In our last article, we explained that estate planning is about more than just downloading the right forms and documents. Proper estate planning is about ensuring your wishes are carried out at your death or incapacity; that your family is never dragged into a courtroom; that your assets can actually be enjoyed by your heirs, not depleted to pay creditors.
There’s also another aspect of estate planning that is often left out: passing on your values, your beliefs, and your message to your heirs and loved ones.
We approach estate planning in the most comprehensive manner possible. It’s about protecting assets, but it’s also about passing on the intangibles, like your value system. It’s about protecting the assets and ensuring the right individuals are put in charge; but it’s also about ensuring they encounter no problems with executing your commands. Ultimately, a great estate plan ensures that your appointed representatives can execute your commands and wishes, both legally and logistically.
What are the major problems that occur with traditional estate plans in Oklahoma?
There are several problems with how estate planning attorneys having traditionally serviced their clients. The first is that the attorneys have historically only focused on the documents. The next problem is the lack of assistance in funding the plan. And the most obvious is that attorney’s seldomly create asset inventories or encourage clients to do so themselves.
Cumulatively, the end result is a client has a set of documents that no one can find after they die; and once found, the documents don’t even accomplish what the client wanted (and paid for).
Problem #1: Focusing only on the documents
The biggest problem with the traditional way of planning for death or incapacity is that the focus is on selling the client the legal documents, instead of focusing on the planning. Traditionally, attorneys saw themselves as the sole creator and source of any and all legal documents. And because of that, attorneys have essentially trained clients to only see us as document producers.
If the Client believes that estate planning is simply about getting the necessary documents in place, then the Client’s focus becomes centered around shopping for documents, about asking attorneys questions about the documents, and even listening to friends or family that want to help find the right documents. Clients may even shop for documents online, and download the documents themselves.
If the only value the attorney is providing is a bundle of documents, why hire an attorney at all? Why not just follow the instructions on documents downloaded online? These are reasonable questions for a person to ask. And that is a problem that attorneys have created with the traditional model of estate planning that only focuses on document production.
However, the documents are only one component of an estate plan. Educating the client is number one. The client must know how the plan works, and how each document fits into the plan. Next is educating the other people or institutions that will be involved. You must ensure that all parts of the plan — including the people — can properly function in conjunction with the plan.
Which brings us to the next problem with traditional estate plans.
Problem #2 Not providing a road map for how the estate plan works
A traditional estate plan is just a bundle of documents — a will, power of attorney, medical directive, and sometimes a revocable trust. Often, the client is simply told what documents he or she needs, and then the attorney prepares the documents. Not only does the client have little involvement in designing the documents, but there is no plan for how to integrate the documents as a whole.
- Who calls who to explain where the children must go temporarily before locating to their new permanent home?
- How do the heirs get title to the assets they are to receive?
- How does the family locate all of the accounts?
- Do the surviving spouse and children know what to do to access the estate?
Before we even get further down the list to the problems that require action, there is a more basic problem of simply not knowing how the plan works.
All of my estate plans come with a diagram and set of instructions. We also assist our clients in communicating with relevant participants and family members, and we prepare instructional letters. Our goal is to make sure our client understands how everything works. And we make sure that we explain and document how it works for anyone else who may later be involved.
Problem #3: a lack of documenting the estate’s assets
It is both amazing and shameful that many traditional estate plans do not include an inventory of assets. I find this to be something so obvious as something a client would want. But because it is often not suggested, clients forget to ask for it.
Every estate plan should not only contain a plan for transferring the assets, but should also itemize the assets and explain how they can be accessed. That means identifying all real estate, by legal description and county; and by itemizing all bank accounts, stock accounts, and retirement accounts, with clear instructions on who to contact for access.
All of our plans itemizes the assets and and include a living inventory of the assets, since they will change over the course of your life.
Problem #4: a failure to fund the trust and re-title the assets
Simply documenting the assets is not enough. If the estate plan included a trust, the assets must be placed in that trust in order for the estate plan to work. Same goes for estate plans that include joint tenancy designations. If the administrative work is never performed, whether by the client or the attorney, the plan will not work. In short, there is no plan.
Problem #5: Not regularly reviewing and updating the Plan
Another failure of traditional estate planning: the lack of review and updating. The biggest failure of traditional estate planning is the failure to transfer the assets into the trust, as explained in problem #4. Attorneys that draft documents and then leave it to the clients are doing a disservice to the client. The client hires the lawyer to get it done. Not just draft the documents.
But even if the titles were properly changed, and the trust properly funded with the assets of the estate, the plan can later fail the surviving family members if it wasn’t regularly updated.
Problem #6: Not focusing on families with young children.
Traditional estate planning attorneys have not focused on the importance of estate planning for families with young children.
Yet, this demographic more than any other needs estate planning. You must plan for how your children are to be cared for, beginning with the very moment you die or become incapacitated. This should be a primary focus of estate planning. Simply naming a guardian in a will is not good enough, because someone still has to go to court, request a hearing, and have a judge appoint them as the guardian. Where are the kids during this time? In state custody?
The above examples are just a small sliver of the problems that occur when estate planning is reduced to shopping for the right documents. Which is why we focus on a comprehensive, big picture view of how you should plan for the future. We set up systems to ensure your plan continues to actively reflect your wishes through your lifetime.
The law changes, your family changes, and your assets change over the course of your life. You need to be able to access your plan and make necessary updates from time to time. You also need a lawyer that proactively prompts these updates for you.
Hire a Personal Family Lawyer to ensure your estate plan works through all of life’s changes and events
If you are interested learning more about what a comprehensive estate plan looks like, one that keeps your family informed and out of court; a plan that even protects your assets for generations to come, through lawsuits, multiple marriages, and economic downturns, then schedule a 15-minute call that will introduce you to our system.
Travis Charles Smith is here to be your personal family lawyer. Not just a lawyer that sells documents. A lawyer that can provide service to you and your family through all of the changes that occur, good or bad, throughout your life to your estate.