseen needs and circumstances that may arise in the future and, on the other, the need to build concreteness into your plan to ensure that your fiduciaries execute your plan exactly as you designed it. Again, selecting the best people to be your fiduciaries is a great way to bridge these two completing interests. Besides that, however, striking the right balance between the two should be something that you and your estate planning attorney work to achieve by selecting the right legal and financial tools to be applied at the right time.
While the above considerations may seem obvious, you would be surprised how frequently they are overlooked during the estate and legal planning process. If you want to make sure that your estate plan isn’t just sufficient, but indeed encompasses all of your circumstances, concerns and goals in the best, most balanced way possible, be sure that your attorney works with you to address these important considerations.
Good luck with your planning.