We’ve all heard horror stories about bequests going astray and estate plan mandates getting trashed because their testators failed to keep their plan documents and the beneficiary and pay-on-death provisions in their financials current and updated. Or, they didn’t build in protective provisions against challenge by disgruntled relatives and creditors, failed to comply with the law, or just didn’t bother to create the documents at all. That’s how loved ones get disinherited, antagonistic ex’s get windfalls, and state officials have to override bequeathers’ wishes.
Now, surely I’m going to hear “I’m glad you said that, Gary, because you made me feel good and proud of myself. My will, trust, powers of attorney, deeds and titles, insurance, retirement and financial accounts all are in great shape. I just updated them.”
‘Waytago!’, reader. But, know what? An awful lot of “in-great-shape” estate plans still fail, for an entirely different reason. Maybe yours will, too.
They fail when disillusioned spouses destroy them by electing spouse’s elective options in the absence of nuptial agreements waiving them. Loved ones with physical and mental disabilities are denied the needed best protective guardianships and conservatorships, because the documents are silent about the issue. Assets lovingly designated to fund children’s and grandchildren’s educations evaporate because the estate isn’t provided with enough liquid assets to cover its expenses and creditors.
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Newly-acquired blended family members lose out after “dynasty assets” brought into the blended family are directed back out to the prior family’s members, and sufficient provision for the step-family members isn’t there. Fiduciaries are forced to work through the rigors of full probate, even though their deceased “clients” easily could have avoided that by titling many of the assets differently.
And more, lots more!
The reason? The estate plan structure can be up to the minute and accurate, but it also has to be adequate. That means thoroughly designed and provided with all the mechanisms that it should have, to do everything that it’s intended to do, and to do it all successfully and unchallenged.
OK, how to do that? “Adequate” starts ‘way back at the beginning of the planning process, when we start thinking about what’s to happen, who is to do what, and who is to get what and how. Working out our ‘druthers isn’t enough. We need to ponder very thoroughly, deeply, introspectively, slowly, and repeatedly about the possible opportunities for unintended and undesired developments that could happen. Foresight. “What if’s.”
To achieve the best results, let’s also enhance our knowledge about issues and solutions. Research. Engage specialized advice; it’s more than worth the cost. Then we can design the best mechanisms, and enough of them, to assure a fully-effective structure that’s also “bullet-proof.”
Yes, it all depends on the quality of our thinking. As computer-oriented analysts say, ‘”Garbage in, garbage out.” Well, “Shallow thinking in, shallow estate plans out!” And our loved ones suffer the consequences.
What to ponder about? Here’s something that can help, some typical core questions and issues to think about, gathered from our readers, writings and courses:
Typical estate planning core questions:
· Before I die, what’s my likely future? Goals? Life style? Living arrangements? My social, occupational, family worlds? Where, and what level of care should I have during end stage? Late life? Incapacitated long-term living? When to “pull the plug”? How to get there from here?
· What effect will all of that it have on my estate? After paying for incapacitated and late-life care, what and how much might be left to bequeathe?
· I know my legatees’ present circumstances: health, marital, children, financial, occupational, family relationships and attitudes. How do I feel about all of those values? What might they be years from now when I die?
· Among my loved ones and intended legatees, what special needs are there because of such as disabilities, impairments, professional ambition? Might they change over time before I die? How best to help them?
· Do I really want to favor the ______ charity, vs. the ______?
· Bequeathe money, or what? Conditions and “strings”?
· Suppose family member ________needs the assets?
· Bequeathe equally, or according to need or “deserving”?
· What conflicts and resentments will I stir up?
· Who should get what? Problems if I leave indivisible assets to all as a group?
· Should I, and can I afford gifting while I’m alive, not make them wait until I die?
· Blended family: What’s fair? The step-family vs. mine?
· How best to allocate sentimental heirlooms?
· My Do Not Resuscitate Order and Medical Order for Life Sustaining Treatment.
· When I’m incapacitated beyond recovery, and the quality of my life is deteriorating, at what point do I want to “pull the plug”? Health care agent? Medical directive (Iiving will)?
· What’s my likely future? Goals? Life style? Living arrangements? My social, occupational, family worlds? Where, and what level of care should I have during end stage? Late life? Long-term living needing help? How to get there from here?
· Who should I choose to trust my and my estate’s care and affairs to manage? Skills, availability, acceptability, burden, willingness, knowledge, judgment, charisma?
· Getting in touch with myself: What do I REALLY feel about ______? What emotional defense mechanisms, both willful and subconscious, are distorting my thinking? I must adjust my thinking to counterbalance them.
· Who are the wisest, most skilled, most compatible helpers to assist me in thinking through these issues?
· What balance do I want to achieve, and be comfortable with, between taking care of myself, Beloved, my children, and their children?
· What components should I build into my plan to “bullet-proof” it, to protect it from challenges and attacks?
· Other issues, applicable in my unique case, that I think of?
Late-life, end-stage, and at-death issues that should be resolved, decided, pre-planned and managed during life, and also managed at death:
· Funeral, interment, or their alternatives.
· Immediate at-death “first responder” activities.
· Memorial services: What, where, the content, officiators?
· Discovery and assembly of estate-related items.
· Filings and applications for taxes, government entitlement benefits, and all the other financial issues.
· Income, investment, and debt management and financial business decisions of all kinds.
· Property, liability, health, disability insurance claims.
· Life insurance, annuity, pension titling and settlement options.
· Assets ownership options, and their at-death provisions.
· Mandatory probate and estate filings.
· Execution of business succession agreements.
· Disputes and claims of all kinds.
· Foreign governments’ regulations and procedures.
· Estate planning strategies, documents and tools, elder-law and tax planning; estate administration methods.
· Vested retirement plan, 401-K, IRA, employee benefit transfers to beneficiaries, and their tax implications.
· Implementation of all the testamentary provisions.
· Other issues that are uniquely appropriate to your case.
Additional lifetime issues to plan now for incapacity or dementia:
· All of the appropriate items in the above chart, plus:
· Pre-funding or long-term care insurance.
· Supplementing the pre-funded or insured costs.
· The legal incompetence decree if needed, court-fiduciary appointment; incapacity law and taxation.
· Selection and contracting for care-givers, including residence facilities, plus respite relief and family-member assistance.
· Powers of attorney and long-term management of the person’s affairs, the home, the business. Also when lucid.
Sorry, good friend, if I’ve deflated your mellow complacency about your plan and caused you some heavy-duty homework. On the other hand, in your and Loved Ones’ best interests, let’s turn it into a “win-win” opportunity.