The Wealth & Wisdom Blog

At age 94, and with a net worth of approximately $147 billion, it is appropriate that Warren Buffett has given considerable thought to his personal estate plan. Just a few months ago, Buffett provided estate planning advice to fellow Berkshire Hathaway shareholders.  In this month’s update, I comment on Buffett’s views on communicating an estate plan to one’s family during lifetime.  In a subsequent advisory update, I will respond to some of Buffett’s other estate planning suggestions.

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SUE AND BOB CLIENT ESTATE PLAN

1. BENEFICIARIES

Following First Death: The deceased spouse’s assets managed in a trust for surviving spouse’s needs.  Surviving spouse owns and controls surviving spouse’s assets.

Following Second Death: Gifts of $100,000 made to each of 5 grandchildren, a gift of $100,000 made to First Lutheran Church, with all remaining assets divided equally between three children, Don, Joan, and Heidi.

2. KEY LEGAL ROLES

• Financial Power of Attorney: Your attorney in fact has the legal authority to make financial decisions for you during your lifetime.  Spouse, otherwise Heidi.
• Health Care: Your health care agent has the legal authority to make health care decisions if neither of you can act. Spouse, otherwise Don.
• Personal Representative/Executor: Your personal representative implements your directions following death. Spouse, otherwise Don.
• Trustee: A trustee would manage any ongoing testamentary trusts established for grandchildren following the second death.   Joan is named.

3. PROFESSIONAL ADVISORS

Financial Advisor: Johnson Financial Group

CPA: East & West, CPA.

Attorney: Veritage Law Group

Broaching political topics at Thanksgiving with your family may not lead to great holiday cheer. In comparison, a discussion centered around your own death—that is, your estate plan—may be far more palatable.  In this month’s advisory update, I provide a few general recommendations about what information that you and your clients could share with your family about your estate plan.

Information To Share Now

If you were a client of our firm, we would likely encourage you to share the following information with your family:

• The key individuals, or “fiduciary,” appointments that comprise your estate plan.
• Your plan for the distribution of unique, difficult-to-value, or perhaps even “indivisible” assets, such as valuable artwork, a family cabin, or a business.
• The identity of your professional advisors.
• The physical location of your legal documents.
• The whereabouts of a current financial statement, a list of your current service providers and summary of your online accounts.¹

Information To Withhold

In contrast, you might withhold information in certain circumstances.

• If you have concerns about a child’s personal career progression, you might withhold disclosure of your personal finances. A future financial inheritance should not be an impediment towards a child’s goals of self-sufficiency.
• If you have made disproportionate gifts among your children or their families, you might withhold disclosure, at least for now, of any such disproportionate gifts. We recommend that your estate plan expressly direct how any disproportionate lifetime gifts should be treated at your death.

Benefits of Communicating the Plan

At least three key benefits result from clearly communicating your plan during lifetime.

• Legal Certainty: First, you would be certain that the estate plan will not be subject to a legal challenge.² If you have adequately communicated your estate plan to your children at a time when you have no evidence of undue influence or diminished capacity, you will have a “bullet proof” legal plan.
• Desired Asset Distribution Format Among Children: Second, adequate communication allows for easy and prompt changes to your estate plan when life changes. A plan for the division of the family cabin can easily be reconsidered when a son announces that he and his wife have bought their own family cabin, or a daughter takes a new job and moves from Minnesota to New York.
• Clearance of Emotional Baggage: Third, adequate communication creates an opening for children to respond to you, now, over the Thanksgiving dinner table, and not respond with animus towards their siblings, later, after your death and over your coffin.

Unlike the drama that surrounds political candidates and elections, your estate plan should be free from unnecessary drama.

Minnesota Vikings fans know that no lead against the Green Bay Packers is safe. The Vikings nearly blew their 28-0 lead this past weekend, prevailing by a score of 31-29.  Bragging rights over the rival Packers will certainly be short-lived, as the Vikings and Packers will play again on December 29^th.  As the holder of a Wisconsin law license, I have been honored to work with many Wisconsin residents, who agree to work with me even after my disclosure of my Vikings loyalties.

In honor of the Vikings-Packers rivalry, in this month’s update I share three unique elements of Wisconsin estate planning:

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