A principle of good estate planning is that there is no “one size fits all” estate plan. Every estate plan should be customized for the particular needs and desires of a family or individual whether or not the estate is “taxable” (in 2012, over one million dollars for state estate tax purposes, or over five million dollars for federal estate tax purposes). This is especially true concerning estate planning for seniors. Nonetheless, many estate planners take a robotic approach to estate planning for seniors with non-taxable estates. As a result, oftentimes templated documents are used and the client becomes little more than a victim of word processing. To prove this, allow me to become a psychic for a few moments. Take a look at your will. It probably says something like the following: “I leave everything to my spouse, if he or she survives me, or if not, I leave everything to my children in equal shares, per stirpes. I appoint my spouse as my personal representative, or if not, I appoint my children as my personal representatives. I excuse my representative from posting bond”, and so forth. Am I correct? If so, you are possibly a victim of word processing and not a beneficiary of “best” estate planning.
But beyond mere customization of documents, because seniors with non-taxable estates currently do not have tax problems as much as they have long-term care and asset protection problems (this may change in the future depending upon the status of estate tax applicable exclusion amounts), estate planning for seniors with non-taxable estates should involve a philosophical analysis of the client’s particular goals and desires, to include the following considerations: (1) what is the state of the client’s health and/or the health of their spouse?; (2) does the client have a strong desire to protect their assets?; (3) is the desire for asset protection secondary to the desire to maintain current lifestyle and total control of assets for as long as possible?; (4) how does the client feel about probate and/or avoiding probate?; (5) would the client like to protect their children’s (or other beneficiary’s) eventual shares from creditors, predators, and the ramifications of divorce?; and (6) Are there specific instructions about the client’s personal care and lifestyle choices that the client would like to make known in the event of incapacity? These few questions illustrate the kind of thinking that should go into the initial phases of estate planning and the considerations that ultimately dictate what type of planning is most appropriate. For example, where a client wishes to maintain complete control over their assets and has no desire to engage in a strategy to protect their assets from long-term care spend down, what I call “routine” estate planning (either simple or complex) would be appropriate. In those cases where a healthy spouse wants to maintain complete lifetime control of his or her assets but wants to protect the interests of their ill spouse in the event that they (the healthy spouse) were to die first, it would be appropriate to engage in some type of “intermediate” asset protection plan. And finally, where full asset protection planning is desired and appropriate, that type of estate planning should be implemented.
In summary, estate planning for seniors with non-taxable estates is not a simple proposition. On the contrary, such planning should involve complex considerations based upon all available facts and best assumptions to achieve the goals of the client(s). If you have been a victim of word processing, consider having your estate plan reviewed so that you afford yourself the opportunity to thoughtfully consider all of the choices available to you in modern elder law and estate planning for your best estate planning.