Estate Planning on a Personal Level

A professional organizer named Sue DeRoos once said, “Everyone gets organized at some point.  They just might not be around for it.”  And so it goes with trying to plan your estate. Even now when you think of planning an “estate”, your visual may include the grandeur of a hilltop mansion with an expansive yard, spiral staircases marking the front door, and foreign-made luxury cars parked in the circular driveway.  In reality, estate planning is much more pedestrian than that.  Estate planning is, quite simply, the process of determining how your assets will be transferred to those duly entitled to receive your property.  Whether someone has taken formal steps to arrange his or her affairs through legal documents does not alter the fact that an estate plan will occur for everyone at some point.

A great estate plan is one in which the desires of the clients are met on a human level.  The wishes of the clients are heard and understood—not on a technical/legal level, but on a personal level.  Too often, clients have a preconceived notion of what financial and estate professionals want to hear, so they speak only of financial and tangible personal assets such as investment portfolios, life insurance and the grandfather clock.  However, underlying the property is often a desire for family harmony and the meaningful use of material wealth as a legacy.  Sibling rivalries, often simmering below the surface while parents are still alive, can reach a toxic crescendo when dealing with the settlement of an estate.  Often this is one of the parents’ biggest worries.

One major challenge is how to be fair to all the children.  Is fair always equal? Experience shows that most clients want to leave equal amounts, but how does that work when a business is involved?  If one child is working in the business (or farm) and another is not, does the child in the business deserve a disproportionate amount because of the commitment to keep the family business growing and expanding? Families struggle with how to compensate the child who took another path in life and if it’s even necessary to do so. What if one child is financially more successful than another who, for example, heads up a struggling non-profit?  Is there an obligation to split the estate unevenly to compensate for a career choice including, the choice to work in or work outside of the business?

It is important to have conversations with children before the estate plan is written so the parents know their children’s thoughts, fears, expectations and concepts of fairness.  Discussions around money can be omitted in the short-term, but holding conversations related to a shared vision for a family business or family farm can be critical to the future success of the ongoing enterprise and the harmony of the family.  Identifying future leadership is not something to be left to chance, and you may find that Johnny, who always talked about running the business some day, really only said that to please his parents. Although these can be difficult conversations your children will not have to “guess” at your true intent including what led you to make the estate decisions. This guessing can lead to serious family disharmony and conflict when the estate plan is implemented and no one is around to explain what was behind the decisions.

Contingency planning is an important aspect of the estate plan documents. In this case, their “if this, then that” wording is an amalgamation of both best case and worst case scenario planning. Well-drafted estate documents are needed to spell out all of the specifics.  Taking into consideration all the special circumstances that families often present to the professionals may take substantially more thought and foresight than simply preparing wills and trusts.  After all, if professional organizers demand you lend time and effort to them, don’t you also owe it to your family?

About the author

Walt Mozdzer, CFP®, CAP

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