Design Thinking: Estate Planning
Way back in January, we told you what we wanted for you in 2019:
Permission to design your life
This month, half way through the year, as you are about to embark on life-giving celebrations of sunshine, friends, and family, we want you to consider designing…
Well, not the actual dying. As we like to joke (darkly) around here at Spring, if everyone could just let us know exactly when they are going to die, this whole retirement planning thing would be a heck of a lot easier. One of the tough things about death is that, while it’s as certain as taxes and change, it’s actually kind of uncertain.
We don’t know when it’s going to happen. We’d like to hope it’s later, after years of great health, prosperity, and fabulous relationships; but we really don’t know. It’s so… nebulous… and generally depressing… that we don’t plan for it, because we don’t know what we’ll want then… we don’t know when “then” will arrive… we don’t know how people will react… and it all seems kind of awful, so we decide to focus on the here, the now, and the certain.
But, as I’m sure we’ve told you before, planning for your eventual departure is truly one of the most loving and thoughtful things you can do for your family and friends. Estate planning is often a lot more difficult than it needs to be, since there are many boxes to check – from taxes, to law, through just trying to end your cell phone contract – and without a roadmap of where all the things are and what you wanted done with them, your people are going to be even more frustrated than the loss of you has already made them.
One of the reasons why we like the design process is that it’s a path we can use to think through hard stuff. As we’ve demonstrated in previous articles, a lot of the stuff around personal finance, at every point in your life (and now death) is pretty hard. This process gives us a map for thinking things through and alleviates some of the pressure. Here’s how we’re going to use it for your estate planning:
Step 1: Empathize
Gain an empathetic understanding of the problem you’re trying to solve – typically, through research. Empathy is crucial to a human-centered design process, because it allows you to set aside your own assumptions about the world and gain real insight into alternative perspectives.
It can be easy to think, “There won’t be much,” or “My estate is simple,” and escape thinking about it. By using empathy, we can come to terms with the fact that we’re doing the relatively simple part of the equation – leaving – and that there are some really great people who are dealing with the fall out.
It doesn’t really matter how simple your estate is, or how complex. It doesn’t matter if your estate is worth a few dollars (or even goes negative!), or if your estate is worth many multiples of dollars. That’s not actually what it’s about.
What matters are the human beings who are still here after you’ve left, sifting through your closet, canceling your car insurance, and trying to figure out why you have so many bank accounts¹.
Many people consider “legacy” the financial and business assets we leave behind. But our true legacies are how people remember us. How would you like to be remembered? What aspects of your life would you like to have that last beyond your lifetime? What values do you hope to pass down through the generations that follow you? What is the great unfinished business of your life, the shadow you’ll leave behind?
It could be as simple as kind hearted notes you often wrote to the people who were close to you. It could be the way you taught your children to fix the plumbing, bake a pie, or do their own taxes. It could be the business you built, the community you contributed to, the tiny piece of forest that you saved for a park.
Every person leaves a footprint of some kind. Take some time to think about what you want that footprint to be.
In our experience, not one person has said that they’d really like the memories they leave behind to include copious amounts of paperwork and confusion over estate law. It’s never been several years tied up in probate court, or provincial court, tugging a war over who was supposed to get that thing that you didn’t know meant so much to so many. It hasn’t ever been about making your loved ones stand in line to get paperwork stamped by Window A, and taking that form to Window Q, so that your family could finally end your gym membership or cancel your utility bills.
Use Step 1 of the design thinking process to empathize first with yourself and the message you want to leave behind for the people you care about. Then, use it to empathize with those people, and think about what you would want to do to reduce the stress during what will already be an immensely stressful time in their lives.
Step 2: Define
Accumulate the information you created and gathered in step 1. Analyze your observations and synthesize them to define the core problems you have identified so far.
Now that you’ve given some thought to what you want for your own legacy, and what you want for your people, write it down. Start looking at these and ask yourself:
What might prevent me from achieving these goals in my estate? Is it money? Is it communication? Are there people who might be hurt by my choices?
What don’t I know that I should know? Is there estate or tax legislation that might get in the way? Do I own my assets the right way to ensure what I want to have happen, does in fact happen? Who should know things about me and my estate? What should they know… and when?
You’re not solving it just yet… you’re just coming up with the questions.
Step 3: Ideate
Generate some ideas. The solid background of knowledge gained in the first two phases allows you to start to think “outside the box,” looking for alternative ways to view the problem and identifying innovative solutions for the questions you defined in step 2.
This is a great time to get some help. As you start wading into the murky waters of estate and tax legislation, financial institution regulations, and all those other pieces that you can’t fully be an expert on all of, that no matter how smart you are, you’ll realize that asking for help is the right thing to do.
Your financial planner, ideally one with some estate planning education, will help you think through what you really want, looking at everything from a big picture perspective. Your tax accountant, again with estate planning education, will be able to provide some insight into those end of life numbers. Your lawyer with – you guessed it – special education in estates, will be able to provide you with a legal perspective. Working together, with you and the people you care about at the very center of your questions², you’ll come up with some great ideas.
Step 4: Prototype
This is an experimental phase, with the aim of identifying the best possible solution for each of the problems identified in the first three phases. Produce a number of possible solutions to investigate.
Okay, so first, you fake your own death.
No, we’re kidding. Don’t do that. Now, you’re going around and just asking questions. Along with your team, you’ve created some ideas in Step 3. Will they work? Your financial planner, lawyer, and accountant will be able to weigh in with their expertise. But what will your family think? Maybe it’s time to start talking to them about what they really want.
It’s also worthwhile to check in on all those organizations and institutions with whom you have relationships, including your digital applications, financial institutions, membership organizations, utility providers, and anyone else who likes to send you bills on the regular. What are their rules? Do they work with your ideas?
Step 5: Test!
Now that you’ve got a few solutions, it’s time to test them out to see if any of them gain traction and/or actually get you where you’re going. While this is the final phase of the process, the results could bring you all the way back to step 2, with new, or more robust, definitions of the issues you are solving, which allows you to come up with new, robust ideas, prototypes and tests.
No, this doesn’t mean that you have to ideate on your estate forever. You could, but that would be terrible for everyone, and potentially really expensive if you’re dragging your professional advisors along for the ride.
Now we get to fake your death.
Your financial planner will be able to model out the top scenarios that you’ve come up with, the ones you’ve asked your family about, and thought: ”You know what… this just might work…”
One of the super fun things about financial planning work is that we get to test those theories. In our models, we can fake your death at all kinds of different times, and see what happens to your taxes and your finances, and estimate what kinds of decisions might actually get you where you want to go.
Through that process, you’ll review the outcomes, and decide on the actions that will make sense for you, right now.
Of course, your life is bound to change considerably over time. In 10 years, you may not want the things you want now. That’s the stuff that will bring you back to step 2, but when you get there – you won’t be alone.
¹ That’s a cash flow planning joke. Tee hee.
² It’s really important to remember that it is the people who matter. Not the money. Not the taxes. The people. Trust us, that’s where your legacy lives.