Here is a great discussion about defining your goals when putting together your estate plan, as set forth in Keith’s book, “Introduction to Estate Planning – How to Protect and Pass on Your Legacy,” Bardolf & Company, 2017.
Good planning starts with identifying goals. Your goals! Not other people’s goals or what someone thinks your goals should be.
Rather than rushing into a discussion about saving taxes or what to do about the family cabin, we want to take the time to figure out what you want to achieve. I find that many clients have never had the opportunity to really think about their goals.
So, your job is to share what your goals and concerns really are. The discussion should take as long as necessary. No rushing, no deadlines, no impatience. If we are going to do valuable planning, we need to take the time to think about and discuss the issues that are keeping you awake at night as well as to identify the issues you may not have thought about. We don’t want to jump to solutions till we know what the problems are.
Sounds pretty simple, doesn’t it? Well, it isn’t. But if we can work like this, we can do some great planning!
When we ask our clients about their estate planning goals, many first mention saving taxes. But as we go through our process with clients to help them identify and really understand their most important issues, we almost always end up wrestling with issues of control and legacy. (Taxes resurface as part of the legacy conversation. Our clients usually want to give more to their family and less to the government). But taxes are another conversation all of its own.
Good estate planning is based on keeping you in control of your life whenever possible. As we age, we lose control. Our bodies begin to fail us. We start to experience more and more “senior moments.” And change is everywhere. Technological changes make what was once simple, impossible (see: TV remotes, opening bottles). Our finances drift uncontrollably with economic downturns and impossibly low rates of return.
Maintaining control can mean many things, starting with funding your retirement and providing for family emergencies. You have worked hard many years and built up an estate. You want to enjoy it yourself—you’re still here, by the way!
The “golden years” are also a time when we look back. We naturally dwell more and more on the meaning of our lives. What difference have we made? What have we accomplished? When we’re gone, what will we leave behind? What is our legacy?
Our planning discussion may lead you to a fundamental question that you’ve never thought of: “What is the purpose for our family’s wealth?”
Most of us want to provide a hand or a higher standard of living for family members. That may mean freeing up some family members to choose careers based on factors other than economics. Often it means doing what we can to make a family business survive and thrive. And you may decide that you have enough to also provide resources for philanthropy.
All of this relates to your financial legacy. But isn’t part of your legacy non-financial? I would argue that it’s the most important part. You’ve tried hard to raise your family with values that will hold them in good stead. As they age, you rightfully expect them to pass these values on to the next generation. That means passing on family history, passing on life’s lessons, leaving behind something of what your life has meant. So, a goal of your estate planning can be to flesh this out, to identify and enhance the legacy you want to leave behind.
As you think about your family members, at bottom you probably just want them to be happy and to have a better life as a result of your planning than they would have otherwise. Our job will thus be to figure out what happiness and a better life look like from both your perspective and theirs.
Of course, you want to specify who is to receive your estate and under what circumstances. You may own special assets such as a cabin or a family business (often a farm or ranch where you live) that you want to pass on to some family members while also providing fair share of your estate to others. If, like my great grandfather, you want your grandson to take over the family farm, your planning should address that, rather than leaving the issue up in the air.
Once you decide who should get what, the question is how you should pass it on. Do you want to begin transferring assets during your lifetime? Should you transfer them outright or in some type of protective arrangement such as a trust? Should you designate someone to help heirs who are too young or are simply incapable of managing their inheritance? Again, what will make your heirs’ lives better in the long run as a result of your planning?