Thinking about Estate Planning in the New Year
2020 is here tomorrow. It’s hard to believe that it will not only be a new year, but also a new decade. It seems like so recent that we were concerned about Y2K, but time has truly flown by and now though we have most of what we need on our smart phones, we still do need help in other ways. With the new decade coming, many people are thinking about resolutions, goals, and plans. In my group of lawyer moms (which has almost 13,000 women), approaching Estate Planning is a big thing to get done. This demonstrates that even lawyers, those who truly know how important this planning is, procrastinate and have a hard time sitting down to finalize their plans.
With this post, I wanted to take the time to discuss several different types of Individuals and where they may be at in the process of getting down to business with planning. You may feel like you or someone you know fits into these categories.
First: People who don’t want to have these tough conversations
Estate Planning can be a very emotional process for some clients because it brings up difficult choices that people do not want to think about. In fact, in the Lawyer Mom group I mentioned, many members expressed that the reason they haven’t done their planning is because they have a hard time deciding who to choose as the guardian of their children. Adding this tough discussion to how busy we all are with work, family obligations, and the overall hustle and bustle of life is nothing something anyone truly wants to do. Also, a number of cultures have taboos or superstitions regarding talking about one’s plans.
A conversation that I regularly have with clients is that we don’t expect anything to happen to most of them, but it is important to have a well-thought out plan for peace of mind and also for ease in the future. When we have the luxuries of health, time, and mental ability, we can understand that this planning is more theoretical, even though it is practical. This gives us the chance to carefully consider the options with an attorney, ensure that the trust is comprehensively funded, and develop a very strong plan that covers different contingencies. Though Estate Plans can be changed over time as family dynamics, situations, and wishes evolve, it is helpful to have created a plan that can follow several trajectories or paths.
Unfortunately, the office occasionally receives inquiries from families where a member is very ill and expected to enter hospice immediately. These families desperately want to take care of the family member’s Estate Planning with the short time remaining, but often, this is not an option. This legal documentation can only be handled when a client has the mental capacity to make decisions and there are times when they have lost the ability to do so. We also hear stories of clients wanting to do their Estate Plans because a loved one passed away suddenly and never had the chance to plan. These examples are a good reminder of why it’s prudent to start planning when you are healthy.
Second: People who believe they don’t have enough assets to need an Estate Plan
These individuals might think that, “I don’t need estate planning because I’m not wealthy.” In their minds, Estate Planning is only for celebrities and people who are in the top percent. This just isn’t the case, though it can feel that way for those who only hear about wills and trusts in the news when a famous person passes.
What this second set of folks should consider: It’s important to think both short term and long term. They want to protect their legacy and give to the next generations, but they may be concerned about whether they have enough for themselves to live off of until retirement.
In California, the probate court process is invoked when someone passes away with $150,000 or more without having done appropriate planning. For someone who even owns their home, probate is a real possibility that can be avoided. Many clients decide to do their Estate Planning after seeing the stress that the probate process has on family members.
If something happened to these individuals while their children are minors or not quite mature enough to make sound financial decisions, then they need to consider what would happen in several scenarios: 1) guardianship choices, 2) ensuring that the funds are managed by someone they trust until going to their children at the right time.
If, as expected, these individuals live long lives, it’s vital that they have approached their planning while they still have the mental capacity to make these choices. Otherwise, as in the first scenario, the family is still subject to stressful processes of wrapping up an estate.
For a small set of individuals, a trust may not be necessary and a will may be recommended, but nonetheless, Estate Planning is so vital to accomplish so that your wishes are appropriately documented and carried out.
Third: People who want to do their planning in a “Do It Yourself” manner
These people know that Estate Planning is a good idea, but they want to do things easily through by doing it themselves, with inexpensive online tools, or are too thrifty to work with a professional. This is not uncommon. In the age of the internet, many people are on the hunt for a good deal, whether it’s for a pair of shoes, a new TV, or even professional services. I like finding things at discounted prices just as much as anyone else, but I also understand how crucial it is to do research on what I’m getting. If an item or service is cheap, but doesn’t work as intended, it can cause much more trouble and hassle than if someone had just invested in quality to begin with.
As an attorney, I have a low risk tolerance. This means that I think things through, consider many different scenarios, and do scrupulous research when learning. The average consumer of legal services does not know what they do not know. There are, unfortunately, many ways that a plan can fail to work as a client would hope. These issues can come from not funding the trust, not being educated on the options they have, and having a plan that is not fit for them.
The goal every client has with Estate Planning is to ensure that their estate passes to those they love, avoids divisive court processes, and follows their wishes. Having a thorough plan that can accomplish these goals is best accomplished by working with an attorney who has experience, patience to get to know you and your goals, and knowledge that she can articulate in an easy to understand manner.
The beginning of a new year presents a great time for people to make new goals and not only reach them, but complete them well.