Welcome to the show, where you, as part of the studio audience get to hear some of the most common reasons why people don’t plan for the distribution of assets after they’re gone. Listen closely, so you don’t make the same excuses.
Okay, maybe that’s a little over-the-top, but not creating an estate plan, even a basic one, opens the door to all sorts of problems you probably would like to avoid. But people come up with all sorts of reasons why they can’t or won’t take the time to create an estate plan.
Reason #1 on our excuse countdown…
It doesn’t matter because I’ll be dead
It’s true, you won’t know what happens to your estate because you’ll be playing a harp on a cloud (hopefully). However, having no plan sets up your family for fights about who gets what, and promises you made during your lifetime which leads to hurt feelings and damaged family relationships that may never be repaired.
In addition, the lack of a plan may force your heirs into a position of requesting a court to appoint someone to settle your estate, which means spending money to pay that person and the possibility of a long, drawn-out process before your heirs receive their inheritance. And if it’s a family member the court appoints to settle the estate, that can cause even more issues.
I don’t want to spend money to get an estate plan
You will have to spend some money to get an estate plan, but consider this. Many states allow the executor of an estate to charge a fee up to 2% of the value of the estate. On a $1,000,000 estate, that translates to a $20,000 executor fee. There may also be other fees and court costs in addition to the executor fee.
If any of your heirs are disabled or may become disabled in the future, a lack of planning can cause them substantial harm. Often, disabled individuals apply for government benefits to help with their care. But if that person directly receives an inheritance, they may be forced to spend the inheritance on their care before they can receive government assistance.
Spending some money on an effective estate plan now can eliminate some or all of these two issues and more.
I don’t want to admit that I will someday die
Many years ago, I had a client who was a retired Marine colonel. He fought in World War II, the Korean War and Vietnam. He had acquired a substantial estate. But as hard as I encouraged him to create an estate plan, he just wouldn’t do it. He knew what death was. He’d been around it for three wars. But he didn’t want to face the inevitable. It was only during the last 3 months of his life, as cancer was conquering him, that he agreed to planning. Without it, his estate would have fallen prey to Reason #2.
I don’t have much and my family knows what I want done with my estate
If you don’t have an estate plan, the state where you live has a plan for you, and if you were around, chances are you wouldn’t like it. Every state has specific rules for settling the estate of someone who doesn’t have a will, a trust, or something to prove your intentions.
According to James J. Ferraro, JD, vice president and legal counsel at Argent Trust Company, “If you are married, the rules of “intestate succession” generally pass all, or most, of your assets to your surviving spouse, provided that your children are also your spouse’s children. If you are not married and have no children, then your parents may receive your estate. This can disrupt any benefits planning or other estate or disability planning that they may have undertaken. If your parents are no longer living, then your brothers or sisters, nieces and nephews are generally next in the line of succession in most states.”
“It is important for you to know that without a will, you allow a judge, who doesn’t know you, to apply the law and distribute the assets that you have worked for in a way that you may not want. At a minimum, you should consult with an attorney in your state to confirm that your state’s plan is compatible with your wishes.”
And the list goes on
- I’m too busy
- It’s too complicated
- I don’t want to reveal my personal information
- I don’t know where to start
- I wrote a will 30 years ago
As humans, we can justify anything and make excuses for why it can’t be done. Consider the ones you’ll leave behind and avoid being a contestant on the Estate Planning Excuses Game Show.