- Cole Gorman
Common Missteps in Estate Planning
One of the more famous quotes from prolific quoter, Benjamin Franklin, is, “If you fail to plan, you are planning to fail!”
The man known as a statesman, postmaster, diplomat, humorist, and numerous other titles actually lives up to that quote. In his estate plan, he bequeathed $4,400 ($125,000 in today’s dollars) each to both the cities of Boston and Philadelphia upon his death in a trust established in 1785 that would gather interest over 200-plus years.
By 1990, the Boston trust had more than $5 million, which established a trade school, while the Philadelphia trust amassed $2 million and funded high school student scholarships.
A Living Document That Requires Ongoing Care
While unique in its setup, Franklin’s trust was an example of a well-thought-out and effectively executed financial strategy. More than two centuries later, estate plans that achieve the owner’s objectives and account for all outcomes and personal dynamics are becoming the exception and not the rule. Far too many are plagued by asset losses and family disharmony.
Those who go to great lengths to map out their estate planning goals fail to account for changes in the future. Documents are not carved in stone. They are both reflective of their time and fluid, designed to be revisited as life changes, which is sometimes necessary depending on current events. Yet, any follow-through on the original documents is sorely lacking by a majority of people.
Living trusts are a vital component that helps to avoid probate court. Assets need protection, mainly if a loved one is still living, but becomes incapacitated. The act of having a trust is not enough. Ignoring it is akin to letting a plant wither away. A trust must be “nourished” with assets transferred into the account, including real estate, bank accounts, and other valuable property placed there in the name of the trust.
Powers of attorney and advance medical directives are another, often neglected aspect of an estate plan. Failing to fill out the documents only creates catastrophe upon the death of a family member. With nothing left behind in writing and no agents delegated to take on the responsibilities, their intentions remain a mystery.
Without proactive steps and preemptive measures, a neglected estate plan becomes a one-way path to potentially contentious probate court proceedings that see already grieving families waging war. A loved one’s legacy should be worth more than that.