Estate planning observations

David MoonBlog

A news article caught my eye recently when it matter-of-factly declared that at some point in life, nearly everyone can benefit from a trust. Although that’s a pretty broad statement, it’s also a bold one, especially from a news organization.

Except it wasn’t from a news organization. The “article” was a sponsored placement by a company that provides trust services.

I’ve been around way too much death recently, and one of the things I’ve been reminded of is that some estate planning professionals (lawyers, bank trust departments) turn two-dollar problems into hundred-dollar solutions. Simplicity is too rare in an industry that gets paid by the hour. Sometimes the individual is at fault, because he may have needed a hundred-dollar solution 20 years ago, but changes in laws and personal circumstances may have rendered those complex estate plans unnecessary.

Failing to update wills is only one common estate planning mistake. I’m not a lawyer and neither I nor my firm provide those services, but I have seen people make a lot of mistakes in their planning – many of which don’t show up until after someone dies.

People should be very careful before making decisions and elections that are irreversible. The prospect of changes in estate planning laws following the election of Joe Biden created tons of work for attorneys, almost all of it unneeded, as it turned out.

While it is true that whatever Congress can give it can also take away, it is also true that Congress is more likely to give than to take away.

Be very careful naming a bank as your trustee or executor (“personal representative” in Tennessee.) You may know and trust the head of the trust department at the Kingston Pike Savings Bank, but 20 years from now she will be retired, and that local bank will be a subsidiary of some foreign institution with a committee in New York or Charlotte making decisions about whether your spouse or grandkid should get a principal distribution.

Also be very careful naming an individual as trustee. Uncle Bob may be trustworthy, but his alcoholism might creep back again some day or he might harbor some hidden resentment against your grandson-in-law.

Estate plans and financial plans must coordinate, but at a certain level they almost work against one another. You need to plan your investment/finances as if you might live (almost) forever, while your estate plan needs to contemplate your potential death this afternoon.

Be careful about trying to control everything from the grave. By the time your kids or grandkids are adults, they are who they are. Someone irresponsible at 35 will likely be irresponsible at 36, 56 and 66.

David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.