Explanation of Concept
The goal is to create a simple tracking tool to avoid losing sight of the big picture.
Think horizontal timeline, with hash marks representing various points in time. At certain intervals which you select, you enter the date, draw a line up from the date, and enter a few notations about the situation as it then exists. Then you return at the next interval, show the date, enter notations about the changed situation, and chart your progress. Imagine a timeline charting your progress chipping away at the projected estate tax burden at your death – are you making any progress? Have you measured your progress?
- Imagine a timeline charting
- your investment progress and
- your plans for beneficiaries when you die
- net of taxes and debts, if any,
- after illiquid assets, if any, have been liquidated –
Do you have a concise picture of what each beneficiary will receive and how?
Have the projected benefits changed over time?
How comfortable are you with what each receives?
Imagine that you have decided to make special provisions for a beneficiary, such as your spouse or a child, to address special concerns, and that you have created a timeline to chart your progress over time.
- Are you gradually making your estate plan more effective or less?
- Have you kept track of and measured your progress?
- Is there a way to help make systematic progress – to be reassured that you are in fact moving forward, not falling behind?
The Family Vision Snapshot – as of a given date, show:
- assets and liabilities
- projected estate taxes as of that that date
- projected liquidity
- diagram: estate plan overview
- your Family Vision Statement and what you identified as the greatest dangers you are facing as of that date, as well as what you identified as your top goals or opportunities
Then set a future date to re-run the analysis and measure progress. Changes can result from:
- asset growth (or decline)
- changes in tax laws
- changes in how you plan to dispose of your assets (affecting the marital and/or charitable deductions)
- changes you have made in how beneficiaries are provided for (from creation of new strategies to benefit children, for example, or charitable endeavors)
MOST IMPORTANTLY, actions you have taken, intending to make progress, such as
- a program of gifts to children aimed at reducing estate tax, or
- initiating a charitable fund, allowing you to test your ideas while you are still alive and see if your unique charitable plans make sense or should be revised and enhanced in light of your lifetime experience with initial efforts
Create a binder which is highly focused on this overview analysis.
- Dynamic tool – we keep it updated for you
- We keep a parallel binder for ourselves, so we can help you make sure yours is always updated and “thinned out.”
- Option to create one for third parties: other members of your financial/estate planning team, key family members, key successor who you want to keep in the loop.
- Liberal use of diagrams and very simple top level tables, supported by financial spreadsheets.
- This binder is separate from your One Source Book™, which manages documents, including estate planning documents, assets, beneficiary designations.
Option to track progress in closely held business interests or other special assets:
- One of a kind criteria selected by you
- Gathering and cataloging key documents describing your ownership rights:
- articles of incorporation, bylaws, stock/ownership certificates, LLC operating agreements, partnership agreements, stock transfer agreements and other restrictions on transfer as well as contractual market for your stock or other investment upon certain events, such as your death or disability
- ownership ledgers charting your % share and progress in moving ownership to the next generation
- lists of directors and officers3.) Tracking debt of the entity guaranteed by you and arrangements for your indemnification as well as your inter-creditor agreements with others who are liable with you as guarantor.4.) Summaries of the strategic position and plans for growth or resolution of a business5.) Ownership succession plans and charted progress6.) Management succession plans and charted progress
Option to track progress in providing for a special situation such as a child, where there is concern:
Example #1: to provide a certain measure of safety net
- record your statement of the situation AND THEN REVISIT, noting changes, so you can document why you set things up as you did and note the often inevitable changes in the situation over time
- diagram your plan for a child, recap all trusts and other gifts, including outright and those completed during lifetime, and summarize in one diagram, with numbers, the projected benefits for the child (cumulative total) AND THEN MONITOR PROGRESS OVER TIME
Example #2: where you anticipate friction among surviving children
- creation of separate trusts during lifetime intended to minimize the further division following your death
- steps to use a third party as trustee
- monitor ownership and management succession plans (closely held business)
- review durable powers of attorney, health care powers of attorney and other successor provisions
Option to track progress in special provisions for your spouse (after your death):
Example #1: out of concern for your spouse’s well being due to financial (investment) inexperience
Example #2: out of concern for your spouse’s status as a second spouse versus your children by a prior
marriage and your goal of keeping very clean, separate provisions for each
Option to track life insurance and related trust:
- vigilance over ”Crummey” notices so that premium payments do not accidentally eat up lifetime exemption from estate tax
- monitor regular review of policy performance by a life insurance professional – the very typical danger of failure to monitor a policy (especially variable policies with investment component and ability to borrow automatically)
- monitor original need for the coverage and on-going adequacy or necessity of coverage
© 2014 by Stephen J. Smith
creator, The Family Vision Experience™