What Were They Thinking?

May 16, 2017 by Rick Randall

The Truth About Estate Planning is: the old way of doing things does not create plans that work.

Sometimes it seems that it would be hard to intentionally create a worse system than the traditional approach to estate planning in America. The chances for a successful planning experience are remote indeed if you define “success” as “meeting client expectations.” 

Already saddled with a society that considers the subject of death and dying as taboo, our professions have created a reactive system that seems to often produce as many problems as it solves. The process usually starts with the client’s professional advisors refusing to combat the client’s desire to make the process as short as possible (think: trip to the dentist!). As long as the experience is short and relatively painless, most “planning” experiences are treated as “successful.” This is an extreme disservice to the client. Not only does the process begin as a reactive experience, it normally ends up that same way for those that inherit from the original client.

We rely on sterile form documents with little effort to educate clients about their options. The “we” includes financial advisors who recommend action based on document acquisition, as well as attorneys who perpetuate the myth that the documents accomplish anything at all. In reality, people accomplish the tasks associated with estate planning, and people receive the benefit or bear the brunt of the results produced through the planning process.

The education “we” provide typically is a “will versus trust” review that includes a biased and incomplete summary of the document approaches and does not include any real information or “training” on what the client and client’s family must do to ensure the plan works as intended. In essence, what passes for estate planning in America today is little more than word processing.  The attorney often knows little more about the client’s true values and goals after the client leaves the office than he or she knew at the outset of the planning.

Even in more up-scale and sophisticated planning situations, the discussions often disintegrate due to petty disagreement and distrust among “professional team members” over who gets to be the “quarterback” and thus retains “client control.” These discussions often cause the lack of needed education and support for the client and family to be glossed over and hidden from our active consideration.

Once the estate planning documents are acquired, most clients have no plan for what “maintenance” is required to ensure the plans works for the long run. Few financial advisors and almost no lawyers provide a dependable review element for their clients. Fewer still proactively explain the need for that maintenance. As a result, more often than not the “detail work” is ignored or neglected, causing the plan to fail to achieve even its sterile financial goals.

Despite the fact that most clients name family members as executors or trustees, there is seemingly no concern on the part of professionals that the people named are normally completely unprepared to know what the tasks are that they will be called upon to perform, let alone how to perform them. Thus, when disability or death strikes the original client, the education begins!

Who can seriously suggest that the best, or even a reasonable, time to teach new information is during the stress of a disability situation or the grieving period after the death of a loved one? Yet traditional estate planning either assumes this approach is effective, ignores that it’s not or simply doesn’t even grasp the issue.

Finally, we haven’t even touched on the virtually complete lack of financial disclosure by estate planning attorneys. With all the regulation and concern in the financial industry, it’s incredible that clients and advisors alike remain mostly in the dark about the economics of the estate planning process.

It’s time we took a closer look at the process.  Each of the big picture issues facing estate planning reviewed here can and should be addressed. Whoever “they” were that created the traditional approach, it’s clearly now up to us to do something about it!

What’s required first is a change in our mindset.  As Stephen Covey suggests, the best approach is to “begin with the end in mind.” It’s not about documents, it’s about results. Let’s talk with our clients about their real issues, and what they want to accomplish. Only then can we design an estate planning system that produces plans that “work.”