The "Human Side" of Estate Planning

Estate planning guides often begin by discussing the intricacies of wills and trusts, probate rules, and estate taxation. Buried somewhere in the middle of the book you might find a section on the "human side” of estate planning. But this subject ought to be covered in chapter one. After all, isn’t the human element what estate planning is all about?

Avoiding probate and minimizing estate tax is important, but it’s not the objective. The goal of estate planning is to prepare for your retirement, provide for your family, ensure the survival of your business, and/or simply to “make a difference.” Investment, tax, and legal strategies are merely tools that can help you achieve these objectives in the most cost-effective manner.

Here are a few issues to consider as you review your estate planning goals.

Lifetime Issues

Does your plan allow you to live comfortably after retirement without depleting your estate?

Have you planned for potential long-term health-care needs (e.g. retirement or nursing home facilities) for both you and your parents? How will you pay for long-term-care expenses? Do you need long-term-care insurance?

If you become terminally ill or incapacitated and are unable to speak for yourself, how will critical medical decisions be made and by whom? A living will and/or health care power of attorney addressing “right to die” and other medical issues can ensure that your wishes are carried out and that your estate isn’t drained by extraordinary medical expenses. It also relives your family of the burden of making these decisions for you.

Communication

Have you fully disclosed your intentions to your estate planner?

What will you leave your heirs? Who will enjoy the benefits of your life's work? Do they need and/or want these benefits? There's no need to guess: Discuss your plans with them.

Be sure your heirs understand your motives. Perhaps you wish to teach your children the value of hard work, so you're providing them with a modest inheritance and leaving the bulk of your wealth to charity. To avoid misunderstandings, communicate this to them through discussion, letters, or even a personalized will.

Making Your Mark

Your assets aren't the only things that make up your legacy. Take this opportunity to share your philosophies, values, business advice, and other guidance. There are many ways your estate plan can make a difference, including:

The Best Things in Life are Free

Estate Plans tend to focus on money and property, but in many cases the things that can't be assigned a monetary value are equally or more important:

If you have young children, does your estate plan address guardianship issues?

Who will reveive photographs, papers, memorabilia, and other "priceless" items?

Other Considerations

Who will be the executor of your estate? A family member may view this assignment as an expression of your trust and confidence in him or her. On the other hand, it may prove to be an enormous burden during a difficult time. A professional executor may be better able to deal with complex tax, valuation, and other issues.

Express confidence in your spouse and heirs by giving them some control over financial matters.

Never attempt to substitute money for love.