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Value Creation Blog

You Need Clarity In Your Estate Plan

Posted by Josh Patrick

I have a saying I love and my wife hates, “clarity leads to power.”  Not that you’re trying to achieve world domination….well, maybe you are.  Let’s just say I’m not trying to take over the world.  I just want to know if I’m doing the right thing.

This is where clarity comes in.  If you’re clear about what your trying to do and why it’s important you have a pretty good chance of having an outcome you want, even if you’re not here to monitor it.

Clarity leads to getting it right.

Too often I see a lack of thought when it comes to an estate plan.  I’ll be working on a plan with a client and I ask what they’re thinking about.  More often than not I’ll get a blank look as if I’m supposed to fill in the blanks for what they should do.

Your estate is yours.  It’s not mine.  I want you to think about what your legacy will be.  A legacy isn’t just who gets what.  It’s what makes you unique and what lessons and wisdom you want to leave to those who are here after you die.

If you’ve spent time getting clear on why you want things, you’re likely to choose the right things to do.  Remember, right is from your point of view not your children and certainly not your advisors.

If you’re clear you might want to share what you’re thinking.

Estate planning is usually an activity done with at least two people.  If you’re clear on why you want certain things to happen you and your significant other can have a real conversation about your reasons.  You might even find that you’re mostly in agreement. 

Don’t be surprised if there are some areas where you both have different ideas.  When your reason is “because” it’s almost impossible to come up with a good resolution.  If on the other hand, both of you are clear on your reasons; it’s much easier to find a resolution that you both can support.

To become clear you’re going to have to ask why.

Yes, it’s that little pesky question again.  This time don’t just ask why all by itself.  Ask what will be the effect onhose you’re leaving behind.  What difference will it make in their lives.  After all you’re going to be dead.  This is about your legacy and their life.  I think spending a lot of time on what difference your choices make is time well spent.

The next step is one that too few us of do. That’s to sit down with your heirs and let them know what you’re thinking and again start with why.  Spend time listening to what your heirs think about your plan.  Remember, you’re dead and they’re still alive.  Your decision will affect their life and the way you’re remembered.  If you care about either of these issues having frank conversations is really important.

Estate planning should be about more than taxes.

Estate planning is not just about splitting up the goodies.  It should be more about what made your family unique.  What wisdom have you picked up over the years?

Our society doesn’t do a great job of respecting those who are older.  That’s too bad.  You can change this in your family by having your estate plan be clear and explain the reasons for your decisions.  This process will help those in your family learn about what your motives are and what you hope to accomplish.  There is wisdom in learning both.

Don’t leave your estate with unintended consequences.

This is especially true in families with significant wealth.  I spend most of my time working with business owners.  I can’t tell you how often I have serious conversations with clients about who should be allowed to own stock in the family business. 

Parents often make an automatic assumption the family business should be split equally between all of their children.  When this is the result we can get an awful result.  One that is almost guaranteed to end up in a major fight between children in the business and those who aren’t.  I know that’s not the intension of their parents.  It’s what happens when there’s a lack of clarity about unintended results. 

You really want to ask lots of questions.  Have an open conversation about what you want.  I know it’s hard to talk about your death.  We’re all going to have one.  I know I want my family to be prepared.  I hope you do too.

 Report on the basics of estate planning

Topics: wealth management, estate planning, creating value

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