Do You Have an Estate Plan or Just a Fancy Piece of Paper? - Rodgers & Associates
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Do You Have an Estate Plan or Just a Fancy Piece of Paper?

I was meeting with a client recently who had used an attorney to draft his will a few years back. The will looked very official and was filled with terms like “per stirpes”, “subpara­graph B”, and “testator”. In other words, it appeared to be a pretty typical legal document. Unfor­tu­nately, this document amounted to little more than an official looking piece of paper. What this piece of paper didn’t take into account was that their assets were titled in a way that made the instruc­tions essen­tially irrel­evant.

One important aspect of a good estate plan, that all too often is not addressed, is the coordi­nation of benefi­ciary forms, transfer-on-death (TOD) plans, and the ownership structure of the assets with what the will says should happen. The reason that’s important is because benefi­ciary and TOD desig­na­tions and ownership structure all supersede whatever it says in the will. To use a simplistic example, if your only assets were in your IRA and the benefi­ciary form says give my IRA to John Smith, but your will says give all my money to Jane Smith, generally John gets the money and Jane doesn’t. This is despite the fact that you have this extremely official looking document that you paid an attorney a lot of money to draft for you.

There are some assets that are trans­ferred to heirs because the will says to, and there are some assets that are trans­ferred due to the ownership structure, benefi­ciary form, or TOD plan. The key difference between having a will and having an estate plan is that an estate plan will attempt to coordinate each of those types of assets.

What to do about it

In my opinion, pretty much everyone who owns anything and definitely everyone who has children needs a will. While there are some online tools to help you do it yourself, meeting with an attorney who will look at your specific situation is still likely the best option for most people. Here are some sugges­tions that will help you make the most of your meeting with an estate attorney.

  1. Provide your attorney with the complete picture. That means you’ll need to tell them every­thing you own, how the ownership of each account, life insurance policy, piece of real estate, or car is struc­tured (i.e. is it just in your name, is it in joint names, is it owned by a trust, is it in an IRA, etc.).
  2. Include your financial adviser. As you’re meeting with the attorney, there are going to be times when you’re unsure of how something is struc­tured. Having open lines of commu­ni­cation between your adviser and your attorney can go a long way in limiting the possi­bility for error.
  3. Stop watching the clock. Yes, your attorney is likely paid hourly. Yes, every extra minute costs you money. Try not to think about it. Quick and wrong is much worse than long and right. The cost of having your money go to someone other than who you intended is much more expensive than an extra few hours of your attorney’s hourly rate.

Final thoughts

I believe there are a number of estate planning attorneys out there who do a great job taking all of these things into account. To put together a well prepared estate plan, there is going to be some work required from you and your financial adviser. Expect your attorney to request you to prepare infor­mation prior to the meeting. Having a fully coordi­nated estate plan in place will allow you to have the peace of mind of knowing that your affairs will be handled as you intended.