Values Not Valuables, Part I

Putting Your Values at the Center of Your Estate Plan
VALUES CENTERED ESTATE PLANNING, PART ONE

Estate planning is not something to be rushed. But it’s not uncommon for busy and accomplished people to wait too long to begin the process, then feel rushed to complete it. Or worse, they pressure themselves into viewing it as an insurmountable and unpleasant task, and never get around to it -- to the great benefit of the IRS, and the detriment of their family and of their favorite charitable institutions.

Nor is estate planning something to do in cookie-cutter fashion and without forethought. Many people think that their first step must be to consult immediately an investment professional or a tax attorney who will create a complex program geared to tax savings based on specific vehicles. Thus, they find themselves with a “tailor made” estate plan that may have little relationship to their real, long term goals. This is much like buying an airplane ticket before you know your destination: you’re going to get somewhere, but not necessarily where you really want to be.

So if you have not developed your estate plan yet, now is the time for you to begin planning. But don’t “just do it.” Approach your planning in a reflective and effective way that builds a strategy based on your personal values and goals. Then find a specialist who can help you implement your strategy.

This more deliberative approach to estate planning is known as "Values Centered Estate Planning."

“Values Centered Estate Planning puts all of your resources -- your assets and ideas -- behind your most fundamental beliefs about the good of your loved ones and society,” explains Mark Weinberg, an estate planning attorney who represents charities and donors in planned giving, and serves as planned giving counsel to the National Academies.

The Values Centered approach to estate planning is a seven-step process, with each step building on the previous one. This issue of Insight will introduce the first four steps; the next issue will cover steps 5 through 7.

Starting out is simple: just tally some numbers. The calculation need not be exact and detailed; rough them out on the back of a napkin at the dinner table. Figure a broad estimate of the assets belonging to you and your spouse, including stocks, bonds, mutual funds, and other securities; retirement funds; life insurance; primary and summer homes, and other valuable property.

The goal here is just to set the stage for the thinking involved in Step 2 -- you’ll do a more detailed analysis of your assets later in the estate planning process.

The most difficult part of the process may be answering two questions that involve soul searching about your own values:

Take time to think carefully about the first question, as your estate plan will be built on this decision. Your answer should be as specific as possible -- how much money and property and to whom.

Developing these answers may be difficult because of the emotions and expectations involved. You’ll need to decide, for example, whether to leave an equal amount to each child, provide more to one than the other for various reasons, or leave enough money to cover college and graduate school for all of your grandchildren. You may also need to consider leaving money to others who are dependent on you.

While your answer to the first question will impact the lives of a few -- your heirs -- your answer to the second question has the potential to impact the lives of many. You may want to donate money to your alma mater for scholarships or a special program, or you may choose to donate to an organization to fund an initiative that you find meaningful.

Remember, the choices you make now will ensure that the people and causes you care about are cared for in the future. Your planning, generosity, and philanthropy can make a world of difference at any level, from family and friends, to local charities and scientific initiatives on a national or international scale.

Regardless of your answers to these two questions, don’t worry at this stage about the details of how to act on your decisions.

Understanding how you would like to allocate your estate, now make a more detailed accounting of your assets and liabilities. Try to be as comprehensive as possible. This listing will be the basis for the detailed financial and estate plan that puts your values and goals into action.

While you are gathering your detailed financial information, begin to build your knowledge of financial and estate planning options and charitable gift techniques. There are lots of books and web sites to begin with (including NationalAcademies.org/Insight). This broad background will give you a strong frame of reference for your coming discussions with an estate planning professional.

While you should stay directly involved in the process of planning your estate, you won’t want to handle it all on your own; the complexities of the process will probably warrant receiving financial, legal, and/or tax advice. When it comes to understanding and navigating the IRS code, for example, even Nobel Prize winners can use some assistance.

Also, because every situation is unique, you should not simply use a standard-form approach or copy a family member’s plan -- they will not work for you.

In selecting a qualified estate planning counsel, consider the following questions:

Has he or she worked regularly with estates roughly the same size as yours? The issues posed by small estates are quite different from those posed by medium or large estates.
Is he or she experienced enough to have firsthand knowledge of family and business matters of concern to you?
Does his or her manner put you at ease, or does it make you uncomfortable? The attorney you choose will be asking very personal questions about your relationships with family members, so you should be able to discuss these matters openly.
Can he or she explain information to you in terms you understand? Some very gifted lawyers are not skilled at explaining the complex probate, estate tax, and other laws to clients. You’ll be paying good money, so you should be able to understand the documents you’ll need to sign. This will help avoid surprises and disagreements among family members at critical times.

One avenue for finding a knowledgeable estate planning attorney is to contact the American College of Trust and Estate Counsel (ACTEC), a Chicago-based nonprofit association of lawyers with a minimum of 10 years of estate planning experience. ACTEC members are elected to the association based on their reputation and ability. You can visit the ACTEC web site at www.actec.org, and perform a search for an estate planning attorney in your region.

Remember, even a highly regarded estate planning attorney shouldn’t do all of your planning. You’ll benefit most if you do your own research and know some answers in advance.

In the next issue, we’ll explore the final steps in the process of Values Centered Estate Planning:

If you have questions or thoughts about this article, or estate planning in general, contact the National Academies Estate-based Philanthropy Program at giving@nationalacademies.org or 202-334-2431.