Take your medicine...it's Good For You

Americans just do not like to discuss estate planning. Supposedly 7 out of 10 of us have no plan. Of the 3 who do, what are the chances that the plan is up to date? 

A friend of mine, Michael Stuart, just sent me this article in the NY Times, Estate Planning as Family Conversation, talking about talking. I wanted to share it with you as it paints the picture of what happens with no plan, and even how to open a conversation about one. 

When I think about the plans that I have helped clients create, many stories come to mind. One recurring theme is a senior couple who own some investments and real property, with one of their adult children serving full-time as a caretaker. Other kids are not too involved in things… and the caretaker daughter pretty much has her hands full with children of her own and helping out the folks. In this situation, the adult daughter has a full time job or two already… and no outside means of support. 

Many parents want to treat children "equally." But what do you do when there is only so much to go around, and the cost to one kid (the helper) is simply going to be too high for that to even remotely be fair? Parents must first plan for their care, then consider being "fair" rather than "equal" to those who follow. 

It's often the right thing to do… but without some conversation, and openness, it will likely have a huge cost in terms of relationships down the line. And ignoring this dynamic is unlikely to provide a better result. So start talking, it is a big first step to helping you with your estate planning today and well into the future.

 

Why Legalzoom.com is better than an attorney

A legal colleague of mine, Dennis Brislawn, wrote an interesting blog post about the use of LegalZoom.com compared with the services of an attorney, and I thought you might find his perspective interesting.

I recently had an opportunity to check out some LegalZoom documents.  One of my friends used the LegalZoom service to prepare some Wills for his kids.  They were simple trust planning documents.  Each spouse left the estate to the other, but if both were deceased, they had a Common Trust for all kids until they turned 21, then money would split into shares that each child would receive in equal installments at ages 24, 27, and 30.  These LegalZoom documents even had powers of attorney and all the trimmings.

The documents looked pretty "legal.”  My friend did the plan himself, in an hour or two on the weekend, and only spent a few hundred dollars.  He did this lieu of going to an attorney for budget reasons and scheduling difficulty with his activities.  At least he did something, which is far better than not covering this important issue – so kudos to my friend.

When he sought my opinion, my comments were that I thought the documents were good from a simplistic technical perspective.  I actually kind of liked them as they were well-written and clean.  How did that work compare to what I or one of my estate planning attorney colleagues would do?  They were simple, not elegant.  But the most important missing component is they did not demonstrate insight, personalization, or the awareness of core values important to my friends.  The document was clear for the kids after age 21, but there was no meaningful guidance into how a trust would be used by the guardians of children to raise them until age 21.  Guidelines create the comfort that their kids will become the adults their parents would be proud of.  What about asset protection for adult children to protect their inheritance against divorce or bankruptcy?  I think you get my point.

Result?  I was retained to do a comprehensive plan to address all the things that were not part of the simple LegalZoom plan. We also looked over their investments, retirement planning, insurance coverage, and the separate inheritances each was to get from their own grandparents and parents.  I reached out to my friend's advisers and got their help in relooking at all these things to make sure that they were properly handled too.

LegalZoom provides documents.  But I’m reminded by this experience that law is far more than the preparation of documents.  It is about listening, discerning, and identifying core values.  It is about understanding what can keep your clients awake at night.  It is about pulling together resources to resolve those concerns and to put a plan in place.  But, even more important, it is about working to keep that plan tuned up so that as things change, it changes.  Documents are simple.  Wisdom is harder to come by.

My experience is similar to this post by Dennis.  I help people with information that will lead to good decisions and workable plans.  The forms that I use are secondary part of my service. LegalZoom is better than doing nothing, and an attorney providing good advice offers more than just a set of forms. If you agree – or disagree – I’d welcome your comments. 

 

The Children get Stuck with the work

I wanted to share a story with you that a good friend of mine and associate, Dennis Brislawn of Brislawn Lofton LLC, recently shared with me about one of his clients. It was very applicable to what I see all the time.

"I had the incredible opportunity to attend my aunt’s birthday party and take this photo. It was indeed a happy occasion for all – especially when she invited everyone back for her 100th birthday party in 2011.

While enjoying the celebration and festivities, I was reminded of the sobering thought of all the financial and legal plans that her only daughter has been saddled with as her mother aged. As the children of aging parents, we never know if we will be buying a celebration balloon like this for their 99th birthday – and it is usually the least of our challenges as the years creep forward for a centenarian parent.

While attending her birthday party, my mind drifted to the many issues her only child has had to deal with for nearly 25 years. Getting to this 99th birthday has been a lot more work and worry for the daughter than for the birthday mother. The daughter has had to manage finances, coordinate moves, work with doctors, screen assisted living homes, and of course, work with the attorneys.

I was personally relieved, knowing I could attend the celebration, wish my aunt a “Happy Birthday”, and return home. My cousin, on the other hand, would be at the party to the very end. She would be cleaning up the leftover cake, policing the party room at the assisted living facility, etc. And she still has to deal with all the fiduciary responsibilities that continue long after the party has ended."
 
People deal with these types of real issues every day – most of which are neither easy nor pleasant. Working with attorneys and other professionals should be the least of their worries. After all, they have to start planning for the next big birthday party for their mom!

How to eat an elephant

Aah, it is the age old conundrum.  How to eat an elephant?  It is a much used description for the large and seemingly undoable challenges we all face.  In our legal practice, it is often the best way to describe the challenge of estate planning.  It’s not a simple fast foot dish to take on.  Instead, estate planning is the proverbial “elephant” and the successful plan will address your estate plan much like the old “how to eat an elephant answer…….you take it one bite at a time.”

Estate planning is often viewed as the “elephant” challenge for many people.  And as an attorney, it is my job to help turn the “elephant” into bite sized tasks.  And advise on where to start and where to take the next bite.  Since one of the most common comments from a client is, “I just don’t know where to start”, I knew we needed to talk about “eating the elephant.”

You know the old saying, “How do you eat an elephant?”  One bite at a time.  Most people don’t know how to prepare the elephant (estate planning).  After my discussion with Bill and Sally, they understood what it was to create a process where you can reduce the different elements of estate planning into bite sized pieces.  This allowed them to take them on, one element at a time – dealing with those that were most pressing first.  After they understood it was “one bite at a time,” you could feel a huge “sigh of relief” instantly hit the room.

Just like an elephant, it might take a while to eat it one bite at a time.  But with the right plan and persistence, Bill and Sally eventually saw the successful (and less stressful) result.  The key is to approach it with a bite sized view of the challenge rather than facing a daunting elephant-sized single project.  There is a great article talking about the ways that businesses (as opposed to estate plans) use this approach to take on these types of elephant issues.  The article is by E-Myth, and you’ll find it at this location, "How to Eat an Elephant" - might give you some interesting perspectives on applying the “elephant eating solution” to your other business situations.  As for elephants, they really aren’t that hard to eat…

Top Areas of Focus - based on Client Needs

I mentioned in an earlier posting the Third Annual WealthCounsel Survey of Attorneys in Estate Planning and promised to share some of the more relevant nuggets with my readers. Here is another nugget...

Attorneys were asked what areas they were seeing as the highest growth areas for their clients over the next five years. Based on feedback from their clients and the increase in demand, here is a listing of the top areas most estate planning attorneys will most likely be focusing on in the next five years:

1. Business Entity Planning for Estate Planning Purposes
2. Beneficiary Inheritance Asset Protection Planning
3. Elder Law Planning
4. Post Mortem Administration
5. Business Succession Planning
6. Lifetime Planning
7. Tax Avoidance Strategies

Notice any patterns?  First, they are indicative of the aging population we will all be serving.  Second, there is a lot of "planning" that needs to take place.  Third, there are more "business" related issues than in the past.  Finally, and always on the list, how to I get to keep more of what I have and not pay as many taxes.

I'm seeing a very similar pattern in our geography as well and our clients are facing many of the same issues.  I guess the survey was pretty accurate.

When Grandma won't leave...

I met with Frank and Joy the other day and they described a problem that is not only very common but more and more of my clients are wrestling with the same issue.  So I thought I would share their story.

Grandma is a feisty, spirited personality who has been living in her same home for that past 40 years.  It is what she knows and it is where she raised her kids and where she spent her best years with her now deceased husband.  She wants to stay in her own home.

The problem isn't the house - it is being able to function in the house on her own now that all her kids have grown up and started their own lives.  She unfortunately doesn’t really have the ability to function safely on her own, day after day. She isn’t necessarily a danger to herself at this point but there are things that go on that make this a difficult situation.  There is the issue of physical security, getting around to the store for food and supplies, basic upkeep of the house and a host of other day to day issues.  Not overwhelming - yet - but she is headed in that direction.

She has several children including Frank and Joy, who are trying to grapple with grandma's situation. They came to me looking for an experienced voice to give them a heads up on how to deal with this very sensitive and personal issue - not to mention the accompanying financial issues. And as with many in this situation, it is a a first experience for both the adult children as well as the Grandma.  Sound familiar??

In this case, Frank and Joy were able to put together a plan over the next few years, include Grandma in the planning and allow her time to "get used to" the idea of not being in her home.  There were a lot of emotions and issues to deal with but eventually Grandma moved out, one of the children took over living in and caring for her house and it had a happy ending. 

  

The "Envelope" Please...

One of the largest and most respected attorney organizations  in the country is called WealthCounsel.  They just released their Third Annual Survey of Industry Trends and there were some "Ah-ha's" and interesting results that I thought you might be interested in hearing about.  Since this group is exclusively used "by attorneys" and "for attorneys" it isn't very often the general public gets to see this information.  Let's take a peak...

While many businesses are down, 40% of the attorney's said their business had increased - at least in the estate planning area.  Why?  More people were focused on updating and getting some plans in place to hold onto more of what they had after many had lost a bundle due to the economic crisis.  This was not only good for the attorney's but was very good for their clients to get an update and better plans in place.

Here is an "Ah-ha" from the study.  They asked the number one reason why clients plan - any guesses?  The number one reason was to "avoid probate" and minimize estate taxes.  Not the first response most would have thought.  Along the same lines, another major factor that motivates clients to do their planning is to answer the question, "What would happen if they don't plan?"  Most attorney's expect to see an increase in activity as the population of baby-boomers starts aging - which is happening right now.

Very interesting results from this years survey...I will share more in another post.