Tuesday, April 27, 2010

What is Estate Planning? – Family Maintenance and Protection Planning

Almost all of our Kansas City area clients ask us, what is Estate Planning?

In our last blawg installment Jason provided us with how BridgeBuilder defines estate planning.

He began breaking down the definition and highlighted the following areas of concern:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protection planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Jason covered the first two areas of concern and today I will provide an overview of area 3 with the remaining areas of concern to be covered in upcoming blawg posts.

Family Maintenance and Protection Planning

Routinely, attorneys develop a myopic view of estate planning. They are guided by the principal goal of passing as much wealth to the next generation as tax-free as possible. While “financial wealth transfer” can, and should, be one of the goals – it should not be the primary goal. Rather, the primary goal should be the preservation of the client’s values and the corresponding protection of the client’s intended beneficiaries.

If you probe deep enough, you will find that most of your clients have definite convictions as to how they would like their beneficiaries to use their inheritance. Similarly, there is usually a strong desire to protect the beneficiary’s inheritance from outside forces, like “creditors and predators.”

The estate plan you craft should address many of the following family maintenance and protection issues:

• Who could best serve as the “back-up parents” for minor children, providing the necessary care, love and nurturing environment;

• How could “continuing trusts” be utilized to safeguard inheritances for minor beneficiaries or other beneficiaries who lack the ability to manage their inheritance;

• How can inheritances for adult beneficiaries be held in trust so as to protect the beneficiaries from the potential future divorces, lawsuits, creditors and predators;

• What types of activities, life styles, work ethics, etc. do your clients want incentivize;

• How can you minimize the potential risk of “affluenza” for beneficiaries who are going to receive sizeable inheritances;

• What if the intended beneficiaries have (or may develop) “special needs” or disabilities?

If there is an area of concern you have, please let us know or contact us as we would be happy to help.  Otherwise, please keep the questions and comments coming. 

Garrett Griffin

BridgeBuilder- Plans for Life