Re-thinking Your Estate Plan

By Brandon Rains, J.D.
From the Winter 2019 Journal of the Colorado Dental Association

When I say the words “estate plan,” what first comes to mind?  I will go out on a limb and say that you may have thought something like, “a way to pass on my money to my loved ones after I die.” If you thought something along those lines, you are absolutely correct. More specifically, a normal estate plan will do two things: 1. protect and provide for you and your loved ones if you are ever mentally incapacitated (this is a related topic for another day, but who will step in and run your practice if you become mentally unable to run it yourself?); 2. give what you have to who you want, how you want, and when you want.

A Broader Picture
Let’s say a couple died with $2M. They had two children; one is a dentist and the other is a drug addict. The couple split their estate 50/50, and each child receives $1M in a trust designed to maximize the protection of their respective inheritances. There are perfectly valid estate planning reasons to treat the dentist and the drug addict exactly the same, which the couple decided to do. Now, how do you think the dentist child will feel when she finds out that she is being treated the same way as her drug addict sibling?

Of course, estate planning reasons for equal treatment is not the same as practical, life situation reasons. The couple may have wanted to protect the dentist’s inheritance from the possibility of divorce or bankruptcy, while they wanted to protect the drug addict’s inheritance from himself.  If the couple never expresses why they did what they did, their dentist will have no insight into their motivations and may feel that her parents judged her as being as untrustworthy as her sibling. This conclusion can damage both how the dentist remembers her parents and the dentist’s relationship with her brother, perhaps irretrievably.

Let’s go back to what a normal estate plan should do: what, who, how, when. Did you notice that a normal estate plan doesn’t include, “why?” Is the “why” of an estate plan even important?

The “Why” of An Estate Plan
In a survey of thousands of heirs over decades, it was found that around 80% of heirs viewed their inheritance as having been a burden in their lives.[1] A researcher at Ohio State found that one-third of Americans have negative savings within 24 months of receiving an inheritance.[2] The money got to the descendants perfectly fine, but it failed to benefit and enrich their lives. Most even called it a detriment.

Let me suggest that an estate plan that includes the why is the solution. In fact, studies have shown that when an heir feels loved, trusted, appreciated and grateful, those feelings can be an antidote to many of the problems associated with inheriting money.[3] The why of an estate plan may be as simple as, “we love you,” “this is what mattered to us,” or “we would love it if you made these positive decisions in your life,” but their impact can be deeply profound. Perhaps not surprisingly, the more the why is fleshed out, the better. What matters is that the why is expressed and recorded so that loved ones can remember what made you who you are and who you believe they can become.

The “why” of your estate plan transforms it into a purposeful estate plan.  This type of plan is meant to proactively share your values, life experiences, wisdom and admiration for your loved ones. A purposeful plan can be empowering, positive and enriching. It can, but does not need to, be connected to a distribution to pay for education or a house, for example. A purposeful plan allows you to continue teaching and sharing. It is not “controlling beyond the grave” (using money as a carrot and a stick at the same time to govern and control behavior), but instead appropriately uses money as a tool to give insights, teach lessons and help loved one become who you know they can be.

Dentists are thoughtful professionals who take great pride in their work and who often understand why they become dentists. Identifying and passing on your personal why is just as important as any professional mission statement.  It is what can turn a burden into a blessing for generations.

Brandon Rains, J.D. is an estate planning attorney who has a unique approach to his practice. He maintains a relationship with his clients long after his clients sign their documents, and he particularly enjoys helping his clients identify and pass on their values to loved ones. Contact Brandon at 720-528-4227 or brandon@rains-law.com.

[1] Goldstone, Hartley. Family Trusts that Preserve Family and Preserve Trust. The Global Family Offices Journal. www.ifoj16.globelawandbusiness.com, (December 2017).

[2] Summary of research found at www.marketwatch.com/story/one-in-three-americans-who-get-an-inheritance-blow-it-2015-09-03.

[3] Watkins, Philip C., Woodward, Kathrane, Stone, Tamara, and Kolts, Russell L. “Gratitude and Happiness: Development of a Measure of Gratitude, and Relationships with Subjective Well-Being.” Social Behavior and Personality, 2002, 31(5), 431-452. Emmons, Robert A. Thanks!: How the New Science of Gratitude Can Make You Happier. Houghton Mifflin Harcourt, 2007. Lyubomirsky, Sonja. The How of Happiness: A New Approach to Getting the Life You Want. Penguin Book, 2008.