Every estate and business is ultimately subject to a plan. Neglecting to develop a plan in advance means that someone other than you will determine how this will play out, most likely through probate court. Understanding that no plan is actually a version of a plan helps people to understand the importance of making these decisions now so someone else does not have to later.
Some take the approach that it’s best not to raise these issues now with family members but instead let them sort out the issues once they have passed. If you are trying to create tension, uncertainty, anxiety, and unnecessary expenses, this is the correct approach. When beneficiaries are left in the dark, it can be exceedingly difficult for them to administer an estate efficiently and can lead to a lack of trust among siblings.
The only way I have found to effectively implement an estate plan is to involve a client’s team of advisors from the outset. A family attorney, CPA and other family advisors must be engaged to work towards a common goal. The absence of an important advisor can cause a plan to fall short of its potential.
Once a plan is in place, it’s important that a family has what I simply call a “family meeting.” This is an opportunity for all family members to be in the same room together and for everyone to understand exactly how everything will work when a parent passes away.
For kids and grandkids, knowing what to do and who to contact can eliminate a great deal of confusion and frustration. Having issues out in the open prior to a death can reduce tension among children or other beneficiaries. Time and again, I have seen clients gather their children and grandchildren for a family meeting over the summer and found it to be a rewarding opportunity for a family to communicate, work together, and grow closer.
Our role is very straightforward. We are here to provide financial solutions to any potential problem, tax or otherwise, that may occur at death. Life insurance is sometimes used to provide liquidity upon a death for a family or business. But simply providing life insurance isn’t enough; we must find the most productive way to pay for the insurance. Sometimes it can be as simple as a more competitive product, or as complex as a structured premium-finance platform. The differences in products and their functionality within the plan or a properly financed plan can be very significant on the front or back end of a transaction.
In the event life insurance is already a part of the plan, but no longer fits the profile of the plan, we can involve the secondary or life settlement market to have the policy sold as opposed to simply lapsing or surrendering the policy.