The Importance of Being Proactive
Being proactive sounds nice in most areas of life, but there is a particular reason that Landry Law, PLLC is so focused on proactive legal work. In the practice areas of trusts & estates, tax, and business law, being proactive can save clients and their loved ones from significant burdens.
Working in these practice areas, one sees a range of situations from planning through administration. In general, when people proactively plan, they are much better prepared for a number of potential future scenarios. Those people who do not proactively plan or who do not maintain their plans through proper funding and updating often end up in burdensome situations for themselves, their loved ones, and their businesses.
When talking of burdens, it is not only financial burdens that are a concern. Often, it is the burdens of time and emotion that frustrate people more than the financial or legal burdens (though certainly those are also best avoided!). Here are some examples of the lack of proactive planning and the resulting burdens. These situations are provided not to scare but to provide context with some common situations.
An individual has no plan and becomes incapacitated (whether due to a car accident, illness, or otherwise). There is nobody who is able to make medical decisions on their behalf or take care of their finances. Their loved ones must petition the court for guardianship and conservatorship, both of which are expensive, take time (even as emergencies), and require that their loved ones spend time on the legal proceeding at a time they likely would rather be with the individual or other loved ones.
A couple both started new businesses during the pandemic. They did not do any tax planning. They may have kept some bookkeeping but were unsure of what they would owe, and they made no estimated tax payments. They also did not track some expenses that may have been deductible if tracked and did not consider their entity structure or different options that may have put them into a better overall position. When they file their tax return, they are shocked to find that not only is the amount of tax for 2020 higher than they anticipated but also they owe a substantial amount in penalties and interest due to not making estimated tax payments.
A couple has no planning and are in a car accident while their minor children are at home. With no documents in place, it is unclear what the couple wanted, and nobody has the legal authority to care for the children. To petition the court to do so takes time.
A business owner dies, leaving nobody to manage the business and nobody as the owner. The business must pass through the owner’s probate estate, which takes time and often causes problems for the business.
An individual last updated their plan in 2001 and dies today. In the meantime, they have become estranged from one person named as a fiduciary and a beneficiary, two others named as fiduciaries have died, new loved ones have entered their life, and the law in Massachusetts has been changed! Their estate plan likely does not follow the individual’s goals and wishes from the years prior to their death, but, unfortunately, without updating their plan, the 2001 documents will need to be followed. In some situations, actions can be taken to try to get closer to the individual’s wishes, but it is never exactly what they would have wanted, often what they wanted is unknown, and doing so requires agreement from those involved.
These are only a few situations where proactive planning makes a huge difference from a legal, financial, time, and emotional standpoint.
With proactive planning, a plan is developed taking into account many potential future scenarios, considering the client’s goals, and designing and individualized plan to meet them. The documents are put into place, the plan is funded, and the individual maintains the plan. Maintaining the plan means continuing to adjust funding as appropriate (when assets are acquired or change) as well as making updates as life and the applicable laws and taxes change. The plan is then implemented in accordance with the client’s wishes.
Often, it is important to be proactive in implementing the plan as well. This means continuing to maintain the plan as well as ensuring that any ongoing work is completed properly. Looking at the plan with a longterm outlook produces different results than looking at it for the next year or even month. This is true for businesses and individuals in legal and tax planning.
Overall, being proactive in your planning prepares, protects, and preserves you, your loved ones, your business, and your assets in the way you want – with your goals first.
