Top 4 Approaches To Estate Planning

Top 4 Approaches To Estate Planning
June 22, 2009 jersey Do-It-Yourself Legal Planning 0 Comments

In my experience, people choose 1 of 4 approaches regarding their estate planning.

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

Leave a Reply