Estate planning isn’t anything mysterious. Most importantly, it’s not just about tax planning. And it really isn’t all that complicated either, not once you understand some basic principles. Estate planning is really nothing more than what I call the ‘Five Rights’ – doing what is needed to make sure the right things get to the right people at the right time with the right management and at the right cost.
Take a second and look around you, you’ll probably see some of the right things in your life – things you own. Look at one of them. Who should get the thing you’re looking at? When should they get it? If the right time isn’t right after you die, who’s going to take care of it until it is the right time? And what’s it going to cost to get it to them? (You may need help with this one. But don’t worry, in the end it’s probably the least important of the five rights.) Is that cost acceptable? If not, what can you do to make it cost less?
Now go on to the next thing you own. And the next. And the next. Pretty soon you’ll have applied the five rights to everything you own.
Congratulations! You’ve completed ninety percent of your estate planning. The only thing left to do is to create a record of your thoughts so when you die other people know what you want to have happen. This is where lawyers come in with Last Wills and Testaments, trusts so forth.
A few years ago (well, more than a few now), I published these concepts in a book called The Moving Company: An Easy to Understand Guide to Estate Planning, Wills and Trusts. (Appropriate, huh? After all, we’re talking about “moving” things to other people. The book is out of print now though you can still find copies sometimes on Amazon.com.)
Don’t get hung up on taxes and other costs
Sometimes people get bogged down on that last right – the cost of moving things to our families and loved ones. We become obsessed about the costs, especially the cost of moving things from one generation to another. (We call those costs estate and inheritance taxes.)
Sometimes lawyers and other advisors even recommend that you do things just to save a few bucks – even if it means that you have to change your feelings about who the right people are or when the right time is or the kind of management needed for the things you own. We’re less than wise when we lose sight of the forest. We’re silly when we end up messing around with the right people, time or management just to save costs. You shouldn’t hesitate to tell your advisors when they begin to lose perspective.
If the major cost of moving your things is taxes and you want to avoid those taxes at all costs, I can show you how to do it very easily. How? You just give it all to charity. Poof! No more taxes. Of course, giving everything to charity means the ‘other’ right people in your life – your family and other loved ones – may no longer get anything.
You see, cost isn’t everything. We might save a few dollars here and there, but in doing it we sometimes make it harder to do what’s really in our heart of hearts – to get the right things to the right people at the right time with the right management. Only after you are sure you know who the right people are, when the right time is and what kind of management might be needed, only then should you ask yourself if the cost of doing what you really want to do is too great. If it is, then (and only then) start looking for ways to cut those costs.
You may find, to your great amazement, that although the costs are high, they are costs you are willing to tolerate so you can do everything else you want to do.
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