How to Choose the Right Estate Planning Training Program

Estate planning training should be comprised of three broad areas: [1] defining estate planning so the reader knows topic parameters, [2] what it entails-documents and parties involved and [3] how planning can maximize an estate's value-either through providing protection or reducing taxation. The objective of many estate planning courses is to fulfill a client's needs. For over 98% of your clients, this means a package of documents:  living trust, pourover will, powers of attorney and a living will.

Living Trust
Used by those who wish to control their estate "from beyond the grave" and/or who want estate disposition to be straightforward and easy with no court or attorney intervention. Generally, a will is a much simpler document but it may not avoid the costs or delays of probate. Probate typically costs the estate thousands or tens of thousands of dollars and often ties up assets for close to a year or longer. A will does not give its creator the ability to distribute assets after death-meaning there can be no provision such as "Johnny gets $40,000 provided he graduates from an accredited college before the year 2016."

The main reasons people use a living trust are: [1] it can be revoked at any time prior to death (or mental incapacity) at no cost, [2] probate avoidance, [3] contesting distribution is extremely rare, [4] no ongoing or annual costs, [5] the cost of drafting a living trust are frequently in the $600 to $1,600 range (the price usually includes all ancillary documents such as powers of attorney, a living will and pourover will) [6] it is the only way one can ensure that loved ones are provided for based on certain future events or circumstances and [7] it is a document easily understood and modified if needed. Most estate planning courses cover living trusts with sufficient detail.

Pourover Will
Typically, a will has limited benefit if there is a living trust. Still, a pourover will can be useful since a trust can only control assets titled in the name of the trust (e.g., title to a house under the name, "Bill and Betty Smith, trustees of the Smith Family Trust, dated 6-15-2005"-the trust has no control or influence over assets not owned by the trust, unless there is a pourover will).

The best way to view a pourover will is to think of it as a document that says, "I may have forget to include a checking account or title to a piece of property in the trust (because I didn't retitle the asset), but I want those assets to be poured into the trust and dealt with as per the trust's terms." Again, fairly basic estate planning training will cover the use of this very simple and short document.

Powers of Attorney
A legitimate fear of clients is incapacity; the inability to act for oneself because of a physical or mental limitation. Enter a power of attorney. A power of attorney can cover health care, the quality of caregivers, financial matters and the overall day-to-day decisions of an individual. The power assures that someone acts on your behalf if you are unable to do so. Mr. Smith may be concerned that his kids will put him in a tent in the backyard if he needs long-term care instead of spending part of their inheritance for professional care. Thus, Mr. Smith can have a power of attorney (the power being given to a third person) stating, "If I need long-term health care, I want to stay at the Luxurious and Expensive Health Haven in San Diego, with a private room and two full-time nurses coupled with the most costly ‘monthly patient package' available until there is full recovery or my death."

Living Will
Estate planning training points out that most, but not all, of your clients will be interested in a living will (a "pull the plug") provision. Either for religious or other reasons, some people believe it is wrong to terminate life under any circumstance. A living will requires approval from two doctors that the patient is not going to recover. The living will should name someone the client is confident will exercise such a power if needed. The notion of giving the directive to end someone's life can be very difficult for a loved one to make, regardless of the patient's condition or possible ongoing suffering.  Estate planning courses typically spend little time on living wills, but this is an important document that can ease suffering and save money (since it is rarely in a hospital's best interest to end use of life-machine-type devices).

Life Insurance
Estate planning education offered by the insurance industry often emphasizes use of life insurance in the planning process. The reality is that a very small percentage of your clients will need such coverage; if no estate tax liability is expected (surviving spouse to inherit and/or size of estate is less than a few million dollars), insurance becomes a luxury to those who want to leave more money to loved ones. There is also the rare situation wherein cash flow or asset disposition becomes difficult. Still, if life insurance is needed, proper estate planning training will showcase the advantages of using an irrevocable life insurance trust (ILIT). An ILIT ensures that death benefits are not part of the estate (since the policy is owned by an irrevocable trust), thereby providing cash free from income or estate taxation.

The Whole Picture
Estate planning courses, whether under the guise of estate planning training or estate planning education, can provide the advisor with all the tools necessary to help a client obtain the desired disposition of their estate during life or after death. Estate planning can be complex, but does not have to be; advanced courses cover special trusts and planning techniques that are clearly applicable to well under 1% of most advisors' clients.