The estate planning process

By Connie Fontaine

The American College


Although the estate planning process has many variable steps -- and may be different with each and every estate -- there are a number of common, identifiable stages. First, data must be obtained. Then the existing estate plan must be evaluated for potential impairments. After that, a plan is designed that is approved by the client. After the client reviews the plan, it must be implemented.

This stage includes the execution of any necessary legal documents and transfers for arrangements of property. Last, it is important for individuals to recognize that a periodic review of the plan, particularly at times of major life or tax law changes, is crucial to having an effective estate plan.

The initial stage in creating an estate plan is to gather all relevant facts from the estate owner and to compile them in a systematic manner. It is important for these facts to include full disclosure of all property ownership (both assets and liabilities), including expected gifts and/or inheritances.

Any known problems connected with particular assets, such as the problems surrounding a closely held business interest, should be noted. Detailed information must also be obtained regarding the family structure, the names of all persons in the family who have some connection with the estate owner, and their relationships to the estate owner. Noting the attitudes of family members toward each other can also be helpful to a planner. For example, it is important to understand the attitude of the estate owner toward a spouse and younger generations. Information must be obtained regarding the estate owner's attitudes toward assets, as well as his or her feelings about work, money, risk, philanthropy, and financial security.

Some questions and areas of exploration that will assist the estate planner in discovering the client's personal attitudes are:
  • Does the estate owner have strong feelings about charitable giving or particular charitable organizations? Many individuals who have accumulated a substantial estate have special feelings for some of the institutions that have aided them in achieving their goals and arriving at positions of financial, professional, or business prominence.

  • What are the estate owner's obligations to a former spouse or to children of a first marriage? In estate planning today, one cannot ignore the subject of divorce. When an estate owner comes to see you with his or her spouse, it is possible that this may not be the first spouse. Also, there might be an elderly parent or a handicapped person in the family for whom the estate owner has some concern.

  • Does the estate owner have a legal or moral obligation to support someone or certain persons?

  • Has the estate owner made significant gifts during his or her lifetime? If so, this person should be questioned regarding gratuitous transfers that have been made, as well as gifts that the estate owner anticipates making to various persons in the future.
A second initial stage in creating an estate plan should be to obtain information regarding the provisions of the estate owner's current estate plan, if any. Does the client presently have a valid will? Has the client created trusts that may or may not serve his or her needs? These documents and other legal documents should be brought to the interview to assist the planner in evaluating the client's current plan and also in making recommendations for improvement.

In eliciting or reviewing facts in the initial data-gathering interview, prob┬Člems that would impede the estate plan should be noted, defined, and explored with the client. As part of the data-gathering process, the estate planner also has a duty to explain to the client various potential options that are available under the current law.

This involves explaining the law to the client and making certain the individual understands completely. The plan is the client's plan, as is the ultimate decision regarding the arrangement of assets and transfers to beneficiaries.

The client's responses to these options can provide significant guidance to the estate planner in determining the type of plan that is most suitable for meeting the client's needs and objectives.

Many clients are intimidated by professionals. Clients may be unfamiliar with the professional's language or terminology and may be hesitant or not quite know how to ask questions that would help them understand and feel comfortable with the estate plan.

It is very important to make certain that clients know what they are doing and why. This can be accomplished by giving the client an analysis of problem areas the planner has identified, as well as areas where there may be a choice among alternative solutions. The analysis is helpful to the client only if it is explained in understandable terms.

It is imperative that planners emphasize the importance of providing accurate and comprehensive information. Such information forms the foundation upon which an appropriate and workable estate plan is built.

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