One of the most popular questions I get asked as an estate planning attorney is, “Do I need a will or a trust?” Most are shocked when I answer, “It doesn't matter because neither one works." After getting their attention, I explain why most estate plans, whether a will or a trust, do not work. But to understand the answer, you must first begin to make a distinction of what estate planning is. Most people view estate planning as “documents.” That is, should I have a will, a trust, healthcare proxy, power of attorney, living will, etc.? The real question should be, “How can I ensure that my estate planning documents do as they are intended?” This is what proper estate planning accomplishes. Ensuring the legal documents you create actually grant the authority and the direction to your loved ones to ensure your needs are carried out when you are not able to do it yourself.
The primary reasons to plan is to ensure your financial and legal matters can be handled as you direct in the event of your incapacity, disability, or death. For example, a standard power of attorney grants the agent appointed authority to make traditional legal and financial decisions for the person granting the power. The challenge, however, is most powers of attorney do not grant ALL of the powers necessary to actually do what the individual intended. For example, most standard forms do not allow the agent to engage in asset protection if you go into a nursing home. This could be very problematic, especially because in most cases when a power of attorney is utilized, it's after the disability of the individual. Then it's too late. Proper estate planning requires a complete review of all of your financial and legal matters. But most importantly, it includes a complete review of your personal wishes for healthcare, family, and in many instances, even business operation. Many people underestimate the family part, but in estate planning that traditionally is the most important. In the thousands of clients I have worked with, I have never had one who wanted to their family to fight after their disability or death, but that's what commonly occurs with insufficient planning. Documents do not ensure against family arguments, but planning can. Planning is the integration of the financial, the legal and the personal aspects of your life. It usually requires the integration of lawyers, financial advisors, and most importantly, the family. This could include children, if and when the parents are willing.
So, next time you're thinking about whether you want a will or a trust, ask instead what each can do for you, and how it will work in the event of your disability or death. We start each individual with our educational workshop to share the top seven threats to every estate plan and why they fail. After the education, we offer a free “vision” meeting to help you identify which of the seven threats are most important for you to avoid and the manner and method in which you choose to do it. After you've identified all of your goals, we offer you no less than three options to accomplish the goals and objectives you identify, which commonly include a simple will-based option, a trust-based option, or even an asset protection-based option. As the term “estate planning” indicates, it does require planning, not just documents. Ensure your plan is not just documents, but ensures what you want to happen, actually will when you need it the most.