Scott was recently published in the Lee’s Summit Journal, a part of a new series on the law. The article, published November 6, 2009, talks about how to work with a lawyer in the estate planning process. It’s helpful no matter where you’re from. The original article can be found at http://www.lsjournal.com/104/story/39302.html.
ESTATE PLANNING: Working with your lawyer
Scott Devouton, Guest Columnist
Your lawyer can help you break down complicated subjects. Estate planning is one of them. Most know that they need to think about a will, guardianship for the kids or beneficiary designations, but aren’t sure where to start. What do I suggest to clients, friends and family?
Estate planning is about as big-picture as it gets. Start there. Get out a pen and paper, your handheld or a whiteboard. Organize your world. Write it down. Take this roadmap to your lawyer or other trusted advisor, and use it as a reference point.
“What you need” depends mostly on “what you’re all about.” Here is one way to approach the process: Your world breaks down into three parts: things, people and time.
1. “Things” equal your balance sheet, your assets and liabilities.
What you have and owe will form one leg of your estate planning footstool. What you have (assets) could implicate things like the dreaded estate tax.
What you owe (liabilities, including standard of living) could implicate tools such as life insurance and debt management. This all may be some legwork for you, but it is crucial to making sure your estate plan fits. A secondary benefit of this process will be that you have your balance sheet fresh for other uses, such as applying for a loan or managing debt. I encourage you to look at it and update it from time to time.
2. “People” start with you. Estate planning involves very personal decisions about many facets of your life.
Everyone has a different cast of characters. “Who” will drive your “what” a lot of the time.
Start with yourself, what you believe in, and what you value. Then consider dependents, whether a spouse, minor child, parent, sibling with special needs, partner, employees, or even a pet. Finally, there is everyone else, including other family, the IRS, friends and philanthropic causes.
3. Ultimately, estate planning is about time.
The things and people in your life all move on their own timelines. A good estate plan takes time into consideration, and is often what makes different plans right for different people. Keep time in mind when you’re thinking of how people and things come together for you.
Keep some estate planning buzzwords in mind…“estate tax,” “asset protection” and “probate” are all terms that you might have heard and may be afraid of.
I encourage you to talk to your lawyer about them, and ask questions until you feel comfortable with how they apply to your personal situation. Remember, different issues apply differently to different people. What may be a problem to someone else may not matter in your situation.
A will, for example, might be good for your neighbor, but a trust may be a better fit for you. An irrevocable trust tied to life insurance may similarly be a good move to some, but entirely unnecessary to others. As you can imagine, the examples are many.
Finally, there is “succession planning.” This term applies if you own a business or real estate, and simply refers to what you want to happen to that asset (and any people associated with it) when you are no longer involved with it.
Address succession planning issues alongside your estate plan. Start early. There is usually a lot of flexibility if you start soon enough; options could be limited down the road. Also keep in mind that succession planning often involves how others (children, key employees, buyers, etc.) envision themselves being involved with the asset later on. I encourage clients to get a feel for all of this sooner than later.
Estate planning can seem huge. It covers a lot of territory and can involve a lot of financial, logistic and spiritual review. However, you can get your arms around it. Talk to your trusted advisors. Start by looking at your world; keep perspective as things come together. Your “who,” “what” and “when” will all drive what estate planning means to you. Have a coffee with your lawyer. Lay it out, ask questions, listen, and make sure your lawyer does the same.
In the end, your estate plan should reflect its most important component: you.
