• Tim Powell

What even IS estate planning?

A little while ago we posted an explainer of what an “estate” even is. So, now that we’ve all read that, the next big question is, “What is estate planning?” Most people think of estate planning as “what happens to my stuff when I die.” But it starts far, far earlier than that.

The best way we’ve found to explain this to our clients is this: Once you can answer three particular questions at three different points in time, you have an estate plan.

So here are the three questions:

  1. Who’s in charge of you?

  2. Who’s in charge of your stuff?

  3. Who benefits from your stuff?

And here are the three points in time:

  1. Right now (while you are healthy)

  2. Incapacity

  3. Death

And HERE is how everything works together to create your estate plan.

Point in time #1: Right now

  • Who’s in charge of you? You are.

  • Who’s in charge of your stuff? You are.

  • Who benefits from your stuff? You do

For anyone reading this post, the most likely answer you’ll have for all three questions right now is “me." And you’d be absolutely right. Right now, you make your own medical decisions, you manage your assets (whether they’re a little or a lot), and you decide who gets the benefit of those assets, and in what way, and when. This is an easy question to answer when you’re healthy, and it’s important to note that, other than providing you with peace of mind, a well-executed estate plan shouldn’t make your life feel any different than it does right now.

Point in time #2: If you become disabled or incapacitated

  • Who’s in charge of you? ???

  • Who’s in charge of your stuff? ???

  • Who benefits from your stuff? ???

Who has planned for this ahead of time? Only about 30% of Americans have any kind of planning for a period of incapacity or illness. However, the majority (almost 70%) of us are going to go through some period of disability and/or incapacity before we die. As the percentage of our population that is elderly continues to grow, so will that likelihood.

But, this isn’t a concern only for the elderly - we have real clients with family who through either the trauma of a car wreck, the progression of an illness, or a medical event like an aneurysm, become disabled or non-responsible in their late thirties and early forties.

If you become disabled, who takes care of you? Who manages your assets for your benefit when you aren’t able to do so, especially if you need long-term care? If you haven’t laid out your wishes clearly in something like a Durable Power of Attorney or a trust, the only solution left for your family may be a court-controlled process called guardianship, which is expensive and lengthy - and that’s if no one in your family wants to fight over you. Maybe your life situation is as much about who doesn’t make decisions for you as it is who does. Unless you decide beforehand, those decisions will be left up to a judge who’s never met you. We have yet to meet anyone who really likes that option.

An additional thing to think about here: Do your people know what you want to happen if you’re ever in a situation where you’re non-responsive, on life support, and the doctors all say you’re not going to get better? Often people have peace of mind for themselves about what happens at the end, but if it’s not clearly written down for others, those loved ones may agonize for years over the choices that have to be made. Planning now can alleviate emotional pain that will come to the people you care about long after you’re aware of what’s going on around you.

Point in time #3: Death

  • Who’s in charge of your stuff? Maybe a spouse? Maybe a family member? Maybe a stranger.

  • Who benefits? Either people you decide, or the people the state picks for you. But the bigger questions here are how and when?

Nobody wants to think about it, or acknowledge it, but the fact is: Mother Nature always wins. Ten out of ten people die. We may not be able to determine the how or when, but we can control (or at least lessen) the emotional and financial consequences for our loved ones when it happens to us. We can control the significance our lives will have, even if we’re gone.

Like in incapacity, with inadequate planning, the only way to determine what happens with your stuff and who benefits is a court-controlled process. That process is called “probate”, which again leaves the important decisions in the hands of someone you’ve never met. Like guardianship, probate is time-consuming, costly and subject to family fights, but it's also completely public - anyone with an internet connection can see any open Oklahoma probate, including the person who died, how much they had, how much their heirs are getting and even what their heirs' addresses are.

Many strategies for avoiding probate will get the job done, but several of those only accomplish that one goal. But estate planning can also be about protecting the people you care about from the consequences of the bad luck that can happen to anyone - the car wrecks, bankruptcies, long-term care costs, and divorces that no one predicted. Do you want to leave an inheritance to your beneficiaries that not only improves their lives but can also be protected from the bad luck that can come to anyone from no fault of their own? If your beneficiaries are young, you may want to provide some structure to whatever inheritance they receive, protecting them from that same bad luck of their own, or from that of someone they make a part of their life, or just from their own inexperience.

Who gets your stuff when you die is always a part of this discussion, but how that happens, and when, and with what structure and protections, are choices that are made more easily, less expensively, with more options, and that can maximize family harmony—but they have to be made now. In the middle of a crisis, the options decrease while the costs and consequences for your people only increase.

If you want to know more, we would love to talk with you about it. Best part, the conversation about how it could benefit you doesn't cost anything. Contact us at (918) 770-8940 or to set up a free consultation, either in person, video chat, or phone call. Disclaimer: Reading this blog post does not create an attorney-client relationship, and it is not formal legal advice. This is for information purposes only. Your best bet, always, is to speak with an attorney about your questions, assets, concerns, and needs.

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