Five questions, in order, will give you a broad-stroke-overview understanding of the legacy planning process. A few additional questions help clarify.

1. How much do we want to give to our progeny (children/grandchildren) and how much to our favorite charities?
   • How much do we require in order to meet our own needs while we live?
2. Should we grant equal inheritances to all our children?
   • Could one or more of them uniquely benefit from a larger inheritance? (Perhaps one of them has unique needs that the others do not. . . . )
   • Would a sizeable inheritance actually cause difficulties for one or more of them? (Perhaps they are involved in destructive behaviors–either personally destructive, or destructive to others–and our funds would “simply” enable even more harmful behavior than what they have already engaged in.)
     

     As someone has said: We need to know: “Will my fortune be safe with my son?” And, “Will my son be safe with my fortune?”

   • If we were to grant a sizeable inheritance to one or more of them, would they actually dedicate the funds to causes in opposition to causes or purposes to which we are committed? (If so, why would we give them money to tear down the very things to which we have dedicated our lives?)
3. When and how do we want to pass our estate to our heirs?
   • Do we want it all passed solely at our deaths? Should we pass some portion(s) while we’re alive and some at our deaths? Or should we give the entire inheritance (whatever we intend) while we are still alive? (Someone has suggested it can be wise to “Do our giving while we’re living so we’re knowing where it’s going”!)
   • Of what benefit would a sizeable inheritance be to our children or grandchildren when they are 35-, 40-, 50-years-old or older? Of what benefit would a modest inheritance be to our children or grandchildren when they are going to college, first getting married, or starting a new business venture?
   • If we give them funds to pay for college, a first car, the downpayment on a home, etc.: is it legitimate to view these things as part of their inheritance?
4. In what form should the assets be transferred?
   • Assuming we own a business, a farm, or some other major asset that requires ongoing oversight: Do the kids (or the charity) even want it? If so, what is our succession plan? How should we pass it on? If they are not interested in overseeing the asset, then when is the best time to convert it into a form that the kids or charity will be able to use it?
   • What estate planning techniques (i.e., ownership and control structures) may we want to use (ILITs, FLPs, CRUTs, CLATs, Foundations, etc.)?
5. How and when shall we communicate all of these things to our children?
   • Should we wait till we die so they can be surprised at the reading of our wills? (Not recommended!)
   • Should we make our decisions and announce them after the fact?
   • Should we discuss them before we finalize our documents?

Notice: Traditional estate planning attorneys generally skip Questions 1 and 2 completely, spend very little time on Question 3, and want to jump right into Question 4. You should want first to answer Questions 1 and 2 before anything else.

A little “bonus” thought: If you fail to plan, you are saying the government is your favorite charity. Proper estate planning or legacy planning can eliminate all estate taxes. There is no reason for you or your heirs to spend any money on estate taxes–either directly from your pocket or via life insurance.

As our speaker yesterday noted, the United States has the most favorable estate planning and charitable laws in the world. They may become less favorable in the future, but right now they are extremely generous.

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John Holzmann

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This entry was posted on Saturday, May 17th, 2008 at 9:25 pm and is filed under estate planning, legacy planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.