July 24, 2018
By Michael Dolan
Most people think of estate planning as writing documents to say who gets what when they die. We could, perhaps, call the documents an estate plan, but creating those documents is not estate planning. Estate planning is a series of actions, changes or functions bringing about a result.
It’s July. You go to your filing cabinet where you keep important documents and look for a copy of the letter you wrote to your children last September. It reads:
“Dear children: I have decided that in August of next year you should each receive money equal to half of the wheat raised on the 160 acres in Section 22. Please help yourself to the funds. Love, Dad”
Can the children expect to pick up a check next summer? Not unless you engage in a process to bring about that result! There are many steps in the process — from buying seed to planting, harvesting and selling. Your letter is just a statement of the intended result.
Starting the planning process
Estate planning is a much more complex process. I would suggest that it involves at least the following four “actions, changes, or functions” to bring about your desired result.
1. Find the right kind of attorney. Work with people who communicate in plain English and who won’t charge extra for every question or call (since that deters you from seeking advice). Find professionals who follow a process to fuel creativity within an organized structure.
2. Invest meaningful time in creating a plan. Counseling-oriented (as opposed to word-processing-oriented) professionals will help you creatively design solutions that fit your family and operation. They will educate you on what is possible and assist you in developing a long-range vision. Then, they will put the plan into writing (will, trust, etc.) as the initial statement of your intended result.
3. Align your estate with your plan. A critical, often-missed estate planning step is the retitling of assets to follow the trust or will. Unless the ownership of most assets is changed, they will not follow the plan. For example, each year millions of dollars pass to “pay-on-death” beneficiaries, and thousands of acres pass to surviving joint tenants. Unfortunately, many of these recipients are often not the individuals named to receive the asset in the will or living trust, and they end up paying unnecessary taxes.
4. Commit to routine maintenance. Laws change, and plan documents should be updated to take advantage of new opportunities and adjust for changes in your situation. You obtain new or different assets ... are they aligned with your plan? Your estate plan is like a tractor: it won’t need an overhaul if you change the oil regularly!
Estate planning is no minor project. Meaningful results come from a systematic process. The casual observer may believe that farming is simply planting some seed and sitting back and watching it grow, but it is a much more complex and involved process if you want a successful result. You should not assume that estate planning is simply putting some documents in place and expecting them to produce a successful result. Important and critical steps are necessary to successfully preserve your family’s agricultural legacy.
Dolan thanks Curt Ferguson, who contributed to this column. Dolan, an attorney, helps farm and ranch families achieve comprehensive estate, succession and legacy planning objectives. He is the principal of Dolan & Associates PC in Brighton, Colo. Learn more at his website, estateplansthatwork.com.
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