The “3 P’s” of Estate Planning

Just like cleaning the garage, many of us are very content to procrastinate when it comes to completing our estate plans. Like the garage, we may be overwhelmed and need a nudge to get started. It is the same with estate planning. Your first step is to understand the “Three P’s” — People, Property, and Plans — and how they relate to your unique circumstances.

People

This should be rather straightforward: identify the most important people in your life. Start with yourself, your spouse (if married), children, grandchildren, your parents, in-laws, siblings and other family members or close friends.

Next, list any charities, special causes, schools, or faith organizations that are important to you. Take the time to consider the positive impact that others have had on your life. Any pets? Do not forget those “friends” whether they have feathers, fins, or fur. Start making that list and take notes, if helpful. This is where the planning process (and fun) really starts.

Property

Inventory your assets in general, not every dollar or heirloom. Start by creating a list of the assets you own or control. Do not worry about the specific account numbers or dollar values. All you need is a rough estimate of what you have.

For example, list cash, stocks, bonds, and real estate, along with their round number values.  You should also note whether you own a given assets in “joint tenancy” or as a “tenant in common” with someone else. While you are at it, identify any wills, trust agreements, life insurance (the death benefit, not the cash value), business interests and any inheritances you may receive.

Plans

Next, think about the plans you want to make for the people on your list (including yourself) and what should be done with the inventoried assets, if you become incapacitated or at your death. This is where the heavy lifting comes in (thinking-wise).

Here are some important questions to consider:

  • Who do you want to make your personal, health care, and financial decisions, if you become incapacitated due to an injury, illness or old age?
  • Who do you want to raise your minor children, if orphaned?
  • How do you want your assets distributed to your loved ones and charities?
  • Do you need to provide for someone in your family with special needs?
  • Do you need to protect the inheritance from some of your loved ones, as well as for them?

It is true that squandering, divorces, lawsuits and even bankruptcies have devoured many inheritances, when left to irresponsible heirs. Careful planning can help make sure that an inheritance is a blessing and not a curse.

  • Do you want your estate to avoid or pass through probate? Do you know the difference?
  • Do you need to minimize estate taxes and maximize the elimination of capital gains taxes?
  • Would you rather be a “voluntary philanthropist” versus an “involuntary philanthropist” when choosing which assets to benefit your favorite people and causes?

This is a short list of the considerations you should address when approaching the estate planning process. In the end, these “Three P’s” will help you enjoy estate planning peace of mind. The garage can wait … for now.

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