Take a few pointers from these financial and estate planning professionals to be prepared for the future.
Even though Nathan Jones estimates he has helped thousands of clients with estate planning over the years, he has a bit of a problem with the term.
Namely, the “estate” part.
“When people hear ‘estate planning,’ it tends to conjure up pictures of mansions and people who have estates: rich people,” says Nathan, a partner at Nathan Jones Law. “The immediate reaction is they don’t need estate planning because they’re not a super-rich person. [Estate planning] is merely planning for whatever assets you have — whether that be a lot or a little — to go to the people you want them to go to as efficiently and cost-effectively as possible. It does apply to you. It applies to all of us.”
To many, “estate planning” can be a daunting concept. They don’t know how to start. They think it will be costly and complicated. They think they can keep putting it off because they have all the time in the world.
They don’t like thinking about the end. You know, The End.
“The reality, what I try to explain to people, is it’s not if, it’s when,” says Polly Reynolds, vice president and trust officer at The Trust Company. “None of us is getting out alive. None of us.”
So, if we all know, generally, how it’s going to end, trust planning at least gives us control over what we leave behind and who we leave it to. A little bit of planning while we’re around goes a long way after our time is up. And getting your affairs in order is not as difficult as you may think.
“It’s honestly for the relief and peace of mind of knowing that things are going to be taken care of,” Nathan says. “There’s a lot of value in that.”
When to Start
Polly says the majority of her clients are between the ages of 50 and 85. Nathan says his clients don’t conform to an age range as much as they do a series of life benchmarks: having children, retirement, the loss of a parent.
“We have a lot of people who lose a parent and they come in and say their parents had everything set up and they want to make sure they do that for their kids,” Nathan says. “Or they say their parents didn’t have anything set up and left them a mess. They don’t want that to happen to their kids.”
Neither Nathan nor Polly think it’s ever really too early to get started looking after your assets, though. Polly says she especially likes to get in the ears of her younger clients. It usually takes a bit of coaxing before they get started down the road.
“If you have a cell phone and a checking account, you have an estate,” Polly says. “Sometimes people don’t want to talk about it, but I make my clients talk about it. I can’t make them do anything. I’m not an attorney. I can’t draw up a will, draw up a trust. What I can do is tell them the importance of it, give them an action plan, and then nag them.”
If you don’t have a ton of assets, estate planning can be as simple as naming a beneficiary for your life insurance, joint titling your car with your significant other, or setting up a payable on death recipient for your bank accounts.
If your estate involves multiple real estate holdings, businesses, bank accounts, spouses, former spouses, children, stepchildren, irrevocable and revocable trusts . . . it can get a bit more complicated.
The simplest place to start, according to Eric Morrison, senior vice president and Columbia market president at Providence Bank, is making a list. While he’s not a licensed estate lawyer, his career as a banking professional has given him years of experience helping clients get their arms around the entirety of their assets.
“Just list out everything that, if something happened to you, would need to be navigated,” Eric says. “If we begin with the end in mind and think about how this would all get navigated if you weren’t here, that might lead us down the right path.”
How to Start
Greg Brockmeier hears variations on the same story when he speaks to reticent clients about starting to get their estates in order.
It’s too expensive. It’s too complicated.
Greg, financial advisor at the Columbia-based Brockmeier Financial Services branch of Raymond James, has an answer for that. Just talk to somebody in the field.
“Talk to the advisory professional — that estate attorney, that financial advisor,” Greg says. “Interview who you feel comfortable working with. Most people will give an upfront, objective view without a cost or obligation, just an entry discovery meeting where you get to know the client and what they’re looking for. They can usually give you a good direction of what next steps to take.”
Polly says she’ll take a look at a potential client’s situation free of charge, then suggest a course. Eric says that, even though you need to be working with certified financial planners and estate lawyers when it comes time to put thought to paper, you should start out with a much wider net than that. Think about your own personal network.
“I always encourage people to reach out to a banker they know, even if it’s a banker where you don’t think they have any idea about estate planning,” Eric says. “Reach out to them and ask if they have a business banker who has contacts with estate planners. Or maybe it’s your accountant, or if you know someone who’s a business owner and you ask, ‘Who did you use for your estate planning?’”
Another thing to remember about estate planning is everything is not as final as it may seem. While your “last will and testament” means just that upon death, it doesn’t mean you can’t keep adjusting its contents until that time. It’s a living document. Adjusting it is as simple as your attorney helping you out with a codicil to augment, add to, or subtract from the document without redoing the whole thing.
“The best you can do is have your will reflect reality today and try to account for life happening,” Nathan says. “Everything is amendable. Some amendments are as easy as swapping out a name. Other times we’ve got to scrap the thing and start from scratch. It just depends on what has led up to that redoing of the plan.”
Why It’s Important
Nathan is coming up on 15 years in the industry and eight years working as an attorney. He says his experiences working with disorganized estates are just as instructive as working with organized ones, if not more so.
Assets that are not accounted for end up going through probate. That is where things really get messy.
“I see of a lot people failing to plan and finding out that there might be a year and a half worth of probate work that has to happen inside of courts, or a family fight gets started because things weren’t laid out correctly,” Nathan says. “All of that can be avoided with some pre-planning. Doing probate work has given me a lot of practical knowledge of what happens when things aren’t done right. Having that theme running in the back of your mind is really helpful to spot little pitfalls here and there.”
You may think that, when you die, all of your assets will transfer to your spouse. Not so if you haven’t explicitly set them up to do so.
Imagine you have a family farm that you just assume will pass down to your four children. But how would that work out so that each gets an equitable share? These are the sorts of decisions you have to enshrine in law now, or else you’re leaving it up to the state to determine a solution.
“It can get as messy as people think it can,” Greg says. “It can be very drawn-out litigation, hurt feelings, broken families. It can get very nasty. Making sure everyone’s communicating effectively, working with the existing advisory professionals, and working with the individual that’s creating the plan and the beneficiaries, the other people involved in that — those are all important considerations to make.”
The time immediately after a loved one dies is already fraught with emotions. You don’t need the added pressure of determining who gets what. That’s why it pays to start thinking about it ahead of time. And, Polly points out, that’s why it pays to designate a trained professional to be the punching bag when the time comes.
It’s all part of the job.
“We can settle a will, we can be named a trustee and then people can get mad at me if they want to, but I’m not a family member,” Polly says. “The family is not going to blow up if they get mad at me. That’s why I try and help families plan and get all this down to where it’s in black and white. When kids come to me, they can be mad at me if they want, but this is what their mom and dad said, and this is how it’s going to be done.”