Benjamin Franklin famously wrote, “in this world nothing can be said to be certain, except death and taxes.” While Franklin wrote those words in 1789, it’s still true that death is unavoidable. (We’ll talk about taxes later). But sound estate planning can minimize the legal and logistical upheaval that your death may cause your family.
Don’t procrastinate. The reasons we fail to plan for our deaths are very human. We fear our mortality. We think we have more time. But failing to plan and memorialize your desires in legal documents means that state law and others will decide what happens after your death. Take time now to consider your desires. Then execute a plan.
Seek expert help. Franklin was a writer, printer, postmaster, politician, inventor and scientist – but he wouldn’t have performed surgery on himself, and neither should you. The same hold true for estate planning. Estate plans are not simple, and wills are legal documents. Writing your own or using an inexperienced lawyer will cost your estate and your beneficiaries (I make more money fixing and litigating problems than I do from my estate planning work). Work with a qualified estate planning attorney. You may spend more now, but you’ll save your estate and your heirs money in the long run.
Taxes alone should not drive planning. Like death, taxes may be a certainty, but they shouldn’t drive your planning. In fact, the perfect tax-efficient estate plan may not be right for your family. Consider family dynamics: Does everyone get along? Can family members serve harmoniously as executors or trustees? Are they fit to serve as fiduciaries or would a neutral third party be better? With multiple marriages, should children from a previous relationship control funds for a surviving spouse – or vice-versa? Can your children handle money? Should you consider a trust? Any potential marital claims or divorce situations? These kinds of questions should drive your estate plan as much, if not more, than taxes.
Plan for succession. If you own shares in a closely held or family business, do you have a proper succession plan or just an assumption about what will happen when you die? Do you have an up-to-date buy-sell agreement or similar document that governs your shares or business upon death? Is your presumed successor interested, willing or able to take over after you’re gone? Don’t make decisions unilaterally – communicate with your family and fellow business owners – and then put a written plan in place.
Communicate with your heirs. Start a dialogue now with your family about your intentions and your wishes. Discuss wealth management and the preservation of the family unit with your children. You won’t be able to explain it when you’re gone. And you will be one day – that’s a certainty.
About the Author: Amanda K. DiChello is a partner and chair of the Private Client Services Group at Saul Ewing LLP.