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Sunday, July 15, 2007

The Emotional Side of Estate Planning

There is a definite emotional side to planning your estate. Although I always advise my own clients to regularly update their plans, I (ahem!) realized that my own plan was significantly outdated. As I prepared my own trust I felt the pit in my own stomach, thinking about my own demise.

Yes, attorneys are sometimes the last to take their own advice.

But I am very glad that I put myself through this. It made me sensitive to the procrastination I see in my own clients and especially prospective clients, who have yet to take the plunge. I can now say: I've been there...

How do we deal with this? How do we get over our initial feelings of uncertainty and, even fear of acting? First, remember this: While "emergency" plans are sometimes necessary, estate planning is really for healthy people! The best time to plan is when you are under no emergency or peril.

Second, we do not plan for ourselves, as much as much as we plan for our loved ones. Many estate planning issues are designed to benefit those who we love. Therefore, think of estate planning as a gift to your children and heirs, and try not to think of it as drudgery.

Third, it is generally very dangerous to do this without the assistance of an attorney. While legal forms and do-it-yourself programs and websites abound, you get what you pay for in estate planning.

And if you do it wrong, or if you do it incorrectly, there are rarely second chances.

I know a family who engaged in some do-it-yourself planning, and gifted parental property to the children to avoid probate. When mom passed away, guess what? They probably at first thought that they were saving some "bucks" on attorney fees, but as a result they owed thousands in capital gains taxes. A properly prepared trust might have avoided this result.

So, while there is certainly an emotional component to planning your estate, think of it as a business transaction -- to avoid the costs of probate, to reduce the sometimes inevitable tax burden, and especially for your own peace of mind.


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