Author: Michael

The Importance of Your Parents’ Estate Plan

A thoughtful estate plan can make your family’s lives easier. But it is your parents’ estate planning that will make your life easier.

Not every family has fostered the ability to speak openly in love–I’ve written about that necessity in the past. But if you have begun that process, here is an outline of what grown children need to know about their parents’ affairs. In fact, adults of any age should review their estate plan at least every 3 years.

Children may wish to ask their parents about their financial status but worry about being overly intrusive. Or they fear their elders may perceive their questions as motivated by self-interest. They may conclude mistakenly that their parents would prefer to keep their finances private.

However, whether it’s our parents or ourselves, we are all certainly mortal, so planning for the future is always wise. Estate planning is just as critical when we are young as when we get older. And if you think estate planning information is hard for YOU to pull together, imagine how challenging it would be for someone else who may have to step in for you during a family crisis.

As a parent, if you are willing to share some of this information with your children (or ask about it if you are a child)–especially if one of them is also the executor of the estate or trustee–they’ll appreciate having the facts and be more prepared emotionally when the time comes. They will know your wishes ultimately anyway, and good communication will lessen any surprises ahead of time. They will benefit from knowing the answers to the following questions:

Do you have enough saved for a comfortable retirement?
Many financial planners use a safe withdrawal rate by age to make sure their clients will still have enough money toward the end of their retirement. But this isn’t always the case, and it’s worth looking into.

If your spending is under this withdrawal rate, you have more than enough and probably can leave a family legacy. But if you are over this rate, you may run out of money and have to compromise your standard of living abruptly. It may be uncomfortable, even embarrassing, for parents to share their finances with their children, but grown children often want to know how their parents are doing.

Where are the important documents? The five documents your children should be able to retrieve quickly are a Michigan Will (and Trust if you have one), a Michigan Durable Power of Attorney, a Michigan Patient Advocate Designation, a directory of basic information, and the latest end-of-year financial statements.

The directory of information should list the assets of your estate along with account or policy numbers and contact phone numbers. It also helps to indicate your intentions for the distribution of each asset, which will help confirm you have the correct titling and beneficiary designations on every portion of your estate.  In my practice I refer to it as the Family Wealth Inventory or Asset Spreadsheet.

You may have structured your Michigan Will (or Trust) to divide your estate equally among your children. But if you have tried to make it easy for one child to access your bank accounts by adding his or her name, you have overridden your estate plan and left that child as a joint tenant.  This can be a problem.

Titling and beneficiary designations are legal estate planning actions. It’s best to review them with your legal adviser. Various types of assets are best designated differently in the estate plan. This is not the occasion for do-it-yourself thrift. It is a rare family that has compiled and reviewed a complete list of estate assets: bank accounts, investment accounts, retirement account, real estate holding, life insurance, health savings accounts and so on.

Are there any special distributions? Any promises you want kept should be documented. Your good intentions won’t matter if you aren’t around to implement them. If you have promised money to a charity and want that obligation kept, document it. If you have promised to loan a child money, document it. If you have promised to help fund your grandchildren’s college education, document that. Without documentation, none of these promises can be kept if you aren’t around to make the decisions.

Are there plans to remarry? If parents have remarried, inter-generational estate planning is even more critical. Prenuptial agreements and careful estate planning are required in the case of second marriages to avoid disinheriting children or grandchildren from the first marriage. The default is rarely a good option. I referenced this in a recent blog post that you can read here.

Do you have any prepaid funeral arrangements? Do you want to be buried or cremated? Do you have any preferences for a memorial service? Although it may seem macabre to plan your own funeral, a memorial service takes time and thought. It will be that much more special and comforting to your family when it is filled with your favorite music and readings.

Encourage your children’s interest in your estate planning.  And children encourage your parent’s interest in their own estate planning. . . you’ll be the one dealing with it. Most of the time, their intentions are honorable. They may simply want to understand your values and therefore your wishes.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Do You Have What It Takes To Do Your Own Estate Planning?

You know me, I’m not a fan of do-it-yourself estate planning.  Sure, part of that is because I’m an attorney who specializes in estate planning so it does take away from business (can’t say I’m dishonest!).  The bigger part is that I see and hear about the disastrous results of folks who write their own wills and other planning documents.  And it doesn’t seem to matter whether they pick up a piece of paper and write it or use one of the “cheap” online or software-based will creating services.  The results can be horrendous (and costly!).

So I thought I would share this quiz I ran across at MSN Money.  It tests your knowledge of estate planning, in theory to help you determine if you know enough to make your own will.  I have to admit I was a little nervous before I took it myself.  I mean, how embarrassing would it be if I didn’t do well on it?!  Thankfully, I did very well.  I actually got a chuckle when the results said, “Are you a lawyer? . . . you know your estate planning cold.”  Whew!  What a relief 🙂

What may shock you is that the average score was 52 out of 100.  Yes, just barely half of the questions right!  And yet almost everyone I meet seems to think they can do their own estate planning just fine.  Well, do you want to take a 50-50 chance with the legacy you will leave to your children and grandchildren?  I sure wouldn’t . . . especially if you have minor children who would need to have a guardian appointed!

I did notice that it seems to be based on 2009 law given some of the possible choices given for certain questions.  And, like so many areas of law, some of the “correct” answers are arguable.  Nonetheless, it is a fun test to give you a feel for what you know (or don’t know!).

So give it a try and share how you did.  And call our office for a FREE Peace of Mind Planning Session if your score leaves something to be desired (or even if you do well . . . remember it isn’t based on Michigan law).

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Recipes and Whole Family Wealth

A little while back I posted about Whole Family Wealth™ – what it is and why I believe it is the most fulfilling way for an and individual or family to plan for their future (click here to read the post).  A good friend of mine followed up with a suggestion for an addition to Whole Family Wealth Planning – family recipes.  What a great idea!  I thought the story was so good that I ought to share it with you:

To me, one of the biggest parts of a family’s memories and traditions is Mom’s recipes. By the time kids reach adulthood, cooking has usually changed dramatically from their childhood. This is probably true for just about any generation. But most kids fondly remember the things their mothers made when they were children.

I thought about this a few years ago. My sisters and I frequently laughed and remembered some of the things our mom made when we were little. Like most people, her version of many standard recipes had little idiosyncracies, and there were some things that were not standard. Like Glowacki Chicken (Mom named a lot of recipes after the person that had given them to her). She also used to make ketchup gravy for pork chops, dandelion greens (which I still can’t stand to this day but my sisters go over once a year for dandelion green dinner) and oxtails.

So a few years ago I decided to make each of my siblings a cookbook of all of mom’s old recipes. I took her main cookbook that she’d used for decades and went through picking out the ones I wanted. For each one, I asked her if it was correct as written or if she did something different. If different, I noted it in the margin. I also asked her for recipes that I remembered but didn’t find in the cookbook so I could write those down. She actually insisted on typing them out for me – to make sure she got them right.

I made copies of all the them and put them in tabbed 3-ring binders. My sisters and brother were really surprised and happy to get it. I just wanted to make sure that when my mom passes, I could still have her biscuits and gravy if I wanted.

And it would be my guess that she and her siblings would value those recipes as much (or more) than any financial inheritance they may receive.  See, the “intangible assets” we all have are far more valuable than any financial assets, yet very few individuals and families take the time to include the values, insights, stories and experiences in their planning . . . and few professionals make it a priority or even know how to do it.

What do you think?  What “intangible” do you miss most about your parents, grandparents, friends, etc.?  What “intangible” of yours would you most want your children and grandchildren to know about and benefit from?

Contact us today to begin creating a plan based on your Whole Family Wealth™.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Things My Clients Taught Me

I recently read a great post by an estate planning colleague of mine in Oregon, Candice Aiston. Because Candice and I work with clients in much the same, relationship-based way, it was no surprise to me that I’ve learned from my clients many of the same things she has learned from hers.  Given the hustle and bustle right now and my belief that I couldn’t improve on her excellent post, I’m re-posting it here for you with her permission.  Let me know what you think!

Things My Clients Taught Me

Every time I get through a client’s estate planning process, I leave having learned something new. I learn what’s important to them and I learn about the characteristics they have that make them so successful in life. Most families that plan with me record a message to their children, and as they talk to their kids, I gain so much insight about what is important to these families. The families are all different when it comes to wealth, religion, political stance, occupations, and interests/hobbies. But they all have a few different things in common that I’ve noticed over the past few years. The characteristics are apparent throughout our entire planning process. Here are a few:

1. It’s all about priorities.

My clients are all very successful, especially in their family lives. I think this is largely due to the fact that they all have their priorities in the right order. At our first meeting, I hear my clients talk about their families. They tell me how they met their partners and they tell me about their kids. Sometimes the meeting is very emotionally charged, because we face worst-case scenarios and talk about their worst fears. They are there because taking care of their family is a priority, even if they were no longer here. Most of them feel that they’ve put off the planning for too long, and that it’s time to finally get it done. The best story I have heard about priorities came from a colleague of mine, whose clients (parents of young children) decided to use their vacation savings to pay for their estate plan. They decided that the planning was so important that a vacation could wait a little longer. (I have to admit, that would be a tough one for me. Luckily, many attorneys out there have various payment plans available.) All of my clients have made it a priority that you take care of your family first. Everything else comes after that.

2. Plan for the worst, expect the best.

Many people put off important things like estate planning, retirement planning, financial planning, and family budgeting because it’s really tough to face these issues. It’s difficult to face worst-case scenarios in your own mind, let alone discuss them openly with your family. It’s even more of a task to find a professional and set up that first appointment. Sure, everyone is busy, but there’s an additional psychological barrier that makes parents want to fly by the seat of their pants when it comes to this stuff. We seem to think that if we don’t think about death and money that the bad things won’t happen. It is very common for people to be superstitious about estate planning in particular. The idea is that if we acknowledge death and make plans for it, then we’ve admitted that the worst is possible. As long as we ignore it, it won’t happen. The truth is that death weighs heavily on all of our minds and actually holds us back from truly being able to expect the best. Once we have gotten through the process of planning for the worst, that weight is lifted and we can focus on the other important things in our lives.

3. Do the best you can for the ones you love.

The clients I have don’t take information for granted. We all have heard people say, “I need a will,” or, “I need to get something in place.” One thing all of my clients have in common is that they came to the first meeting to learn. They didn’t come to the meeting to tell me what they needed; they came to learn what their situation looks like, and to learn about how they can do the best planning to care for their families. They had questions. They wanted all the facts on the table so that they could make decisions that would work best for their families. It’s not about checking something off of your “to do” list or doing something that everyone says you should do; it’s about doing the best you can for the ones you love.

4. Just do it.

No, I didn’t just throw this one in there because so many of my clients work for/with Nike. All of my clients are pretty good at just doing it. They are all able to weigh pros and cons quickly and get things done. Most of my clients are extremely busy people. If they’re anything like me, they’ve probably had to learn to quickly weigh the facts and make important decisions, because they need to get on with their lives! If they know they need the planning, and they feel that they like me and trust me, the decision is a quick one. (Without those factors in place, no one should make a decision to move forward. If your meeting with a professional leaves you feeling more confused than ever, or if you get a gut feeling that you should leave, then do it! You should only work with someone who makes you feel comfortable and confident. No professional is suited to work with everyone.)

5. Find a way to make it work.

You may be surprised to know that many of my clients weren’t able to just write me a check for the full cost of their planning services. Once they learned how badly they needed the planning, they did what they needed to do to make it work, including asking me if there were payment plans available. Like most things in life, once you’ve decided to make something work, there’s little that can deter you. If you feel that you can’t afford the full cost of services up front, ask your attorney about a payment plan.

It’s hard to know how to conclude this post. I’m sure I have a lot more to learn from my clients over time. Maybe they should charge me a fee for all of this wisdom that they bestow upon me. 🙂

Correcting a Death Certificate in Michigan

This is one of those things that you never really think about yet seems to come up with surprising frequency.  As a matter of fact, I hadn’t thought much about it until the conversation came up on an email listserv I belong to.  So here’s the quick explanation in case you or someone you know ends up in this situation.

The best part is that the “what to do” part is relatively easy.  You can get the paperwork online by going here: http://www.michigan.gov/documents/deathcorrpublic_6733_7.pdf.    You’ll need to print it out, fill it out and mail it (along with the $40 fee) to:

Vital Records Changes
PO Box 30721
Lansing, MI  48909

If you want additional, certified copies they are $12 each.  You can contact the Michigan Vital Records Changes Unit by calling (517)-335-8660.  And you can always contact us if you have questions as well.

Ok, so remember how I said the “what to do” part is relatively easy?  The kicker is that the process of making the change can take some time . . . sometimes as long as 3 to 4 months!

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Planning for Special Needs Children in Michigan

I love working with families and helping them ensure their children’s future, there’s no question about that.  Although there are special considerations for each family when it comes to planning, there are some additional considerations for families with a child who has special needs.  This post was originally one of my weekly fun and informative e-newsletters.  I received such great feedback that I thought I would share it with everyone .  Feel free to forward this along to families who come to mind, and let them know that we will certainly assist them with their unique situation.  And you can sign-up to receive my weekly e-newsletter by clicking here.  As a bonus, you will receive my free report “10 Things You May Not Know About Cheap Online Will Software.”  Enjoy . . . and share your thoughts via comment below or clicking here!

Every child is special, in their own unique way. That said, certain children are even more precious–and their needs are great. I’m referring to what many call “special needs children” (though, it’s perhaps better to call them children with special needs–after all, they really are “children” FIRST, and not to be defined first by their “needs”!).

Because this is something which adds certain complications to any family, I thought I’d take a moment this week to address 3 key wealth strategies for families with these beautiful, special children.

Planning Your Family’s Wealth Around a Child With Special Needs
Here is the standard thinking, in regards to setting up your affairs with children who have special needs:
Families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than a minimal amount of assets upon reaching age 18, he/she will no longer be eligible for some government benefits.

However, while these families are indeed on the right track, parents with special needs children also should:

1. Set up a second trust. I am a strong supporter of stand-alone special needs trusts.  The purpose of this additional trust would be to make sure that the provisions in the parents’ trust don’t disqualify the child from receiving any government benefits that would otherwise be available for his/her care.  It’s better to “wall off” what the child receives.  The separate trust is also there so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for federal disability benefits.

2. Increase savings. These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.

3. Plan for three retirements. These families not only have to plan for their retirements, but also for the child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.

While I’m not a financial planner, I thought that these tips were so important that if you find yourself in this situation, you should raise them with your professional adviser.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Truly Creating a Legacy – Story Based Planning

In this final installment on story based planning, my colleague and mentor – Scott Farnsworth – delves into the reasoning behind why story leading questions are powerful . . . and the key to a story and values based plan.  To me, these are the plans that truly create a legacy rather than just a set of documents.  To have the proper context you will want to read the previous 4 posts here: 1, 2, 3, 4.  I believe everyone needs this type of plan.  If you find yourself longing for a legacy rather than a set of documents, give us a call to schedule your Peace of Mind Planning Session.

Nancy Kline, the author of Time to Think and More Time to Think, has taught me a number of significant truths.  One is that “the human mind thinks best in the presence of a question.”

As I turned that idea over in my brain a hundred million times, I began to see that questions matter, and they matter deeply in every field of human thinking.  The nature and quality of the questions we ask determine the nature and quality of the thinking we spark and of the answers we receive.

I learned in law school that certain types of questions lead to particular kinds of answers.  For example, “open-ended questions” elicit a different kind of answers than “yes/no questions,” and these are different from “leading questions,” which guide a witness to testify a certain way.  The type of questions we ask or the way we phrase or frame our questions influences the answers we receive.

This principle is readily seen in the field of education.   As a Portuguese instructor, a college professor of business law, and now as a facilitator of professional training, I have observed that students receive, process, store, retrieve, and apply information differently according to the types of questions they are asked and, indeed, by the types of questions they anticipate they will be asked.  The learning processes and the thinking processes for one type of question are different from the learning processes and the thinking processes for all other kinds of questions.

For example, a course in which students believe they will be graded with a true-false, multiple choice, matching, or short-answer exam will produce a different kind of thinking and learning than a course in which the anticipated exam is essay, open-ended, problem-solving, or issue-spotting.  Similarly, an oral exam results in a very different educational experience than a written one.

The type and style of questions also determines the nature, quality, and quantity of information available to the teacher to assess the students’ comprehension of the subject matter and their ability to apply the material elsewhere.  Some kinds of questions deliver rich and abundant information about the student and the learning process, while others yield scant and sketchy insights.  If teachers want to understand how well their students are thinking and what they are learning, they should pay careful attention to the nature of the questions they ask.

“Successful” students — i.e. those who score well on exams — learn how to anticipate the nature of the questions they will be asked and apply the learning and testing strategies that work best for those kinds of questions.  On the other hand, “successful” students — i.e., those who learn to think clearly about the material and then put it to use in the “real world” — think beyond exam questions and anticipate the issues the “real world” will present them.

What’s true in the field of education is also true in our work with clients:  the type and style of questions we use matters deeply. Our questions determine which issues our clients think about, and then drive the way they think about, those issues.

If our questions are analytical and numbers-oriented, our clients will think analytically and will focus on the numbers.  And if our questions are more intuitive and visionary, our clients will be more reflective and more thoughtful about the future they are creating for themselves and those affected by their planning.

The best planners are comfortable working in both sides of the brain, and are skilful in getting their clients to do the same.

In her magnificent book, I Will Not Die an Unlived Life,” Dawna Markova writes:

The brain has both analytic and intuitive ways of processing information.  They are meant to work hand in hand, but usually end up in an arm wrestle.  If we analyze only as we have been taught to do in most schools, snapping at the first answer that comes along, then judging it good or bad, right or wrong, the shy intuitive mind, not unlike a prairie dog, runs for cover.  Analysis, when improperly done, causes paralysis.  It creates a world “out there,” of which we are only spectators and in which we do not live.  It is commonly called objectivity.

If, on the other hand, the analytic mind asks open questions of discernment — “I wonder how this would work. . . . What would it look like if this were really possible? . . .” the intuitive mind begins to explore many possibilities, weaving its way through the trees until it has a sense of the whole forest and its meaning in nature’s scheme of things.  Pop!

This wandering and wondering are not useful when one is dealing with issues such as the computation of income taxes.  But the exploration of purpose and passion requires us to uncover patterns and understand the relatedness between things, and then synthesize them into a new whole.  This is the terrain of intuitive processing.  Personal truth can not be found in either analytic thinking or intuitive thinking alone.  It can only be uncovered in an open inquiry between them.

Because most of us work in a presumptively analytical world, it is not always easy to inspire ourselves or our clients to operate concurrently in the intuitive world.  It sometimes feels awkward or invasive.  And yet, if we fail to go there, we are stuck in the shallow waters of “the computation of income taxes” and similar tasks, ending often in “analysis paralysis.”

So what is the secret to moving comfortably and confidently into the deep waters of real thinking about the issues that should underpin and overlay great planning?  From my three decades in the planning professions, my answer is to ask what I call “story-leading questions.”

Stories are our native language, and everyone, including our most analytical clients, has a story to tell.  Stories are a right-brain, intuitive activity that naturally invites the “wandering and wondering” and the “exploration of purpose and passion” Markova writes about.  In the hands of an artful advisor, story-leading questions and the stories they spark beckon clients (and also advisors) to “uncover patterns and understand the relatedness between things, and then synthesize them into a new whole.”

The result is a masterful, thoughtful blend of solid numbers and bottom-line analysis, together with deep, rich, and meaningful insight into the client’s purposes and passions.  The hard realities of the tax code and the stock market are woven seamlessly with the heart and soul and vision of the human beings for whom we are planning.  Literally, a new world, the future world our clients are seeking, is created.

The key to this beautiful and powerful approach to planning is the art of the story-leading question.  It unlocks the door to what I believe is the best possible planning on the planet: story-based planning.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  He focuses on planning for  doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned business succession, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

The “Story Leading Question” and True Values Planning

If you haven’t had the opportunity to read the earlier posts in the series on story based planning written by my colleague and mentor, Scott Farnsworth, you can do so here, here and here (sounds funny to have all those here’s!).  They give an important backdrop to this post on “story-leading questions.”  I have found story leading questions to be one of the most transformative processes I’ve implemented when working with clients.  It “opens a door,” as Scott says, to really learning more about who each client is and what’s important to them – true Whole Family Wealth™ Planning.

In “The Power of Story-based Planning, Part 3” I wrote that “the best way to genuinely understand our clients and their values is to ask them thoughtful and insightful story-leading questions in an appropriate setting and then settle back and listen to their answers with all the love and attention and encouragement we can muster. I have learned that who they are and what they deeply value are woven into the stories they tell and can be discovered by a caring advisor.”

So what are story-leading questions?  Simply put, they are questions that invite the other person to answer with a narrative.   They open the door to a story.

I have found that good story-leading questions exhibit a warm and welcoming interest in the life of another.  Good story-leading questions are appropriate to the level of trust and intimacy between those conversing.  They don’t put the other person on the spot, nor feel judgmental.

Good story-leading questions also allow the person answering a number of ways to answer the question, rather than leaving them only one possible option.

Story-leading questions are like wizard’s matches:  they ignite a warm, crackling exchange of life-experiences and life-lessons.  Sometimes, they even kindle bonfires of story sharing.  A good story-leading question naturally and comfortably invites the other person to recall and share a little bit of their life with the person posing the question.

Most of us already have a wide array of story-leading questions that we use but most of us are not mindful of them or how powerful they can be, especially when we remember to ask them “in an appropriate setting and then settle back and listen to the answers with all the love and attention and encouragement we can muster,” to quote myself.

Here’s an experiment you can try.  When you go home this evening and when the time is right, try out this simple story-leading question with someone you love:  “So what was interesting or unusual about your day today?”

Or ask a young parent: “What has your child learned to do lately?”

Or ask a child: “What’s something you’ve discovered lately that makes you happy?”

Or ask an older person:  “What’s happening with your grandchildren?”

Or ask a friend: “What’ve you been up to since the last time we talked?”

Then listen, really listen.  Show with your countenance and your body language that you deeply want to hear the answer.  Don’t rush, don’t compete, don’t minimize or infantilize in any way what they say.  Just listen.

I promise if you do, you will discover — or rediscover — magic.

This same approach works in our professional lives.  Story-leading questions and attentive, caring listening can transform the planning process.

Our clients safeguard a treasure trove of information about themselves, their lives, their loved ones, and their visions for the future behind a heavy locked door.  Opening the door requires two sets of keys.  One set is the questions and the other is the listening.  Accessing this valuable cache of information can lead to the creation of elegant and appropriate planning for these clients.

Great story-leading questions and attentive, respectful listening are the keys.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  He focuses on planning for  doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned business succession, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Are You Getting REAL Values-Based Planning or an Impostor?

This is the third in a series of posts on Story Based Planning written by my colleague and mentor, Scott Farnsworth.  In this post Scott tackles TRUE values-based planning and what has become a substitute that “poses” as values-based planning . . . questionnaire based planning.  Here is what Scott has to say:

In an earlier post I wrote that “values-based planning” is founded on the notion that each client has a personal set of values that should be ascertained early in the planning process and then used to fashion a financial plan or estate plan unique to that client.  Most enlightened planners today would concur that financial and estate plans based on client values are far superior to the “one-size-fits-all” cookie-cutter plans that many of us grew up doing.

The question with regard to values-based planning is not whether we should create plans based on client values.  The answer to that one is duh-obvious: Yes.  The issue is not WHETHER we should do values-based planning, but rather HOW to do it so that it actually works.

In other words, how do we respectfully and accurately ascertain each client’s unique and deeply-held values upon which their planning will be based?  What methodology will allow us – and our clients – to look into their hearts, to see there what truly matters, and to then discern how to create a plan with them based on what we have discovered?

Unfortunately, the widely-heralded “values-based planning revolution” has been in my view a case of one step forward, two steps back.  This is largely because in nearly every instance what started out to be “values-based planning” quickly morphed into what I call “questionnaire-based planning.”  Indeed, with a few notable exceptions, virtually every so-called “values-based” approach is designed to be implemented by means of a cleverly designed, carefully worded questionnaire.

I think that is a tragic turn of events, and here’s why:

A.  Questionnaires are blunt instruments that deliver cut-and-dried, categorical answers.  As a result, they seduce planners into seeing clients as cut and dried and categorical.  But that’s not the way we humans are, especially when we drill down to a values level.  We are not pegs to be pushed into differently shaped holes, or colored bobbles to be sorted into different boxes.  We are each unique.  We are full of nuances, contradictions, uncertainties, and places where the lines are blurred.  We don’t fit into four or five neat categories, as most questionnaires require.

Some would argue that being able to offer clients a plan based on which one of several categories they fall into, as determined by their questionnaire responses, is substantially better than the old “one-size-fits-all” method of planning.  While it may be an improvement, it is not true values-based planning.  Offering clients a choice of cookie cutters is still cookie-cutter planning.

B. Questionnaires have built-in biases, which are based on the assumptions and prejudices of their creators. Regardless of whether these biases are accidental or intentional, a biased questionnaire skews the results away from the client’s true values. When you start with untrue assumptions, you always end up with incorrect conclusions.

I have seen long, beautiful, and well-worded questionnaires that were supposed to assess a client’s values and direct the planner to the type of plan the client needed.  Oddly, it seemed that nearly everyone using that questionnaire was steered toward essentially the same plan, one that favored the aims and products promoted by the questionnaire designer.  It seems to me that when everyone gets the same answer, maybe the questionnaire is asking the wrong questions.

C. Questionnaires can be “gamed” by clever clients. The process of answering questions in a questionnaire invites clients to consider not just their answers, but the impact of their answers on the planner and the planning process.  “Will this answer raise or lower the fee?”  “Will this answer make me seem more wealthy or less wealthy?”  “Will this answer cast me in a negative light?”  “Will I appear miserly, judgmental, prejudiced, immature, or short-sighted if I answer that way?”  “Will I be exposing my weaknesses, and will that allow her to take advantage of me in some way?”

Human nature being what it is, the odds are high that clients’ responses will be less than candid and unguarded.  Consequently, there is a high probability that questionnaire answers will be scrubbed, distorted, shaded, or flat-out wrong.  This makes the results of a questionnaire unreliable as a basis for serious values-based planning.

D. Questionnaires lead to dull, inattentive planners.  Questionnaire-based planning doesn’t require planners to listen deeply and attentively to clients, to ask insightful questions, or to employ judgment and wisdom to discern how to weave the client’s life-lessons into the plan.  The “correct answers” or the client’s “categories” just “magically” pop out from the responses.  Yeah, right.

True values discovery requires careful and attentive listening.  Each client and the stories they tell are alive with insight and meaning.  They are full of clues and pieces of answers.  Real people living real lives are like that.  The right answers don’t just pop out; they have to be teased out and then pieced together like a jigsaw puzzle.  But when you make a commitment to discover for yourself – and for the client – a clear and complete understanding of what’s really in their heart, their deepest purposes for planning, you discover that the results are unquestionably worth the effort.

E. Questionnaires don’t lead to values-based planning. Questionnaire-based planning is neat, clean, analytical, and easy, but it is incapable of drilling all the way down to the values-bearing strata deep inside the client.  No matter how cleverly worded, a questionnaire can never respectfully and accurately ascertain each client’s uniquely personal values.  The results are too shallow and mechanical.  The intention may be right but the methodology is wrong.   Thus, whenever planning becomes questionnaire-based, it ceases to be truly values-based.  I call it “faux values-based planning.”

Please understand that I believe there is an appropriate role for questionnaires in the financial planning and estate planning process, which is to help gather data.  I have no problem using questionnaires as fact finders.   They just don’t work to discover and discern significant client values.

So What?

“So what’s the harm,” you may ask, “in doing questionnaire-based planning?   It’s definitely a lot better than the old way we used to do it.”

The most significant harm is that when financial planners and estate planners – even smart, sincere, and well-intentioned planners – think they are doing values-based planning but are only doing faux values-based planning, they stop seeking the real thing.  They become enamored with zirconium and fail to find the acres of diamonds just over the next hill.  They take the shortcut and never realize they just missed the best part of the journey.   As a result, they rob themselves and their clients of the magnificent experience of true values-based planning.

Good is the enemy of great.

The moment earnest planners apply the label “values-based planning” to something that is not and once they start to believe they are doing “values-based planning,” even though it is really only the “faux” variety, they lose the sense of urgency to discover the real thing  and are unable to see the need to do more.  Once they get locked in, it is nearly impossible to unlock them.  As a wise person once said in another context, “the problem is not what they don’t know.  It’s what they do know that just ain’t so.”

Values on the cheap vs. paying the price

While questionnaire-based planning may appear neat, clean, analytical, and easy, it is really only values-based planning on the cheap.  The real process of values discovery – like virtually every other authentically meaningful human endeavor such as nurturing a fulfilling marriage, raising independent children, growing a beautiful garden, or building a success business – can be disorderly, messy, intuitive, and sometimes challenging.  It requires real work.  It requires that we pay the price to come to know, really know, our clients.  It cannot be achieved with clever techniques.

The Solution

To move into the beautiful new world of true values-based planning, the solution is not to try to come up with a more artful questionnaire.  The solution is to recognize that their stories — the oldest and most natural form of human communication – are rich and ripe with the unvarnished truth about our clients’ values.  We just need to ask the right questions and then listen, really listen.

I have found that the best way to genuinely understand our clients and their values is to ask them thoughtful and insightful story-leading questions in an appropriate setting and then settle back and listen to their answers with all the love and attention and encouragement we can muster.  I have learned that who they are and what they deeply value are woven into the stories they tell and can be discovered by a caring advisor.  That is the essence of what I call “Story-based Planning in a Thinking Environment.”

I’m happy to say that I use a questionnaire mostly for fact finding, not for developing a values-based plan.  I make it a point in every Peace of Mind Planning Session or Whole Family Wealth™ Planning Session to purposely set the questionnaire aside and spend a significant amount of time listen to my clients’ stories.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Planning For Your Values – Story-Based Planning (Part 2)

Your values are important to you, otherwise you wouldn’t hold them as values.  So why don’t we plan to pass on our values as much as we plan to pass on our retirement account, our cars and other assets we have?  It’s a great question and one that is tackled by my colleague and mentor Scott Farnsworth in the second in a series on Story-Based Planning.  You can read the first post here.  Here is what Scott has to say:

For at least the last decade, the hottest buzzword in the planning professions has been “values-based.”   You couldn’t turn around without running into “values-based” selling, financial planning, estate planning, you name it.  But what in the world is “values-based planning” anyway?

Looking under the label and behind the question is helpful, I believe.  In truth, all planning is based on someone’s values, so the question behind the question is whose values? To acknowledge our professions’ dirty little secret, the truth of the matter is that in the “pre-values-based planning era” nearly all planning was based on the professional’s values or, at best, on the values we assumed the clients held.

If the professional was selling life insurance, lo and behold, one of the key values was “tax-free liquidity at death.”  If the professional was selling living trusts, it was generally assumed the clients valued “avoiding probate,” “reducing estate taxes,” and “distributing the assets” in some orderly fashion, usually in a way consistent with the drafter’s trust templates.  If the professional was selling investments, every financial plan was based on the premise that the client wanted to pay for his kids’ college and then retire comfortably a few years before he turned 65.

Not surprisingly, every plan a planner created looked strikingly similar to every other plan he created: they were all based on the planner’s values and assumptions, not the client’s.

What the term “values-based planning” was trying to communicate was the notion that each client has a personal set of values that ought to be ascertained early on in the planning process and then used to fashion a financial plan or estate plan that was unique – truly unique – to that client.  The real question then became, for those planners actually trying to create plans based on client values, “how do you ascertain the client’s values?” At least now the issue was correctly framed.

This breakthrough led to the advent of what I call “questionnaire-based planning.” Client values, the planning professions assume, can be ascertained through a cleverly designed multi-page questionnaire.  But while “questionnaire-based planning” is far better than its predecessors, it still fails in its primary objective: to develop for the planner and the client a clear understanding of what’s in the client’s heart – the client’s deepest purposes for planning.  For that you need story-based planning.

In the next installment I’ll outline why “questionnaire-based planning” is merely masquerading as genuine values-based planning.  It looks good on the outside, but inside it has no real power to get to the heart of the matter.

To be continued.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

The Power of Story Based Planning – Introduction

If you read my post here about Whole Family Wealth Planning™, you know how important it is to share your values, insights, stories and experiences.  It got me thinking that I should share a series of posts written by my colleague and mentor, Scott Farnsworth.  As we walk through this area via Scott’s thoughts, please share your thoughts as well via comment below or contacting us.

Virtually all my “official” training as an estate planning attorney and a Certified Financial Planner has been about numbers. Tax rates, code sections, rates of return on investments, asset allocation models-the unwavering focus has been on something quantifiable. The underlying message always came through loud and clear: unless something can be tallied on a ledger sheet, it isn’t worthy of our professional attention and probably isn’t all that important. Only “numbers-based planning” is real planning.

But my gut-and my real-life experience-told me something different. They told me that when numbers-based planning collided with human beings, i.e., our clients and their children and grandchildren, either the planning was never actually implemented by the clients, or the wheels came off when the planning landed with a thud on the succeeding generations. They told me that the most clever and tightly-wound estate or financial plans could and would be unraveled by the people they were designed to “help” or “protect.” They told that we planners ignore the human issues at our peril, and at the peril of the beautiful numbers-based plans we crank out.

My sense was often that with numbers-based planning, the tax tail was wagging the dog-driving the planning instead of riding in the back seat along with all the other significant but not critical factors. One significant study found that the likelihood of a family-based business surviving into the second generation was inversely correlated to the amount of tax planning the first generation had done. (Correlates of Success in Family Business Transitions, Morris, Williams, Allen, and Avila, Journal of Business Venturing 12, 365-401, 1997). In other words, the tax doctors were actually killing the patients they were hired to “save.”

Numbers-based planning might work if we were planning for robots, but we’re not. We’re planning for real flesh-and-blood people. I recall a series of conversations with a couple from New York City who had spent tens of thousands of dollars for one of the premier law firms in the country to draft a plan to care for their estate and their two teenage children. The plan touched all the legal and tax-planning bases, but in the words of the wife it was “cold and impersonal, not what I want to leave for my children.” The expensive, well-drafted plan was never executed but remained nothing more than a pile of paper, glistening with lawyerly brilliance on the surface but empty and meaningless underneath.

Unfortunately, that couple’s experience is repeated all too often. In my view, such outcomes will not change until we take a fundamentally different approach to this whole business of estate and financial planning. They will not change until we spend more time listening to client stories than tallying up their balance sheets; until we tailor their plans to the human hopes, dreams, and fears imbedded in their stories; and until the plans we create help them tell the story of their legacy-of who they really are and what impact they have had and hope to have on the people and causes they love. I call this approach story-based planning.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Michigan Special Needs Children – Caring Through Planning

This post is an excerpt from a recent issue of my weekly e-newsletter.  I received such a positive response that I thought I would share it with my blog readers as well.  If you would like to receive these fun, informative and helpful weekly e-newsletter, click here and put in your information.

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Today I want to talk about special children.

Every child is special, in their own unique way. That said, certain children are even more precious–and their needs are great. I’m referring to what many call “special needs children” (though, it’s perhaps better to call them children with special needs–after all, they really are “children” FIRST, and not to be defined first by their “needs”!).

Because this is something which adds certain complications to any family, I thought I’d take a moment this week to address 3 key wealth strategies for families with these beautiful, special children.

Feel free to forward this along to families who come to mind, and let them know that we will certainly assist them with their unique situation.

Let me know what you think!

Here is the standard thinking, in regards to setting up your affairs with children who have special needs:

Families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than a minimal amount of assets upon reaching age 18, he/she will no longer be eligible for some government benefits.

However, while these families are indeed on the right track, parents with special needs children also should:

1. Set up a second trust.
I am a strong supporter of stand-alone special needs trusts.  The purpose of this additional trust would be to make sure that the provisions in the parents’ trust don’t disqualify the child from receiving any government benefits that would otherwise be available for his/her care.  It’s better to “wall off” what the child receives.  The separate trust is also there so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for any government benefit programs.

2. Increase savings.
These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.

3. Plan for three retirements.
These families not only have to plan for their retirements, but also for their child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.

While I’m not a financial planner, I thought that these tips were so important that if you find yourself in this situation, you should raise them with your professional adviser.

Warmly (and until next week!),
Mike

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Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children).  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.