Estate Planning: Having the Conversation

When I was first practicing law in the 1980's, the term "estate planning" conjured up visions of lawyers in expensive suits and large offices sitting down with the DuPonts and the Pews and figuring out ways to keep their fortunes intact through the next ten generations. 

Estate planning meant avoiding taxes through intricate schemes and legal gymnastics that most of the people I knew didn't need. In 2001, the estate tax applied to estates more than $1 million. 

Today, the federal estate tax only applies to estates over $5,000,000.The result:  the number of estate tax returns filed decreased from more than 108,000 in 2001 to fewer than 34,000 in 2009 (though there is no escaping the tax man, especially since Pennsylvania has an inheritance tax that ranges from 4.5 percent to 15 percent). 

But I have lived more life since then, I have seen loved ones become ill and pass away, and I have gone to their homes and sorted through their things, and discovered more about what estate planning really means. It is about planning, about organizing, about confronting your own mortality, and most of all about having "the Conversation."

People shy away from thinking and talking about the various events of life that can change their day to day routine so quickly: about accidents, illness and disease, aging and death. 

They are events that we cannot control, but they are events that we can plan for.  Having the conversation starts with talking to yourself:

what is your contingency plan if you are hospitalized?

• If you have a lingering illness?
• If you cannot make your wishes known to your doctors and loved ones? 
• Who do you want to make those decisions when you can’t? 

The law in is its infinite wisdom provides the method for all of the people who do not plan for these events. 

If you cannot take care of yourself, the law permits a guardian to be appointed, in a process involving lawyers, a judge, hearings, time and expense. If you have not made your wishes known through a living will, then the law provides the same process: lawyers, a judge, hearings, perhaps Congressional hearings and political battles as well, all to determine what you might have decided if you had been competent to decide the issue of your own life and death. 

A little thoughtful planning, a discussion with your family, a little expense, and you can provide for these situations. You can decide the issues that only you should really decide, you can document them, and then you have done all you can. You have bought a relatively inexpensive form of insurance for the situation.  But most important, you have had the conversation, first with yourself, and then with your loved ones.  You have made a plan.

Estate planning today means having a durable financial power of attorney that designates one or more trusted loved ones to take charge of your financial affairs when you are unable to do so. It means having a living will—also called a medical directive—that expresses what you would want done if you are in an end-stage medical condition, and selecting the person or people who you want making those decisions when you can't. 

It means having a will that provides for your loved ones and appoints the person you want to handle your affairs.  It means considering making gifts while you can enjoy the giving; checking to make sure your insurance beneficiary designations are up to date; putting your records together in one safe place, writing notes to explain your affairs, and even attending to your genealogy, and putting the names of the people on the back of the old family pictures. 

It means telling your loved ones that you love them, writing them letters to be opened when you are gone, and showing them how much you love them by the thoughtful way in which you have prepared for that day. 

By having the conversation, first with yourself, and then with your loved ones, and then putting an estate plan in place, you do not ward off the events of life, but you have done everything in your power to prepare for them. 

So start today, in the morning over coffee or tea, and have the conversation.

©2011  Douglas P. Humes