Despite what Suze Orman will tell you (and sell you), you should not get your estate plan out of a box. If the attorney (or financial professional) you’re interviewing is bragging about how easy it is create a will or a trust, you should run, not walk, in the other direction. The term “boilerplate” as it pertains to your entire document, should not be a source of comfort, but a source of concern.

The truth is that not all estate plans are, or should be, the same. While the word processing elements of an estate planning document is not altogether difficult (did you know that attorneys own computers?), a will or a trust is not something that should be created by the attorney without input from you.

A good estate planning attorney will want to spend time with you to figure out your hopes, your dreams and goals. Once you teach us the family, we will help you learn the law, and together we will create an estate plan that works.

Posted by Victor Medina
Medina, Martinez & Castroll, LLC

Contributing to this problem are two conclusions driven by changes in society. One, folks have discounted the value of counseling and advice from a professional. Out of a sense of ego or skepticism of people trying to “sell” them something, people have started replace the advice and counsel of a professional with knowledge gained by their own research, usually on the Internet.

Second, people now view professional services as the commodity of what is produced at the end of the service. If it has to do with life insurance, people focus on the price of the premium, without understanding the intricacies of the policies themselves and without understanding the quality of the underwriting. In the estate planning world, the focus is on the “it” of the documents – whatever “it” turns out to be for that client – a will, a trust, a living will, a power of attorney.

The unenlightened have already concluded from their own research what they need and they call around shopping that commodity on price.

While I take a long time to settle on a professional to help me in different areas (usually I trust my gut), once I chose that person, I rely on their expertise in helping me with my problems. The cost of the service is only relevant to whether the advice and service does what it’s supposed to do.

The truth is that to maximize the chance that your estate plan works when you need it to – you need an attorney who makes doing this work the focus of their practice. Your estate plan is no different than dealing with a medical condition – in most cases, you need a specialist who has seen your situation lots of other times and can apply their additional expertise and knowledge to help your specific problem. When it becomes appropriate, you begin to interview and select a cardiologist to treat you. Not only that, but you might go with the cardiologist who specializes in diabetes – adult onset diabetes.

Not all estate planning professionals are the same – you deserve the specialist.

Posted by Victor Medina
Medina, Martinez & Castroll, LLC

*By the way, if you’re one of the ones shopping on price, let me save you a phone call to my office. I’ll give you here the same response I give anyone who calls asking what the price for “it” (the will, the trust, etc.) is: It’s FREE. All of my wills are FREE. The trust is FREE and so is the living will. Never have and never will.

On the other hand, I charge for the counseling. Whether I’m worth my fee for that counseling is up to you to decide and I invite you make a free, no-obligation appointment to learn more. Reference this blog post and I will waive my normal $750 evaluation fee.*

In all seriousness, people are slowly coming to grips with how different this world is than one just 10 years ago. One of the professional associations to which I belong spent a few days debating back and forth the merits of planning for this type of “wealth” transfer in estate planning. I’m not sure there was a consensus, but I remain committed to helping him my clients with this problem by saving that information for them. From my perspective, estate planning is about transferring ALL of your wealth, not just your finances – such as your Spiritual, Emotional and Intellectual assets that you’ve acquired over your lifetime. For many people, information that is on the Internet, passwords, etc. is also included in that list.

It is often forgotten how much of a confidant attorneys were for their clients in the past. It’s our job to keep secrets, our client’s secrets, and the best of us do that very well. It stands to reason then that attorneys should be a natural repository for the type of secure information that needs to remain secure during a client’s lifetime and be transferred safely to the next generation when necessary. We need to get back to the idea that your lawyer is your counselor, not just during crisis moments, but during your lifetime.

My biggest problem with these companies and the services that they offer is that none of them has any professional license on the line if they mess up. There are also no barriers to entry to do this work. (Whereas an attorney needs a degree (most of the time), pass a bar exam, and has their license subject to review and revocation if they screw up.) Therefore, for these businesses, there is no incentive (beyond a business incentive) to act correctly in a situation. As we have seen in the past, online information is less than secure and there is no guarantee that even the best companies won’t have information taken from them, or be somewhat “negligent” in securing that information in-house. It has happened to the largest credit card companies; why should we think that small startups claiming to be able to hold your information secret should be any different?

What I liked about the Wall Street Journal article was the way it highlighted how being in the 21st century means that there may be assets which have no physical presence in the world. Follow me on this one for a moment, nowadays people are very accustomed to doing their banking online, creating an investment account online, and choosing to go paperless when it comes to statements. It is very easy to imagine a rather significant investment account that no one knows about or can discover after the person dies.

Just to show that I don’t hold grudges, here is the link to the Wall Street Journal article-http://is.gd/1FHFY

Posted by Victor Medina,
Medina, Martinez & Castroll, LLC

1) Do Nothing.

By far, this is the largest segment of the population. I often speak to local mom’s groups (younger market) and service organizations (older market). These are workshops where there is just as much a chance that someone’s done estate planning as has not. Invariably, over 90 percent of those folks have done ZERO estate planning.

This means that they are leaving the “wrapping” up of their affairs to their loved ones (who, by the way, have likely not done estate planning either). The result is that loved ones are “learning on the job.” Let me just suggest that the grieving period is probably not the best time for dealing with uncharted waters. I’ll talk about how our approach is different in a second. The point is that folks have the opportunity to help their loved ones through a transition and maintain control and flexibility during their lifetime. The overwhelming majority choose not to.

2) Do It Yourself.

The Internet has empowered a lot of people to take on projects that have typically been left to “experts.” The effect has been the removal of service professionals from many routine activities. People can now shop for and choose mortgages (maybe that’s a bad example in this economy), buy cars, purchase life insurance, etc. without the need of an intermediary. While there are many circumstances where that’s okay, there are other times where a mistake is too costly.

I can’t do anything for people who believe that the planning of their estate can be accomplished by filling out a form (even online, these days), printing out the result and putting it on a shelf until it’s needed. There are number of sites that are promoting estate plans (even sophisticated techniques like living trusts and life insurance trusts), such as LegalZoom, LegalDocs and LegacyWriter. While I think it’s a great business for these folks to be in, I think it’s a terrible way to plan and in some ways, it’s worse than doing nothing.

Doing nothing means that the state-sanctioned estate plan, that of intestacy (where you die without a will), will step in. It’s pretty “fair” plan in that it makes sure that your spouse and your children get your stuff, but it adds some hurdles and expenses that are, frankly, optional in many cases.

If you do your own estate plan with a software program or Internet service, you run the risk of making a major error. Because these forms are not drawn up by a state-specific attorney, they may not be compliant in your state and may not achieve the objectives you set out to do. The consequence is that the entire plan may be thrown out. And, while these companies may offer you some sort of guarantee – do you mind if I ask you how you know whether your estate plan works? When do you know if your estate plan worked? Isn’t that a little late to start waiving around your iron-clad guarantee?

By the way, there are financial implications to having a plan that doesn’t work the they way you thought it would. BUT, there are also non-financial implications as well. Answer me this question – what’s the cost of a living will (advance health care directive) that doesn’t work the way you thought it would?

I’ll just leave you with this – Don’t you think it’s strange that all of these places tell you that they’re not giving you legal advice and that you should check with a lawyer in your state? (BTW, if you call our office and reference this blog post, I’ll review your online-designed estate plan and waive our normal $950 review fee – that’s FREE to you. If you’re reading this, you’re being diligent about planning your estate and you deserve to know whether your plan will work or not.)

3) Use A Documents-Driven Attorney.

There are a lot of law firms that tack on “Wills & Trusts” to the end of their practice areas like a side order of fries at a diner. What passes for “estate planning” at those firms is little more than word processing. 90% of estate plans are one of 3 forms and if you let me look at it, I can tell you which one.

This type of estate planning is like the online, form-filling approach, except the lawyer’s is the one filling out the form, not you. You owe it to yourself, and your loved ones, to go with an attorney that focuses their practice in this area; not someone who deals in estates as an after-thought.

Even attorneys that focus on this area of law use forms extensively in their practice. You should decide whether you are comfortable with a “fill-in-the-blanks” estate plan, rather than a plan customized to your and designed with your goals in mind. As I discuss below, your estate planning attorney should take the time to educate you about your plan – not treat you like Monday’s appointment. Estate Planning is not a cookie-cutter activity. There are perils in dealing with a documents-driven attorney.

4) Plan With A Counselling-Orientated Lawyer.

This is the strongest option. A counselling-orientated attorney will take the time to learn about your family, your goals and will take the time to educate you on how your plan works. This kind of attorney will also make sure that the estate planning process include financial strategy meetings with your advisors and additional educational opportunities for you and your loved ones.

The top counselling lawyers will have a maintenance plan in place to make sure that your estate plan is up-to-date with your “family” changes, current with the law (financial and non-financial), and will reflect advances in your attorney’s experience and education. Counselling-orientated attorneys will also charge a fixed fee, which includes all necessary telephone conferences. It shouldn’t cost you extra to fully understand your plan.

I’d rather not go on and on about this choice, because I know it will quickly devolve into a not-so-transparent advertisement to do planning with me and my firm. That really isn’t my point. I just want to make sure that you understand the difference in the approaches. If you want to see the 6 common mistakes make when selecting an estate planning attorney, I suggest you sign up for the free report on the right-hand side of this blog. You’ll get your free report almost immediately and you’ll be able to compare apples to apples as you investigate your options.

Whether you go with a documents-orientated lawyer or a counselling-orientated attorney isn’t that important to me. I know which one I think is better, but you’ll have to make that decision for yourself. I just hope that you walk away from this reading this post having made the clear decision not to do Approaches (1) and (2) – to be blunt, those really stink.

Posted by Victor J. Medina
Medina, Martinez & Castroll, LLC

1.  What assets will you be putting in the will?

Take an inventory of your significant assets.  These should be the things that you want to give to other people and hopefully, these are the things that other people want to get from you.  (I suggest the garage sale test – if you’d include it in your garage sale someday, skip it).  Note – there are some assets that cannot be passed by your will – and your lawyer should know what those things are (and why they shouldn’t be included in your will).

2.  Who will you be giving your assets to?

For the most part, this is a very straightforward task.  A few notes, though – first, there are some restrictions on your ability to disinherit certain relatives.  Second, you should think about where you want your assets to go if your first choice is not around or refuses your generosity.

3.  Who will administer your will?

This person is called the executor.  There are really only two qualifications for an executor or trustee.  First, you want a person of impeccable integrity.  Second, you want a person with good common sense.  You also want to make sure that this person is aware of your desire for them to serve as executor (and are agreeable to that role) and as always, have a back-up in mind.

4.  Who will care for your children?

If you have children under the age of 18, you’ll want to think about who will take care of you children, should you die before your kids are adults.  This section requires more thought and explanation than I can give you here in a blog post, but guardianship is an important concept that requires much thought.  For instance, will your chosen guardian have sufficient assets to raise your children?

5.  Who will care for your children’s assets?

In addition to choosing a guardian for your children’s welfare, you need to think about who will care for the assets that you leave to your children if they are still minors.  This person is known as a trustee.

6.  Who will witness the execution of your will?

The decision of who these people will be is not as important as following the necessary procedure to ensure that your will…will be deemed valid and enforceable.

1. Select an attorney who is an excellent listener.

Too often clients are telling their story to a lawyer who is busy planning based on what they think is going on with this client, and not listening to what the client actually has to say. I find this practice is often the case with a “wills factory” where the attorney is itching to pass your case off to a paralegal and get to his or her next intake meeting.

Good estate planners will listen to you during an initial interview and continue to listen to your concerns throughout the process and into the future. Which brings me to….

2. Select an attorney who doesn’t bill you for every 5 minute conversation, fax and mailing.

This one kills me. I’m always wary of a professional who is more concerned with “nickel and dime-ing” his clients, than he is about providing value at every opportunity. I suggest you steer clear of the former.

Instead, I suggest that you engage an attorney who flat-fee bills for the estate planning work, including all of the interviews and meetings that need to occur to get the estate plan done. While estate administration is akin to litigation in that the time involved is difficult to predict, and therefore hourly billing is a better model for both parties, estate plans are fairly predictable matters in the resources they will consume. They vary in their complexity from client to client, but a lawyer worth his or her salt should be able to quote you a flat fee for that work, and that fee should include phone calls, meetings, etc.

3. Select a lawyer or law firm that plays an activel part of your (or his) community.

This tip is less about reducing your commuting costs and more about stability and long-term planning. You want a lawyer who will remain in the area (and in the practice) long enough to address your growing concerns and needs. You want a trusted advisor who will remain available to you when you need him the most.

This is best achieved by selecting a lawyer who is a pillar of the community in which he (and/or you) reside. This attorney should be involved with local schools or charitable organizations (whether or not in his or her actual practice), and should be known by others in the community. This is good news for you, the client, because it means that (a) the lawyer has a reputation to uphold, which means he’ll most likely treat you right, and (b) the lawyer has planted roots in the arean will be around for the long haul.

4. Select an attorney who fits your personality.

Some clients are looking for a lawyer in a stuffed shirt and standoff-ish attitude to do their estate plan. If you are one of these clients, please let me introduce you to a few colleagues of mine – there are many who will fit the bill.

On the other hand, if you’re looking for someone to listen to your concerns and work with you in an intimate manner to help achieve your objectives, make sure that the attorney across the table from you is someone who you instinctively trust and with whom you feel comfortable. They say that your first instinct is usually the right choice, and I believe that’s especially the case with the lawyer who will serve as your family’s legal advisor.

Let me spoil the surprise and give you the answer up front.

You should have:

A Durable Power of Attorney for Health Care
A Durable Power of Attorney for Finances
A Living Will

The first and second one let you name who will make decisions for you concerning health care and money, respectively.  A living will tells doctors exactly what kind of care you do and don’t want to receive if you are terminally ill or incapacitated.

Fortunately, these are not bid ticket items in the world of estate planning, so there’s no real reason not to get them done.

The news is filled with battles between related parties fighting over the wishes of an otherwise incapacitated person. The US Supreme Court has ruled that a person has a right to direct the course of his own health care, even if family members disagree with those choices.

Although it’s difficult to think through all of the situations these documents need to cover (withholding of pain medication, food and water, etc.), you owe it to your loved ones to make clear your wishes in those situations.

On a related note, if you are the parent of a minor child, you absolutely, positively need to have a will setting down who you want to have custody of your child in the event of your death.

In short, unless you want to subject your loved ones to drawn out legal battles and financial hardships in the event of your incapacitation, if you don’t have these three documents then get thee to an attorney and get these documents drawn up.