May 30, 2011

Estate Planning Checklist

People often ask me what is estate planning and what does the process entail? Since the former question is a little bit too broad to explain in a blog post, I will attempt to answer the latter question. The following is the process I have used for the past couple of years. 

1. Meet with Clients 

At the initial meeting, I meet with clients to go over the truths, half-truths and outright myths that are associated with estate planning. For example, I am repeatedly told by potential clients that they do not want the government to inherit their estate, which rarely happens, or that a client has heard that a self-settled living trust will shield assets from lawsuits, a complete myth.

We usually go over what is included in the typical estate plan: a trust, a will, a power of attorney and an advance health care directive. Typically a client will insist that they need to write a trust because they saw a flyer for an estate planning seminar that exaggerated the benefits of a living trust. Yet a will, rather than a trust, is perfectly suitable for somebody with a modest estate with no children or a home because of non-probate transfers.

We also go over how long the process will take. I tell clients that I can go as fast as they want me to go. If they provide me with the necessary information I can draft the documents in a morning or an afternoon. For example, one client insisted that I complete everything in 1 week because he was leaving the country for an indefinite period of time. 1 week after coming into my office for that initial consultation, he signed the necessary documents in the morning and boarded a plane in the afternoon, never to be heard from again. No, not really. He was vacationing in the Middle East. 

2. Review Documents 

Once I receive all the necessary information, I am then able to draft all the documents. Of note, most people take on average a month or two to complete my estate planning questionnaire.

I then go over these documents with the clients. I am happy to review each document page-by-page but most clients find reading a will or trust to be quite tedious. For example, upon initial examination, most clients discover that a will or trust is a lengthy and complex document. To date, there has only been one client who has insisted that we go over everything in detail. His occupation was an engineer for reference. I should mention that lacking the desire to read a lengthy document written in legalese is an activity frowned upon by even prominent members of the legal community. Richard Posner, Chief Judge of the 7th Circuit Court of Appeals, a pre-eminent authority on contract law, said that when he received his 100-page home equity loan contract he surprisingly signed it without reading it because he had a life.

Also during this second meeting, I often highlight the distribution clauses in the trusts and wills because that is what concerns people the most typically, namely who will inherit their estate and who is in charge of the distribution. 

3. Sign Documents 

The final stage in the 3-step process is to formally execute the documents. This is by far the shortest meeting of the 3. The entire process takes about 15 minutes. If needed, I arrange for my notary to come to my office or the client’s home so that we have the appropriate parties present. There is no California law which mandates that a trust or certificate of trust be notarized rather it is notarized out of custom. However, a deed transferring the client’s home requires notarization.

Once the signing is complete, I provide the clients with all the executed documents for safekeeping. It is not my policy to safe keep the estate planning documents, instead I tell the clients to keep the items in a secure place such as a safe deposit box. The only document I do retain is the deed to the home. If the home is located in Santa Clara County, I personally record the document because it is a short drive from my office to the County office building. If the home is located outside Santa Clara County, I mail the document to that recorder. Approximately 4-6 weeks later, the recorded deed will be delivered to the client’s home.