Don't Let the Cart Get Before the Horse in Estate Planning

Don't Let the Cart Get Before the Horse in Estate Planning

By Melinda Gustafson Gervasi

April 8, 2024

The expression "don't let the cart get before the horse" comes to my mind most weeks at the office; clients approach estate planning in the wrong order. All too often a new client will say "I need a trust", usually because someone without a legal degree has told them they need one.  Gently I re-direct the clients to talk about their goals and wishes in estate planning.  Establish the wants first, then figure out which tool to use.  Sometimes it may be a trust, other times it may be a completely different estate planning device, such as a will or a transfer on death deed.

For example:

What is your goal of estate planning?

• To organize my affairs and keep things as simple as possible for my loved ones when I die, OR
• To shelter my assets for my minor children to ensure they have funds to get them to adulthood, OR
• To minimize any tax liability I may have upon my death, OR
• To control my assets after death so that a second spouse can enjoy them until s/he dies and then they pass to my children from my first marriage

Note the use of "or", having one or two goals is manageable and helps you steer the course while creating or updating an estate plan. Too many goals can cause a log jam.  

What financial situations might develop?

• Is there a mortgage on your personal residence or family cabin that needs to be paid off at your death?
• How will funeral expenses be paid?
• What income or property tax liabilities might you have to pay at the end of your life?
• Who will pay the income taxes on qualified retirement plans (your typical IRA for example)?

These are just a few factors to consider when figuring out where and how to leave your assets.

What estate planning tool should you use?

• Wills are instruments that tell a probate court where your assets that do not have a named beneficiary or a co-owner should go at your death;
• Direct transfers, meaning they go directly to the named be person(s) without going through probate include: trusts, co-ownership, named beneficiary, and TOD deeds (among others).

Not all tools are the same -- some are more complex and expensive than others.  Keep in mind that an expensive tool is not always best, it can sometimes be unwieldly and cause more harm than good.

As you think about estate planning, remember not to put the cart before the horse.  Think about your goals, seek counsel from a lawyer in your state that focuses on estate planning and probate, and move towards your goals with the best tool available.

A blog is not a substitute for a lawyer, it is meant to spark thought and reflection and is not leave advice.  Thanks for reading, and be well!

Horse with Cart, image by M. Gustafson Gervasi, Inishmore, Aran Islands, west coast of Ireland