Estate Planning —
9 Excuses Why People Don’t Plan Their Estates
Regardless of the size of your estate, you probably know that you should have an estate plan. It may be as simple as a will, or it may involve complicated trusts, estate tax strategies, or passing on a family business. Unfortunately, many people don’t do anything about their estate—until it is too late. Here are nine excuses why people don’t prepare an estate plan, and what you can do to overcome them.
- I don’t see the need for an estate plan. You don’t
need a large estate facing taxes to need an estate plan. Even a small
estate should have at least a will, a living will, a health care proxy,
and a durable power of attorney. And you may have a larger estate than
you realize, with growing retirement accounts, increased home values,
and life insurance—an estate that could face taxes.
- I don’t plan on dying. Estate planning, like buying life
insurance, brings up the specter of death. By postponing estate planning,
people feel, at least subconsciously, that they are postponing death.
There’s no easy solution to this excuse. However, thinking of someone
you know who died without a well-prepared estate plan might motivate
you.
- I don’t plan on dying—at least not soon. For some
of us, it’s not so much the fear of death as the idea that death
seems a long way off. With life expectancies increasing, it probably
is. But one of the reasons for an estate plan is to plan for the unexpected.
- I don’t want to pay for it. Yes, it costs money to write
a will, set up trusts, pay attorney and financial planning fees, and
carry out the other things necessary to prepare a good estate plan.
However, without such plans, the costs can be much higher on the back
end—costs your heirs won’t be happy about.
- I don’t want to spend the time. Estate planning can take
time. But the time involved for the survivors when there is no estate
plan is even worse. A financial planner recalls a man worth $15 million
who postponed writing a simple will until it was too late. Probate for
the man’s estate took two years.
- I don’t want to talk about my family. You may have conflicts
with your children or other family members that make estate planning
difficult. Second marriages represent another major source of conflict
in estate planning.
- I don’t want to talk about my money. Estate planning,
especially for larger, more complicated estates, should involve the
heirs. Yet many people feel uncomfortable discussing their money with
their children or others. They need to realize that such secrecy can
be very destructive to the family.
- I don’t want to ruin my kids. Some wealthy people don’t
want to leave money to their children for fear of spoiling them. They
plan on letting them earn their own money. Parents certainly have a
right to do what they want with their money. Unfortunately, sometimes
this is an excuse for not doing any planning. Then much of their money
ends up going to Uncle Sam—and some of it may still go to the kids.
- I don’t trust my kids. Some parents worry about their children’s ability to handle money. The child may be a drug addict, a spendthrift, an alcoholic. Again, this can be an excuse for doing nothing. Proper estate planning, however, can work around this concern, such as the use of trusts to manage and parcel out money to the child. Or the money can be directed to charity, instead.
If you’ve delayed starting work on an estate plan, review the nine excuses above. See if one of them fits you. Talk about it with family members and your financial advisor. Sometimes that’s all you need to take to prompt action.