Is Your Attorney Overcomplicating Your Estate Planning?
I believe a lot of attorneys overthink estate planning in general. They make estate planning into something that it does not need to be. They overcomplicate things and create the impression that clients need to become experts in probate law, tax law, trust law, and health care law before they can make good decisions.
In reality, when you are doing estate planning as the client, there are really only four big questions that you need to answer. Once those four questions are answered, most of the rest of the work shifts to the attorney to make sure those decisions are properly reflected in the documents.
I usually explain it this way. Let’s assume we put everything together exactly the way you want it. The documents are signed. The trust is funded. Everything is complete. You leave my office after your signing ceremony, and you drive away feeling relieved that it is finally done. Then bang — you’re in a car accident. You don’t pass away, but now you’re in a coma for six months.
The Four Questions That Simplify Every Estate Plan
Question 1: Who Do You Trust to Handle Financial Decisions for You?
With that specific hypothetical situation, the first question becomes very simple. Who do you want stepping in to handle your finances? Who is paying the bills? Who is moving money around if necessary? Who is making sure the mortgage gets paid, the lights stay on, the insurance premiums continue getting paid, and everything else keeps functioning while your family is focused on whether you are going to recover?
The goal is that if you wake up six months later and eventually return home, you are returning to your life rather than returning to repossessions, foreclosures, disconnected utilities, and financial chaos.
If you do not make it at all, this same person often ends up handling many of the financial responsibilities involved in administering your affairs. This is the person making sure that everybody receives exactly what they are supposed to receive and receives it in the manner you intended. For that reason, we are looking for one person. If they cannot do it, we have a backup. If they cannot do it, we have a third just-in-case person. One person, one backup, and one emergency backup tends to work remarkably well. Now we move to the second question.
Question 2: Who Do You Trust to Make Health Care Decisions for You?
We are using the exact same car accident and the exact same six-month coma scenario, but now we are no longer talking about finances. Now we are talking about healthcare decisions. Who do you want handling those decisions for you? Who is talking with the doctors? Who is deciding between treatment options? Are we doing surgery A or surgery B? Who is signing the paperwork that seems to appear every few hours when somebody is in a hospital? Somebody has to have the authority to make those decisions, and more importantly, somebody has to be the person you trust to make them.
Once again, we are looking for one person. If they cannot do it, we have a backup. If they cannot do it, we have a third just-in-case person. Sometimes the financial person and the healthcare person end up being the same person and sometimes they do not.
The question is not who would be fair or who might get their feelings hurt if they are not chosen. The question is who you trust to make those decisions if your family is standing in a hospital hallway and somebody needs to decide what happens next. Now we move to the third question, and this is the part most people think of as estate planning.
Question 3: If You Pass On, Who Gets What, When, and How?
If you do not make it out of the hospital in that same scenario, who gets your assets and how do they get them? This is usually the point in the estate planning meeting where some of my clients become a little frustrated with me because I start killing off their loved ones in hypothetical situations to see where the money actually goes.
If one child passes away before you, where does their share go? If they had children of their own, would those children step into their parent’s place and split what their parent would have received? Most of my clients answer yes to that question almost immediately. Then we usually take it one step further.
What if those grandchildren had already passed away as well? Where does the money go then? Most clients immediately say that it should simply return to the surviving children. We keep working our way through those scenarios until we reach a point where the family is comfortable that no matter what happens, the assets will eventually end up where they intended.
Why Percentages Work Better Than Specific Gifts
One of the recommendations I make during this process is to rely heavily on percentages whenever possible. Clients often begin by saying they want one child to receive the dining room set, another child to receive the house, another child to receive the car, and somebody else to receive a particular account. The problem is that life changes. Five years from now, half of those assets may not even exist anymore. The house may have been sold. The car may have been traded in. Investments may have changed entirely.
If your true goal is simply that your three children receive everything equally, percentages solve that problem beautifully. It does not matter what assets exist when you die because whatever exists gets divided according to the percentages you selected. Percentages age much better than inventories.
There is one more piece of this question that becomes extremely important if assets are eventually passing to younger beneficiaries. There needs to be an age of inheritance put into place. For that age of inheritance, most of my clients are going to pick the age of forty. Now, when people first hear that, it sounds incredibly old. They hear forty and immediately think that means the child is not receiving a penny until they hit middle age, but that is not actually how these trusts work in the real world.
Between eighteen and forty, the trustee has the ability to give money out for certain things, pay for certain things, and take care of whatever needs they feel are appropriate. Maybe that means paying for college. Maybe that means helping with a down payment on a house. Maybe that means helping start a business or helping through a difficult period in life. The trustee has the flexibility to look at the situation and make decisions that make sense for that particular beneficiary at that particular time. They do not have to simply sit on the money and refuse to distribute anything for twenty-two years.
Also, understand that the trustee can always accelerate distributions if they believe it is OK to do so. If the beneficiary is twenty-eight years old and looks totally responsible, has a good career, handles money well, and appears financially mature, the trustee can say there is really no reason to hold this money back another twelve years and simply distribute the inheritance outright. The trustee is allowed to do that because the age of forty is not intended to be a prison sentence for responsible beneficiaries. It is intended to be protection for beneficiaries who may not yet be ready to handle a large inheritance on their own.
The reverse, however, is not true. Once somebody reaches forty, the trustee generally cannot decide, “I still think you’re irresponsible, so I don’t want to give you the money.” At that point, they kind of have to distribute it. Most of my clients universally agree that if somebody has not gotten their financial act together by the time they are forty, they are probably not going to. Holding the money back another ten years is not likely to solve the problem, so they might as well receive the inheritance and move forward from there. That is really how the age of forty works in practice and why so many of my clients end up being comfortable with it. Now we move on to the fourth big question.
Question 4: Who Do You Want Raising Minor Children or Disabled Adults You Are A Guardian For?
This question is completely detached from the money. This is not about investments, inheritances, trusts, or financial management. This is simply about who would be taking care of those children or disabled adults on a day-to-day basis and who you trust to step into that role if you cannot be there yourself.
The money part of that equation is really handled by the first question because the people handling the finances should be able to work together with the people providing care. Guardianship is about raising children, getting them to school, helping with homework, taking them to doctor’s appointments, and handling all of the countless little responsibilities that come with actually taking care of another person. Financial management is a separate issue entirely, and that is why I separate those two decisions in my discussions with clients.
Just like the first two questions, we are looking for one person. If they cannot do it, there is a backup. If they cannot do it, there is a third just-in-case person. Having that structure in place provides a tremendous amount of clarity if something unexpected happens and avoids the confusion of family members trying to figure out what you would have wanted after the fact.
Why Naming Co-Executors and Co-Trustees Can Create Problems
That leads into one of the recommendations I make throughout all of estate planning. Do not pick co-anything. Co-executors generally do not work well. Co-trustees generally do not work well. Co-powers of attorney generally do not work well. Co-guardians generally do not work well. Shared authority sounds fair while everybody is sitting around a conference table talking about hypothetical situations, but crises have a way of exposing every weakness in a plan.
Even when it comes to guardians, I will have clients tell me they want their brother and sister-in-law to serve together. Most of the time, that is not actually what they mean. What they really mean is that they trust their brother, and their sister-in-law simply happens to come along with the package because they are married. The problem is that life changes. People get divorced. Relationships change. Circumstances change. Suddenly, the documents require two people who may not even be speaking to one another to jointly raise children.
What clients usually mean is that they trust their brother. If that is the case, name the brother. If they truly trust the sister-in-law independently, then name the brother first and the sister-in-law second. That way if the brother cannot serve for some reason, the sister-in-law steps in, and there is still a clear chain of authority without forcing two people to try to share the same role at the same time. That same principle applies almost everywhere else in estate planning as well. One person at a time tends to work much better than trying to create committees. Crises are not the time to be holding votes or trying to get multiple people to agree on every decision before something can happen. In a crisis, clear authority almost always beats shared authority.
The beautiful thing about the Big Four Questions is that these are really the main decisions my clients need to make. Once those decisions are made, the rest is largely on me. My job is to take those answers and make sure they are properly reflected in the documents so that everything works the way it is supposed to work when it is actually needed.
Unfortunately, this is where I think some attorneys start making estate planning much more complicated than they need to be. They start asking who you want as executor, who you want as trustee, who you want as power of attorney, who you want as conservator, and who you want as guardian. The reality is that most of those questions are really just subdivisions of the same larger questions we already answered.
How Shared Authority Can Slow Critical Decisions
If the question is who you trust to handle financial things, then that answer should probably flow through most of the financial positions in the plan. If the question is who you trust to make healthcare decisions for you, then that answer should probably flow through most of the healthcare and personal care positions in the plan. There is very little reason to take what is really one decision and artificially split it into four or five separate decisions unless there is a very specific reason for doing so.
To me, separating all of those positions out is a little bit like going to McDonald’s, walking up to the register, and ordering a chicken sandwich, a large fry, and a large Diet Coke, only to be told that they can take your order for the sandwich at this register, but you need to go to the next register to order the fries. Then, when you get to the next register, they tell you that they can take the fry order there, but you need to go to a third register to order the drink. Technically, that system works, but practically, it makes absolutely no sense.
The same thing is true during a crisis. You do not need three different people trying to coordinate financial decisions while nobody is entirely sure who has authority to do what. You do not need healthcare decisions broken across multiple people who are all trying to communicate with one another while doctors are waiting for answers. In most situations, you want one person handling the financial side of your life, one person handling the healthcare side of your life, and clear authority so everybody knows exactly who is responsible for making decisions.
That is how the Big Four Questions work. Those are the main decisions my clients need to make, and once they answer those questions, the rest of the process becomes surprisingly easy.
Estate planning doesn’t have to be confusing or overwhelming. When you work with our office, we’ll guide you through the process by focusing on the four decisions that matter most—not burying you in legal jargon or unnecessary complexity. We’ll explain your options in plain English, answer your questions, and prepare an estate plan that reflects your wishes while protecting the people you care about most. Contact us today to schedule a consultation and take the first step toward creating an estate plan that gives you and your family lasting peace of mind.