Effective estate plans meet many needs: providing an adequate standard of living during the estateholder’s life, efficient transfer of property after death, maximizing the amount passed to heirs, and limiting inconveniences and delays for beneficiaries. Most estate plans require the knowledge and skills of many diverse professions working together. These professionals typically have a passing knowledge of each other’s fields — but the complexity of most estate plans requires them to bring their individual skills together to create an effective, detailed plan.
A properly planned estate relies on legal documentation that provides detailed instructions to the executor, trustee, survivors, and the probate system. Wills, trust agreements, and other documents must be drafted properly — courts interpret them literally, so proper language and form are essential. An attorney familiar with the laws of the estateholder’s state of domicile should draft the will, since the domicile state has jurisdiction over the final disposition of the estate. For complex estates, an attorney specializing in estate law and the tax code is essential.
The accountant often has the earliest and broadest view of the estate’s financial condition — particularly regarding business interests. After the estateholder’s death, the accountant will be called on to complete the necessary income and death tax returns. Given a continually changing tax code, an experienced accountant is a critical team member. For complex plans, an accountant specializing in estate taxation is essential.
Most estate plans require additional sources of liquidity to ensure proper execution. Life insurance policies commonly provide the needed cash. An experienced life agent can find the most appropriate coverage for the estateholder’s situation — balancing lifetime cash values, tax-deferred growth, and death benefits that provide estate liquidity.
The financial planner is usually the integrator of the individual contributions of all other team members. The goal is to create a lifetime plan of which the estate plan is simply the final component — coordinating the estate plan with retirement planning, insurance coverage, personal investments, and income tax strategies to provide the broadest perspective.
Fiduciaries
To a great extent, the level of success achieved by the estate plan rests with the fiduciaries selected by the estateholder. Executors manage the probate estate and settle debts and obligations. Trustees manage property placed in trust. Their skills and aptitudes have a great impact on the ultimate success or failure of the plan.
Often, the estate planning team includes these fiduciaries — especially professional trust officers who deal with estate planning matters daily. In the case of non-professional fiduciaries (family members or friends), the estateholder may not wish to include them in the planning process. However, the estateholder must confirm that nominated fiduciaries are willing and able to perform these critical functions and communicate a general sense of the plan to them.
The Most Important Team Member
The most important member of the estate planning team is the
estateholder. The various professionals can assist in designing the plan, but it is the individual estateholder who must decide the details. Every estate plan is a unique creation tailored to the individual’s circumstances. There are no “right” solutions — the estateholder must ultimately decide which strategies are most suitable for his or her situation.