Have you done an estate plan? Do you even need one? You may believe that they have an estate plan simply because you have met with an attorney and have had documents drawn; but seeing an attorney does not (in itself) an estate plan make. Why? Because an estate plan neither begins nor ends with legal documents: It begins with your goals and should not end until the day you die.
Your “estate” consists of all assets you own, have a beneficial interest in, or have control over. Included in this list could be personal property, real estate, business interests, life insurance (if you own the contract), and assets over which you have a power of appointment (the right to direct another person’s property). As a general rule, the need to plan your estate revolves around concerns related to surviving spouses and children who are minors, the disposition of property you care about, providing for your health care, and – if your estate is large enough – minimizing estate taxes. To the extent that you have an estate large enough there is also the option of leaving a legacy to society at large.
Estate planning allows you to addresses the concerns: how do I protect and care for my heirs, maintain my wealth, and ensure that I receive proper care in my later years without being an undue burden on my family? There is a short list of beneficiaries your estate can be enjoyed by: you and your family, charity, or the IRS. A solid estate plan allows you to ensure it is enjoyed by the right two. To truly resolve all of these concerns takes both initial and continuous – often sophisticated – planning efforts, the scope of which lies outside the realm of an attorney to adequately provide.
So, how should you start putting together an estate plan and where should you go for help?
The best starting place in formulating a solid and satisfying estate plan is to explore what you want to have accomplished by the end of your life and then to structure your plan with these specific goals in mind. Next, conduct a thorough inventory of your estate with a focus on asset value, tax basis, ownership, growth potential, and distribution alternatives under current tax law. Careful consideration should be given to equal versus equitable issues related to the heirs’ inheritance and whether there is enough liquidity in the estate to meet your objectives today and in the future. Next, a comprehensive analysis of your retirement plan should examine your risk of running out of money and whether there is room in your plan for lifetime gifts to children and/or charity.
As you can see, putting together a comprehensive estate plan involves the coordination of many professional disciplines – tax, legal, investment, risk management, and business valuation – in an orchestrated fashion to ensure that the plan is fully documented, tested, and tracked to reach your planning objectives. In this way, by ensuring that the planning effort has produced optimum results in reaching your goals, you will protect yourself, your business, your family, and your peace of mind.
The time to start planning is right now while you are alive and well, able to use all of your faculties, and able to enter into legal contracts such as wills, trusts, buy-sell agreements, etc. In so doing, it is advisable to seek the help of a knowledgeable planner who can help you bring all the pieces together (only one of which is an attorney) in a coordinated plan that is professionally constructed, monitored, and adjusted as changing personal and economic conditions require. The more complex your estate, the more intricate a plan you will need to realize your goals and the more imperative it becomes to have a professionally engineered and monitored plan in place.
Make sure you have more than just legal documents protecting your wealth and your family: make sure you have an estate plan.
Don Reichert is the president of Capital Design Associates Group, LLC, a family wealth management and estate planning firm in Greenville. He can be reached at 864-235-1428 or firstname.lastname@example.org.