Sure, the word "estate" carries with it connotations of sprawling green checkered lawns, and mansions with maids, butlers, and other staff, but the definitions of the word "estate" in the area of "estate" simply refers to the property one has control over at their death. Although most consider the traditional sense of the word when forming their ideas of the estate planning goals of tax and advanced planning, most of what we try to accomplish with out clients is far from that:
- STRUCTURING OF DISTRIBUTION: I haven't met too many 18-year olds who would truly benefit from $300,000 falling right into their lap in one lump sum. Although traditional life insurance policies are structured to do so, and even putting together a comprehensive Will pretty much guarantees unrestricted inheritance to young adults, many clients overlook this very important component of estate planning (which, by the way, is primarily available through a living trust).
- AVOIDING PROBATE: This probably should be #1, but I fear I will sound like a broken record. Probate is the default state your estate will fall into unless you plan for the alternative. Probate is costly, riddled with delays and complications, and is a relatively tedious process. I can count on one hand how many situations were better off going through the probate process. The rule of thumb is that it should always be avoided, and proper planning is the way to do that.
- CHANGES IN YOUR RELATIONSHIPS: Almost just as important as what happens to your estate, consideration should seriously be given to who is going to handle the "what." There is a lot of discretion given to the fiduciaries of an estate plan, regardless of how specific you are, so making sure that a thorough estate plan is in place choosing the right individuals to handle your matters is essential. To illustrate this to my clients, I tell them to consider their least favorite family member, and imagine the possibility of them handling all of your affairs.
- YOUR FINAL WORDS: Consider this. Whatever statements or provisions are in your estate plan, regardless of when the were created, will be what your family reads and internalizes upon your death. Quite often, clients will put together a plan (or no plan at all) which may result in unintended consequences, and family members at the short end of any "sticks" could misinterpret the sequence of events for years and years to come.
These truly are only a few of the many, many non-tax considerations in effectively planning your estate. Even more than the dozens of reasons common to all clients, each individuals circumstances can generate dozens more. Although the words "Estate Planning" carry with them thoughts of wealth and complex family situations, estate planning is truly for everyone, and careful thought should be given by the middle class, just as much as the upper.