Every estate plan has three elements that determine whether it succeeds or fails.
The ultimate measure of a plan’s success is, “Does it do what I want it to do in my absence?” With the following three components in place, your plan is much more likely to succeed.
1. Rules and Instructions
Successful planning means your wishes will be carried out, even when you are not there to do it yourself. Sometimes your wishes need to be carried out while you are alive but too sick to make decisions. Eventually, your wishes will be carried out after your death.
Even though some decisions may be challenging to make, you are the best person to create the rules and instructions. Why? Because you are the #1 expert on your family and your values. Nobody else understands your family or your values like you do!
The rules and instructions to be made will include decisions around medical care (including end of life) and your finances (bill paying while you are sick, or distributions or inheritance rules after your death).
The rules and instructions you set up need to reflect who you are. You want it to be more than a fill-in-the-blank document with your name typed in. Make sure your plan reflects who you are and your family’s unique circumstances.
2. Who’s in charge?
Having rules in place is not enough to make sure your plan is successful. You also need someone to carry out the rules and instructions. That person needs to be able to:
- follow your wishes (and not just do whatever they want)
- take action (and not procrastinate)
- get legal or tax advice when needed (and not think they know it all)
- deal with family disagreements gently but firmly.
3. What’s in the bucket?
Once you have the rules and instructions in place, and a helper to follow through on those rules, there is one remaining issue that will determine if your plan is a success.
To what do we apply the rules and instructions?
This is one of the most common problems with estate planning. Many people have assets and asset instructions that conflict. Perhaps their Last Will & Testament is inconsistent with their beneficiary designations. Maybe they have a Trust but nothing in the Trust. (Yes, this happens quite often.)
Your plan will not work unless it is clear which assets are governed by your instructions and your helper.
There are a surprising number of people who go through the effort of creating a Trust, but then they don’t put anything IN the Trust. We like to think of a Trust as a bucket. If nothing is in the bucket, or there are important assets missing from the bucket, then the plan will not work as you hoped.
To continue reading more about what makes a successful estate plan, check out our article and free resource: 6 Estate Planning Pitfalls to Avoid (Reasons Why Most Estate Plans Fail, Costing You Time, Money and Extra Stress)
To learn more about the basics of estate planning, take a look at our upcoming workshop, Wills & Trusts: How to Get Started. At this 1-hour workshop you’ll learn if a Will or Trust is right for you, the clear step-by-step process for getting organized and planning, and if Edwards Group is a good fit for you.