Estate Planning - Why Bother Anyway?

Every now and then when I do a presentation to a group, I’ll have someone in the group who asks a question along the lines of “why does any of this stuff matter anyway?”

It’s usually a guy. Whose great aunt’s estate was a total nightmare to handle.

And she had a trust and it still ended up being a total nightmare anyway and now the whole family hates each other and so lawyers who talk about estate planning are just part of a big conspiracy to bust up families and get paid to do it and it is all just one big giant scam and it’s all directed at him. Personally.

[eye roll and sigh – usually from him]

Of course, the interesting thing is that people with this sort of personal bias show up to a presentation on estate planning anyway. I, however, interpret their attendance as a sign that they want to be reassured. They may want to hear that the great aunt’s situation was a fluke, or that the situation could have been prevented with just one little thing. But I really don’t know what they are looking for unless they tell me.

What I can say is this – proper, carefully thought out estate planning can accomplish a lot of objectives. It can’t control what other people do, but it can control the ideas you choose to leave in the world when you are no longer a part of it and the way you do it.

Some ways increase the odds that there will be family conflict; some decrease the odds. After spending the last 20 years of my professional life in courtrooms, reading wills and trusts, and representing parties trying to figure things out, I’ve learned a few tricks.

Today, I’m going to share some of them with you.

1) No plan = free for all

Sure, every state has intestacy statutes that set forth what happens to your stuff and your assets and your liabilities when you’re gone. For the most part, those statutes are pretty vague because they cannot be so specific as to address every person’s personal stash of assets.

Do you want the corporate stock you inherited from your grandfather to go directly to one of your kids who will value it the most or handle it the most responsibly? Or liquidated, no matter what the market is doing, because the executor has to sell everything and distribute cash.

The family silver that has almost no market value these days but has massive sentimental value to your sister – should that just be liquidated with all your other personal belongings and the little bit of cash distributed evenly to your kids?

Oh, and your second wife/husband with whom you signed a carefully thought-out pre-nup? What if they have come to hate your kids and decide that nobody needs to know about that pre-nup because the state statues give them more than they would take under the pre-nup? So s/he just pretends there never was one and your kids must be delusional even asking about it?

All of those things can happen – I’ve seen iterations of each of those examples. And believe me, none of those situations left anyone feeling very happy.

2) Who takes care of your kids?

Parents of minor children often ask, “What happens if I haven’t done anything to name a guardian?” The answer to that question is a very unsatisfying, “Nobody knows.”

Because the truth is the only person who knows is the judge who will be making that decision. Now, the judge will base her or his decision on the information that is presented at a hearing and judges generally do their best to make the right choice. But they don’t know you, your kids, your family. They don’t know any more than is put in front of them. And right now, nobody knows who may show up in court to seek guardianship of your kids if you haven’t named someone.

I have heard people say time and time again, “Oh, my parents will just take them.” Until an estranged sibling or some other relative you thought would never be interested in your kids shows up to argue that your parents are too old and feeble to handle young children, even though your parents would provide the best environment for your kids and that estranged family member is the last person you would ever want to take care of your kids. But they live in the same town, would make sure your kids stay in the same schools, and most of all – they know all about your life insurance, retirement assets, and the value of your home. That’s the main reason they showed up in the first place.

3) Probate is costly – and not just in money

Every state has a probate process. The procedures, customs, timeframes, and all sorts of factors vary state to state. In some states, it is a relatively easy process. In others, it’s super time consuming. Some states allow lawyers to charge a percentage of the total estate. Others want lawyers to stick to hourly billing (as a side note, hourly rates for lawyers are typically north of $200 an hour – much, much more for more experienced lawyers or those in big urban areas). You will be paying filing fees to open the probate and even for a simple one, you’ll have to wait months before you can distribute the assets and close it out.

If you don’t hire a lawyer (and I’m of the opinion that not every estate really needs one – court clerks are often very friendly and helpful, especially for smaller estates), you will be spending hours of your own time figuring out the process and procedures. Gathering the information you need, taking time off work to show up for any necessary hearings. And if one of the named heirs doesn’t like what is going on, then you’ll be dealing with their drama.

Probate costs rack up quickly – filing fees, lawyer fees (if you hire one), your time spent managing the process (with or without a lawyer), and the opportunity cost of waiting for the assets to be available to distribute. These are things that can be greatly reduced or even eliminated entirely for your own family by taking care of your own planning in advance.

So, I’m going to be honest with you here… if all of those situations sound just fine to you, then don’t bother with estate planning. It’s not going to matter. You’ll be gone. Any of those things that can happen will be someone else’s problem.

I’ve heard of a client (not one of mine) who actually was so angry with her own family that she didn’t want to make things easier for them. She didn’t want to take the decision-making burden off her kids. She wanted them to have to fight about everything because she was angry at them. So her plan was not designed to make it easier for them – it was limited to making sure someone was named to take care of things in the event of her incapacity. It made things easier for her if she needed someone to make medical or financial decisions for her while she was still alive. And that was that.

Planning can be as simple or as complicated as you want it to be. We here at Sage Legal have options for you to get your own plan done the way you want it. To address the issues most important to you. Or not address them. It’s your choice.

And that is that.

If you would like to learn more about how you can tackle your own planning, book a free 15 minute call and we can talk through some things and see if it makes sense for you to come in and get to work.

And if you’re wondering what happened with the lady who wanted to make her kids’ lives miserable? The conversation she had with her lawyer actually caused her to re-think her relationship with her kids. She reached out to them, did a lot of relationship repair on her own side. Then she came back a few months later and re-did her plan to make it a lot easier for them.