It’s “WHY” and “HOW”…Not the “WHO” and “WHAT” that Matters

Someone asked me the other day when I was giving a speech to tell them exactly what “Estate Planning” really means. Seems like an easy answer for me, but not so much for everyone else. So I turned the question back on the audience and asked them what Estate Planning meant to them. Surprisingly, or maybe not, the majority of people said it was about “WHO” gets “WHAT” when someone passes away. This is, unfortunately, a very common belief. Allow me to give you a different way to think about Estate Planning.

While one of the main ultimate end results might be what loved ones get, it isn’t what effective Estate Planning is all about. Effective Estate Planning is all about the “WHY.” The core objective to me is to figure out a strategic way to help a person fulfill their wishes and desires within the legal limits of the state and the country. How does someone make sure that their wishes are going to take place when they aren’t here to monitor them and make sure things happen the way they want them to? An effective Estate Plan does exactly this so there are no worries and concerns.

More often than not, most people believe Estate Planning it is about “the documents” that are put together and executed. Yes, the documents are critical to document the wishes and desires of the individual…they are tools or instruments to carry out their wishes. But thinking the documents are the plan is where we get off track. If someone just wants a document, there are plenty of places to get this…and a lot less expensive than talking to an attorney. You can get them online easily or from someone who sells just documents…but that’s exactly what you get…a document.

One thing I learned in law school is there is no “standard plan” for everyone…everyone is a custom suit…individually tailored. Our wishes, desires, and needs are all custom to the individual…there are no standard human beings so there can’t be a standard plan. And a “document” is not a plan…it is a document. And here’s the tricky part that most people don’t fully understand unless they are a lawyer. Not all documents play well with each other. Meaning, some documents negate other documents or may supersede another document…this can cause quite a mess in the end when “what” is trying to be distributed to the “who” as we initially discussed.

While there is no question we have to create some documents to help carry out people’s wishes and desires, the only way to figure out what these are is to conduct a “planning process.” This process is the core of what Estate Planning is all about…not the documents.

This brings me to other critical part to think about when creating an effective Estate Plan…HOW will all these unique and wonderful wishes and desires actually be carried out? How does someone get the assets and treasures and desires of the person passing them along? They get there with a lot of thinking, discussing, and analyzing their true wishes and desires…this is Estate Planning. After all this has happened, then, and only then, do we create the appropriate documents which will specifically direct the courts to carry out our wishes exactly as we “planned” they would happen.

Without effective Estate Planning, the default under state law (the cookie-cutter estate plan you already have in place because of the laws of the state) is to give your assets outright to the children (and maybe other blood relatives, depending upon the state) upon the individuals death.

There are a multitude of reasons this “one-size-fits-all” plan isn’t ideal in the vast majority of situations. Not only doesn’t it take into consideration your true wishes and desires of leaving a different share of the assets to different beneficiaries, but it doesn’t consider the myriad of ways you might want to leave these assets to people that may be appropriate for different beneficiaries.

Hopefully now you have a much better feel for what true and effective Estate Planning is all about. And if you ever attend one of my speeches, you can proudly stand up and tell everyone it isn’t about the documents…it’s about “why” you want to do certain things for your loved ones and “how” these should be distributed…and the documents are merely the tools to make it all happen within the law. You’ll get a gold star if you give that answer! And if you actually use this process for yourself, you too will have NO. MORE. TEARS.