There is so much goodness in the article by The Street touting Bank of America research about estate planning that we needed to highlight more of the learnings (see prior post debunking the myth that Mom and Dad are not wealthy enough for a Trust). We’re going to shift from the paperwork to the process.
Some believe that you simply get a Will and/or a Trust and job done. But the reality is that proper estate planning is an ongoing conversation between Mom and Dad, the Next Generation, and the professionals who help run the Business of the Family. An estate needs some annual, regular care and feeding because our lives are dynamic, situations change, and our plans must evolve accordingly.
“Bank of America’s trust officers say a document that is never revisited can drift out of step with the family it was designed to protect. Kevin Hannant, a market trust executive at Bank of America Private Bank in Los Angeles, said families should ordinarily review estate plans about once a year.”
And even friend of Forward Inheritance Beth Pinsker, a certified financial planner and financial planning columnist at MarketWatch, told CNBC, “Whatever you pay today is less than what anybody's going to pay after the fact if you don't have a will. It's going to cost so much more for your heirs to deal with your estate after the fact.” Failing to plan is planning to fail!
So what does ongoing estate planning look like? Annual “board meetings” that not only review past performance, conversations around how to optimize the value, and scenario planning in case something goes sideways. “Those could include a sudden health decline, a contentious probate process, or an inheritance reaching a beneficiary who is not yet ready to manage it responsibly.”
The Business of the Family should be run like a business. Goals, vision, and values should be well articulated and understood. The Family Operating Agreements (will, trust, POAs, insurance policies, etc) must be secured, stored, and shared appropriately. The Assets and Liabilities must be properly accounted for. Succession planning should be mapped out. And if everyone is really doing their jobs, these pillars of the estate must be linked by reality.
Does this sound daunting? Maybe. If you were aware of a local business worth $1-5M, wouldn’t you expect these things to be done? Why is the Business of the Family any different? We can have these conversations at the Kitchen Table or over a Hospital Bed or in the Funeral Home. It’s our choice. We can help our families. We can lead by example. We can move our families forward…