Dear Michael:

We have our wills done to our satisfaction. We have helped two of our sons get into the business of farming and they are thriving. We have a daughter who to receive the proceeds of a second to die life insurance policy as well as our savings – which are considerable. As we approach our seventies, we feel like we have everything covered.

We don’t have long-term care insurance but with the income, we have off the farm and with our savings, we feel pretty comfortable. Is everything we have enough?

– Sitting Pretty


Dear Sitting Pretty:

You’ve set up an estate plan whereby the two boys farming will receive the farm operation. You’ve provided a second to die policy to supplement the amount which will go to your non-farming daughter. Even though these amounts to the farming sons and to your non-farming daughter are not in equal amounts, they would certainly qualify as an equitable inheritance based on the time the boys spent helping you build your estate.

When I help my clients build their estate plan, it’s my job to teach clients about what are all the ‘if’s’ involved and how to protect against them. In my mind, I see it like a jigsaw puzzle. Much like farming, you build it piece by piece over the years. Each piece represents something you have done to build both your farm and your estate plan.

For example, an integral piece to the puzzle would be having a will. If your familiar with jigsaw puzzles, you always start by finding the outside perimeter pieces and putting them together first so you’ll have a picture frame of the puzzle. This is how I see the will – it frames the rest of your estate plan.

Other integral pieces are what the will has in it, much like a puzzle. Is there a personal representative named? Do you have a plan for what happens when you die? For example, if the man dies, how does the wife handle machinery and other transitory assets?

You’ve done a many of these pieces already. You’ve got the will, the transition spelled out in the will, the second to die policy to supplement your daughter’s inheritance. You two have almost all of the pieces of the puzzle. Congratulations!

Other parts of the estate plan puzzle have to do with living worries.

What happens if you get hurt or disabled? Who would take over the farming for the short term? For the long term – if necessary? If you are disabled and need some assistance? Do you want to do what most people do and dump it into your spouse’s life and their ‘golden years?’ That “in sickness and in health ’til death do we part” can be a really bad thing for a spouse who has to become a caretaker twenty-four hours a day.

Let’s say the missing piece in your estate plan is how do you plan to deal with what happens if you get hurt or disabled and need assistance. Your whole life you’ve depended on health insurance to pay for medical costs. You wouldn’t dream of going without Medicare and a supplement. Yet many people refuse to invest in their own beliefs when it comes to estate planning.

Do you want to receive assistance at home? If so, do you want your spouse to provide ALL of this assistance 24-7? Most people would say no, but when the time comes and you may have to dig into your pile of significant savings, most people won’t do it. Why? Because the number one worry for seniors is – no matter how much money they have – will I have enough to last until I die?

Funny thing is you can take about one-tenth of your savings – buy a hybrid long-term care policy that takes care of you if you need care at home. Or, eventually in a facility. Or it pays a much higher death benefit tax-free to your children than your cash if you never use it. And you can take your money out any time without penalties. It also protects against seeing your daughter’s inheritance get used to pay for your care costs – if you’re lucky enough to live long enough when care gets really, really expensive.

Most of the estate plans I work on having this missing piece of the puzzle – which is unfortunate because more farms are lost these days from long-term care than they are from estate taxes. Why not use some of your savings to provide one hundred percent surety? No more ‘what if?’ It’s so simple and yet people fail to finish their estate plan puzzle leaving a big gap where there shouldn’t be one.