The usual response I receive when I ask, “What brings you here?” during an initial meeting with clients, is, “To avoid probate and minimize taxes.” Avoiding probate and taxes are good goals, and easy to resolve.
The much more difficult — and much more meaningful work — is all relational. When we delve further into clients’ goals for estate planning, I have found that they want much more, especially concerning family. They want their children to get along, want them to know that they were loved, and they want their hard-earned wealth to be utilized appropriately and wisely.
Relational goals are long-lasting. By engaging the client in these kinds of discussions, we can make the estate planning experience so much more significant. Not addressing these concerns could result in long-term, negative effects on the client and the client’s family.
It is difficult for clients and their attorneys to get below the surface to address relational and emotional concerns. Staying above the surface with financial, legal and tax matters seems safer.
Discussions about relationships are risky and may elicit feelings of vulnerability. Avoiding them is easier but can leave devastating deep-rooted negative effects — sometimes for decades.
As attorneys, we are professional counselors. I believe we can not only help our clients by serving as catalysts for these types of conversations, but also feel that it is our duty to do so.
We need to reach beyond the superficial nature of taxes, probate and finances to capture and include the heart of an estate plan.
STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu HI 96826
808-524-0251 | stephenyimestateplanning.com
Kingdom Advisors founder Ron Blue takes an interesting approach to estate planning. He advocates lifetime giving as a way to assure that the objects of your bounty are worthy recipients of your wealth. This could play out a couple of different ways.
Giving assets outright to your loved ones is a way to give them full control over and responsibility for those assets. However, one of your intended beneficiaries could easily lose his or her inheritance as a result of a divorce, vehicle accident or bad business deal. And this could happen due to no personal fault of the beneficiary. For this reason, many estate plans include ongoing trusts that allow the beneficiaries to have as much control as they are able to handle, while at the same time insulating the trust assets from creditors and predators who might try to take those assets away.
The thing about leaving assets to your loved ones after you are gone is that you will have no idea how each of them will handle his or her inheritance. Your best guess during your lifetime could turn out to be wrong. So what about making gifts during your lifetime that will enable you to see how your intended beneficiaries handle their new-found wealth? This could be a great way to “test drive” your estate plan and determine how well it works while you are still able to make adjustments to it. If one beneficiary turns out to be a poor steward of your wealth, you can always redirect assets in your final estate plan to other beneficiaries, or provide greater restrictions on a spendthrift beneficiary’s control over your wealth.
The same principles apply to charitable gifts. Your favorite charity could turn out to be a poor manager of donated assets. It would be far better to find that out during your lifetime than to leave your loved ones regretting your philanthropic choices. If a charity does what you hope it will do with your gift, you can add to it upon your death. Not only that, but your gift may have far greater impact the earlier you make it. If, for example, you want to provide funding for scholarships so underprivileged children can go to college, the sooner you make your gift, the sooner a scholarship recipient will graduate from college, get launched in a career and turn around and “pay it forward,” as you have done.
As Ron Blue would say, you should consider “giving while you’re living so you’re knowing where it’s going.” It’s sound advice for anyone who prefers to test the water before diving in head first.
When Terry discovered his home had been burglarized, the frustration of having to replace his valuables paled in comparison to the feelings of being violated. Then, several nights later, someone entered his garage and stole his car. What Terry didn’t realize was that during the burglary of his home, the thief took his spare set of car keys. While still in shock over the initial crime, he now had to deal with being a victim once again.
If an estate plan is our final personal and intimate letter to our loved ones, why is it that we can’t understand it when we read it? This last intimate writing should be full of our unique, personal and emotional voice, yet, it reads like a sterile contract, devoid of any human feeling or emotion. Why?
In May of last year, Reuters reported that a Georgia judge had agreed to appoint a mediator to help the family of the late Dr. Martin Luther King Jr. decide whether to sell Dr. King’s Nobel Peace Prize and his personal Bible.
Like most Americans, you’ve probably spent years working to achieve the retirement of your dreams. There comes a point when this milestone changes from a distant goal to an imminent reality. You can make your first year away from work more rewarding and less stressful if you anticipate potential challenges and prepare for how you will handle this life change.