Why this book?
During the 35 years I practiced estate planning law, I spent many hours with clients explaining state and federal law, probate, Wills, taxes, contracts, beneficiary designations, Trusts, various forms of ownership, and how these together formed the clients’ estate plans.
Clients could rarely absorb all this important but unfamiliar information after one or two meetings. (This is a fact that many lawyers do not recognize!) The clients might walk out of the office semi-understanding the plan, and later realize, perhaps with some embarrassment, that they were not quite clear about the function of the elements and how they worked together. Out of embarrassment, or fear of increasing their legal fees, they might hesitate to ask follow up questions.
A client who is foggy on the function of the components of the estate plan and unwilling to ask follow up questions is vulnerable to being swayed by friends and other influences. Such a client might exercise self-help--creating joint accounts, giving assets to minors, rewriting documents. In doing so, a client can disinherit a loved one, skew the distribution of the estate, create a tax burden, or make the process of settling the estate needlessly complicated (and much more expensive).
Or, a client can achieve these results by following bad advice. Bad advice is advice that does not fit your assets and your wishes. Note: advice that is bad for you may be good for others. Advice, even from financial professionals like brokers, insurance advisers or financial planners, can be good or bad, depending on your assets and your wishes; thus, if it changes the disposition of your assets, you should have your estate planning attorney evaluate the advice in the context of your full estate plan. Reading this book will sensitize you to advice that can affect the disposition of your assets.
What this book is, and is not
This book presents estate planning principles through fictional conversations about very real problems, to show in a memorable and, I hope, clear, way how the parts of the estate plan work individually and together. Other books explain. This book attempts to illustrate.
Many of the invented conversations in this book occur in the office of Rebecca Dalton, a (fictional) lawyer specializing in estates and trusts law (often called T&E, as that is easier to say than “E&T”). She took over the law practice of Ben Morgan when he retired. Some conversations are between Ben and his walking buddy, Roger Bailey. And some of them are among friends, discussing what they have learned from one sad error or another.
Estate planning attorneys try to help clients leave their assets a) to whom they want, b) with appropriate people in charge, when the beneficiary is unable to manage money (and for other reasons), and c) to keep taxes at a minimum. This book focuses on the first two concerns.
This book is not about estate tax planning. As of 2020, the federal estate tax is imposed only when the taxable estate (plus lifetime taxable gifts) exceeds $11,580,000 (or, if the right steps are followed, a combined $23,160,000 for a married couple). This number is indexed for inflation, and increases annually. (For persons dying after 2025, this exemption will drop to $5 million per person, indexed for inflation.)
Hundreds of sources exist on planning to minimize estate taxes and other transfer taxes, but the subject matter is of greatest interest to advisers for that limited group of people wealthy enough to worry about the federal estate tax. This book may also be useful to people with assets in that range, but one hopes they have attorneys and accountants to help them with federal estate, gift, and generation-skipping transfer tax planning.
That being said, certain taxes are of interest to any client, and in two sections of this book you will find conversations involving income and capital gains tax. These types of taxes are incurred by many more of us than will ever have to worry about the federal estate, gift, or generation-skipping transfer tax.
My fervent hope is that this book will help the reader understand his or her estate plan, and be an active partner in maintaining it, to ensure that the reader’s assets flow to the intended beneficiaries, with the proper management, when death steps in.