What’s Your Score?

So many families think they have things all figured out when it comes to estate planning. Many think they know what they need to know, have done what they need to do, and have nothing to worry about. Unfortunately, in a lot of cases, that’s just not true. 

If you were put to the test, what would be your estate planning score? For these guys, the news is not good.

Take Blake for example. He has a beautiful wife, two great kids, an amazing house…but no estate plan. But he’s young! He thinks, what’s the worst that could happen? Estate planning is for old people. I’ll deal with it then.

Blake gets a zero. Nothing could be worse than an outright failure to plan! Some people put off estate planning, even though they know they shouldn’t, because they think it’s too complicated or too expensive. But this guy is worse—he puts off planning because he thinks it’s unnecessary, and he’s putting his family at risk. Don’t be like Blake.

Consider Jenny. She is retired and financially secure, but she’s blissfully ignorant. She thinks she has her legal affairs in order—but she’s wrong. Her entire estate plan is based on a last will and testament. She has no idea that a will is not going to keep her estate out of probate court. In her case, probate will be extremely expensive and will take forever. I’d give Jenny a two. She has a plan, but for her situation it is the wrong plan!

Then there’s Scott. He thinks he’s ahead of everyone. He is financially secure, like Jenny, and appears to be prepared for the future (at least on paper). He has an estate plan. He even has a trust. He knew enough to realize that a will does not keep an estate out of probate court, but a trust can. What he doesn’t realize, though, is the importance of funding his trust. He never did anything to title his assets correctly so that his trust would work for him and his family. Like Jenny, he is headed towards probate court, despite the fact that he has a trust. Scott beats Jenny; he gets a three, but without some work he still has a plan that is destined to fail!

We all have different priorities and different reasons for planning, but everyone needs a plan. We work with clients looking for very simple plans designed primarily to protect young children or to just steer clear of probate court. We also work with clients looking for more complex plans designed to protect qualified retirement money, look out for disabled heirs, or shelter assets against the rising costs of long-term care. Most of all, we strive to ensure that no one we come into contact with fails to plan, gets stuck with the wrong plan, or winds up with a plan that is destined to fail. 

If you want to get a better planning score than Blake, Jenny, and Scott, your plan has to at least deal with these three things:

 1. Your plan must allow someone to make important decisions for you (financial and healthcare) while you are living, in case you can’t handle those decisions yourself. This involves setting up power of attorney documents and healthcare directives.

2. Your plan must outline who gets what, and how, when you die, with particular attention to detail if you have minor children.

3. Your plan must use the right documents (often a trust) in the right way (with proper funding) to stay out of probate court.

Your specific circumstances might mean your plan needs to go far beyond these three key considerations—they are just starting points. But no plan will get a good score without addressing these three keys in a professional and thoughtful way.