Estate Planning Awareness Month, which at De Fonte Law PC is every month, is the perfect time to explore why estate planning is essential not only for you but also for the people in your life. Whether you wish to protect your assets and your family’s future or are a professional working closely with clients who need estate planning, this comprehensive guide is for you.
Why You Should Tell Two Friends About Estate Planning
Estate planning is for everyone—not just the wealthy. This Estate Planning Awareness Month, I have a simple favor to ask:
Can you tell two friends?
If you tell two friends, and they tell two friends, and so on, we can help make estate planning a priority for many more people. Imagine the positive impact:
- No more GoFundMe requests when someone passes away unexpectedly without a plan.
- No probate headaches for loved ones. A properly funded revocable trust means privacy and reduced court costs.
- Control from the grave. Imagine your wishes being carried out exactly as you want them to be – protecting your family, promoting harmony, and ensuring your assets are managed correctly.
The statistics vary, but generally, only 30% of American adults have an estate plan. That means that 70% are vulnerable to conservatorship and probate.
Let’s work together to normalize estate planning for everyone. Estate planning isn’t just for the wealthy or elderly. It’s for anyone who cares about their loved ones, their future, and their assets.
The Domino Effect of Estate Planning: It’s About More Than Just Documents
You might think the most satisfying moment for an estate planning attorney is when a client signs their documents, but for me, the real success comes from ensuring the people in my clients’ lives are taken care of as well.
At De Fonte Law PC, we go beyond simply producing documents. My team and I aim to make estate planning a full-circle experience for our clients. How do we do that? By asking detailed questions and looking beyond just the client’s immediate needs:
- Checking parents’ deeds: We use databases to verify whether parents’ homes are in a trust, offering referrals to estate planning attorneys across the country if necessary.
- Verifying guardians: We ask our clients to confirm that their chosen guardians for their minor children have fully funded revocable trusts, life insurance, and umbrella insurance.
- Helping business owners: If our clients are co-owners of a business or property, we provide referrals for estate planning for their partners. It’s crucial to ensure all parties are prepared.
- Assisting real estate owners: Many people in smaller buildings assume they don’t need estate planning. However, when you own property – even if it’s just the air within your four walls – you’re in business with other owners, and you all need a revocable trust to avoid probate. Even people who have purchased single-family homes have often vested their interest in the property in ways that are not tax efficient or do not meet the intended goal.
I see estate planning as a domino effect. When my clients engage in proper planning, it benefits their families, partners, and anyone else who might depend on them or whom they rely upon. The ripple effect is what makes estate planning so powerful.
Busting the Myths About Estate Planning
Here are five key misconceptions about estate planning and why they’re wrong:
- Myth: Estate planning is only for the wealthy
Reality: Estate planning is essential for anyone who wants to protect their family and control their assets. Even if you don’t have significant wealth, an estate plan ensures your wishes are carried out, and your loved ones are protected. I worry less about a very wealthy family—they can afford conservatorship and probate. A middle-class family will likely suffer the loss of the family home if the worst happens and that home is not in a trust. - Myth: A will avoids probate
Reality: A will still has to go through the probate process, which can be time-consuming and costly. A revocable trust is often a better strategy to avoid probate entirely. - Myth: Estate planning is a one-time event
Reality: Estate plans should be reviewed and updated regularly, especially after major life events like marriage, births, deaths, or significant changes in assets. - Myth: If I’m young or healthy, I don’t need an estate plan
Reality: Unexpected events like accidents or illness can happen at any age. It’s crucial to have a plan in place to ensure your wishes are followed, no matter what happens. - Myth: A trust only benefits beneficiaries after death
Reality: A revocable living trust can manage your assets while you’re alive and provide protection if you become incapacitated. It offers flexibility and control that a will alone doesn’t.
California’s Default Estate Plan: Why You Need to Opt Out
If you haven’t created a customized estate plan, California has a default plan for you, and it’s not something you want to rely on. This default system can be expensive, chaotic, and may not reflect your wishes.
- Conservatorship: If you become incapacitated, a judge will appoint someone to make decisions about your healthcare and finances. This public process can be long and expensive.
- Probate: If you pass away without a trust, your estate will go through probate—a costly and time-consuming process that can drain your assets.
- Child Protective Services: If you have minor children and haven’t designated a guardian, your children could be placed in temporary care by CPS until a judge decides what’s in their best interest.
The solution is simple: opt out of California’s chaotic default estate plan by creating your own. A properly drafted estate plan ensures your wishes are carried out and that your family avoids unnecessary costs and delays.
The Pitfalls of DIY Estate Planning
We all love a good DIY project. But estate planning is not one of those areas where you should go it alone. DIY estate planning can create more problems than it solves.
Here’s why DIY planning is risky:
- Improperly funded trusts: Most DIY estate plans fail to fund the trust properly, which means assets could still end up in probate.
- No appointed guardians for minor children: If you don’t name guardians, a judge will decide who cares for your children.
- Business interests left unmanaged: DIY plans often fail to address complex issues like business ownership or real estate, leaving these assets unprotected.
At my firm, we spend hours with our clients, walking them through every decision to ensure their plan works for their unique situation. Most clients change their minds about who they want as agents or successors during this process. A well-trained estate planning attorney helps uncover the best solutions—not just fill in the blanks like a DIY template.
Estate Planning Tips for Professional Referral Partners
As a professional referral partner – whether you’re a financial planner, CPA, real estate agent, or insurance broker – you play a vital role in guiding your clients toward estate planning. Here are some tips and tricks for making estate planning a natural part of the conversation with your clients.
Tip #1: Frame Estate Planning as Financial Protection
Estate planning is an extension of the financial planning you already do with your clients. Help them understand that:
- It’s not just about death: Estate planning also covers issues like managing assets during life and ensuring healthcare decisions are carried out as they wish.
- Probate costs can be a huge financial drain: By creating a revocable trust, clients can protect their wealth from unnecessary legal costs and court fees.
- Ask simple questions: “Do you have an estate plan in place?” This can be a great conversation starter and shows that you’re concerned about their full financial picture.
Tip #2: Use Life Events as Triggers
Major life events are the perfect opportunity to bring up estate planning. For example:
- Marriage, divorce, or children: These are natural moments to revisit a client’s estate plan to ensure their wishes align with their new life circumstances.
- Retirement: Many clients neglect estate planning as they approach retirement, but this is the ideal time to ensure their legacy is protected.
- Real estate transactions: Buying or selling property is a great time to talk about including real estate in an estate plan.
You’re often the first to hear about these life changes, making you the ideal person to guide clients to an estate planning attorney.
Tip #3: Normalize Estate Planning Conversations
Many clients find estate planning uncomfortable. But as their trusted advisor, you can help normalize these discussions:
- Focus on control and peace of mind: Remind clients that estate planning is about ensuring their wishes are carried out both during life and after death.
- Address the myth that estate planning is only for the wealthy: Every client, regardless of their assets, needs an estate plan to avoid probate and protect their family.
- Introduce the idea early: Make estate planning a routine part of your conversations with clients. It shows you’re looking out for their comprehensive financial health.
Tip #4: Collaborate with Estate Planning Attorneys
Estate planning is a team effort, and clients benefit most when their financial planner, CPA, and estate planning attorney work together:
- Share client information with permission: By coordinating with an estate planning attorney, we can ensure the client’s financial and legal goals are aligned.
- Ask for referrals for loved ones: Encourage clients to check that their family members, business partners, and co-owners are also covered by estate plans. Estate planning should protect everyone who depends on them.
Tip #5: Bust the Myths
You can play a crucial role in debunking common estate planning myths for your clients:
- “Estate planning is only for the wealthy.”
Let clients know that estate planning is about protection and control—not just wealth management. - “A will avoids probate.”
Explain that a revocable trust, not a will, is the best way to avoid probate and its associated costs.
Why Estate Planning Is Ongoing—Not One-and-Done
One of the biggest mistakes clients make is thinking that estate planning is a “one-and-done” process. In reality, it’s essential to review and update estate plans regularly. Why?
- Circumstances change: New marriages, children, business interests, and financial shifts all require updates to an estate plan.
- Laws change: Recent changes like Prop 19 in California or new inheritance rules for retirement accounts mean clients may need to adjust their plans to avoid unintended consequences.
At my firm, we reach out to clients every three years to make sure their estate plans are up to date. Estate planning attorneys should do more than draft documents—we should be there for clients as life evolves.
Estate Planning Awareness Month: Take Action Today
As we celebrate Estate Planning Awareness Month, now is the perfect time to take action. Whether you’re a client looking to protect your family and assets or a professional helping clients navigate estate planning, now is the time to make estate planning a priority.
If you have any questions or want to start the estate planning process, reach out to me at De Fonte Law PC. Let’s work together to create peace of mind for you and your loved ones.
