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THE PHASES OF ESTATE PLANNING – Part One

For married couples, proper estate planning entails covering four phases. Let’s begin with a discussion about Phase One

PHASE ONE – ALIVE AND WELL

Many people come to me to discuss estate planning because of one or two main concerns or goals. Such concerns and goals often include:

 

  • how to best give their loved ones an inheritance when both clients are gone
  • how to keep the money in the family
  • how to protect inheritances from divorce
  • how to minimize taxes
  • how not to lose everything to the nursing home
  • how to be fair in leaving an inheritance among the children (especially if there is a blended family situation)
  • how to avoid probate court

This list is far from complete. But what I often find is the focus is on the clients’ deaths.

In most cases, I like to refocus the conversation to the notion that the clients are going to live for awhile. This shift allows us to discuss what their concerns are for themselves now and for the foreseeable future. It also allows me to raise an issue that most people usually don’t think about: What would happen if the clients were ever sued! Because if there was a successful lawsuit against them, their plans for the future may be significantly impacted.

My perspective is that the two people I am meeting with need to be protected first. Once that discussion is complete, then we can move on to goals and concerns for others. It is similar to the instructions given by a stewardess during the safety check at the beginning of an airplane trip: When the mask drops – put on your mask first and then help your children with their mask.

So what would happen if a client is sued? Under the law, some assets have a degree of protection and some assets are at risk. Once we see the level of “at risk” assets, we can have a frank discussion as to why a particular client would be sued in the first place. At that point, my clients are in an educated position to let me know their level of concern about this issue and I can make recommendations on how best to minimize their risk of loss from a significant lawsuit.

In a future post, we will discuss Phase Two: another topic that is not given the attention that it deserves – namely what happens if, due to an accident or illness, a client becomes incapacitated, either for a short duration or for a long period of time.

 

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