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What is de facto estate planning? |
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| Plan for your heirs |
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 Ninety-two
percent of households in America get some form of
insurance, including group term at work, which is
typically how people have some coverage. There's a
beneficiary designation line, so people, generally
without any advice at all, think of how to answer
the "who" question. They multiply that when
they set up their 401(k) plans, IRAs
or when they receive any other employee benefit that
might have a death benefit. When people set up securities
accounts, brokerage accounts or financial institution
accounts, many of these will automatically come with
a beneficiary designation form to make the plan payable
at death. Every one of those things is an estate plan
where someone is answering a "who" question.
People rarely think through what the risk exposures
are by doing this.
“If
you have somebody who's never going to be competent
to really handle a lump sum, you really absolutely
need to do something different in answering the
'how' and 'when' questions for that person.”
If you have any assets that you're going
to transfer, the risk exposures are taxes, bad investing,
bad organizing (during periods of time when some people
in the family might have to organize the assets),
exposing assets unnecessarily to creditors, problems
with maturity and ages of beneficiaries and their
capabilities. If you have somebody who's never going
to be competent to really handle a lump sum, you absolutely need to do something different in answering
the "how" and "when" questions
for that person.
Many individuals have no probate; all
of their estate plans have been done in this manner.
They've got pieces of estate plans put together probably
with just answering a "who" question.
A will is really a small part of where the average person is doing his or her estate planning. They're doing their estate planning in all these other little pieces. In a perfect world, they have a will, perhaps they have a trust, and their attorney and other advisers have made sure that all these other little pieces are coordinated. To do this people have to evaluate and compile the appropriate facts and then implement the plan to stay on the same page cohesively. It's hard to do.
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Who should evaluate a consumer's estate plan? |
An attorney who does estate planning or some other related financial professional who is capable of doing estate planning should evaluate the consumer's estate plan. If they are not an attorney, they should probably not be reading somebody's will and getting into intricacies of the will. Not every attorney is an estate planner. You've got to make sure you're getting your plan evaluated by somebody who really does it as a substantial part of their practice and doesn't look at a will every year or two.
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