Q. I read your recent article on Aretha Franklin’s multiple handwritten wills and the family strife that ensued for five years after she died. The situation provided a great example for why all of us should have properly written estate planning documents in place and how this is something that should never be DIY!
As a client of the Farr Law Firm, having my estate planning documents prepared by an experienced attorney and updated regularly seems obvious to me. What I’m wondering is why so many people are so afraid to get started? Why do they procrastinate, when the consequences can be so huge if you don’t plan in advance?
A. You are correct. Aretha Franklin’s situation, as detailed in my recent article, makes a great case for why everyone should do estate planning. To reiterate her situation, Aretha Franklin died five years ago and several handwritten wills were found in her home after her death. Her lack of a cohesive, properly written estate planning document triggered disputes and court battles among her family members to determine which of her handwritten wills would take precedence. This could have all been avoided had she done estate planning with an experienced estate planning attorney.
Aretha Franklin’s case is a reminder of the unfortunate consequences that result from never finalizing a will and/or trust or DIY’ing your documents. There are lots of highly publicized cases, such as hers, that we have written about in our newsletter. Yet, with all of the publicity on the internet about family battles and expensive court cases, many people are afraid of estate planning and don’t take action.
Why People Procrastinate When It Comes to Estate Planning
Estate planning is not the happiest of topics. You determine how your money and property will be handled, who will raise any minor children you have, and who will make health care and financial decisions for you in the event of your incapacity or death.
Currently, only 34 percent of Americans have created an estate plan. In a 2022 survey, Quest Research Group asked 1,000 people how much planning they’d done and if they were motivated by the pandemic. Sixty-five percent said that coronavirus made them realize the importance of sharing important information with family. Around the same amount of people (64 percent) noted that planning for the future was more important than ever, and half said the pandemic made them realize how unprepared they were for a serious emergency. If people understand the importance of estate planning, why do so many people avoid it?
Common Excuses for Avoiding Estate Planning
The following are the three most common reasons why people avoid estate planning and why you shouldn’t let these fears or excuses stand in the way of planning in advance.
I’m Too Busy
We all lead busy lives, and for the most part, that never ends. Our children, partners, parents, coworkers, and many others place demands on our time, barely leaving us time to do the things that we want to do, much less those things that we should do.
Like most things, you have to make time for matters that are important. Letting yourself be too busy is often a convenient excuse to put off something you think you will always be able to do later. Unfortunately, car accidents, strokes, and other unexpected tragic events in our lives do not let us put off this type of planning indefinitely.
My Estate Is Not Large Enough
Estate planning is not just about your assets. Estate planning can also provide for minor children, plan for your future medical decisions, and determine how your representative will distribute your assets. In some cases, estate planning can also help you avoid probate.
Estate planning is not just about who gets your assets when you die; it is also about making your wishes known for your care if you are no longer able to care for or make those decisions for yourself. Planning ahead can make a painful, stressful, and costly process much easier for the people who love you.
Too Expensive
Not doing anything can cost you even more. This is because probate is expensive!! On a national average, the probate process takes from 5–8 percent of your family estate out of the hands of your beneficiaries and gives it to lawyers, accountants, courts, and other outside individuals!
Undecided about What to Do
You may think you are undecided now, but by not having estate planning documents in place, you are letting the courts decide for you!
Estate planning is the only way you have control over how your hard-earned assets are distributed. You may want to leave funds to friends, family members, or charities. If choosing who you would like to receive your estate and/or leaving a legacy matters to you, you will need estate planning documents in place to accomplish that.
You Only Have One Child — There Is Nothing to Fight Over
Avoiding fights over your assets is only one reason to have a plan in place. An estate plan can also provide for a minor child’s physical and financial care, avoid custody battles, and determine how your heirs receive your assets. If both you and your spouse die, who will care for your child? What if two sets of grandparents and your sister all want custody? An estate plan can avoid this by appointing a guardian you and your spouse trust in advance.
You Don’t Know Who to Name as Trustee, Executor, or Guardian of Your Children
If you do not name them, then state law will name them for you, by establishing a priority for who may act in those roles, and they may be just the people you want to avoid receiving those powers.
Too Superstitious
People who are superstitious believe doing estate planning somehow jinxes their life. This is a common excuse. In this case, mindset matters! These two ideas may be helpful with that: (1) One hundred percent of people die. (2) Statistics indicate that people with proper estate planning have a longer average life expectancy than people who don’t (peace of mind perhaps!).
Another way to look at this is to consider something like car seats. Why do people buy them for their kids? I’ve never met a parent who refused to buy a car seat because they thought it would make them more susceptible to an accident. You buy one because you’re being a responsible adult. Same thing with estate planning!
A Complete, Up-to-date Plan Will Spare Your Loved Ones Pain and Expense
No one wants to think about death. It is an uncomfortable subject for almost everyone, but if you fail to plan, your family could suffer major consequences. August is National Make-a-Will Month, a good time to think about estate planning. No one lives forever, but with proper estate planning techniques, you can take care of your loved ones and provide financial and health care decisions if you become incapacitated.
Estate planning involves communicating your final wishes when you are no longer around or no longer of sound mind. This is commonly accomplished using wills, trusts, powers of attorney, and advance medical directives.
Communicating your final wishes can be emotionally draining and some people may be reluctant to get started. What they don’t understand is that not doing estate planning can put a huge burden on your family. For instance, if you die without a will or trust, your estate will go through probate, which is truly a nightmare. Besides peace of mind, these are some other reasons estate planning is extremely important:
Estate Planning Assures Your Assets Are Distributed as You Intend
It is critical to formalize a plan for your assets, so they go where you want them to. An estate plan allows you to allocate your assets according to your wishes. If you don’t have an estate plan, your money and property may not get to the correct person. Without an estate plan, the state in which you reside will decide how your assets are distributed.
Estate Planning and Incapacity Planning Allow You to Indicate Your Wishes and Who Will Carry Them Out
An estate plan often contains a financial power of attorney and an advance medical directive – two vital legal documents that help ensure that your legal and financial and medical affairs will be carried out the way you want them to be. A financial power of attorney appoints a trusted relative or friend to manage your legal and financial affairs, should you become unable to do yourself. An advance medical directive gives someone you choose permission to make healthcare decisions for you based on your wishes if you’re incapacitated.
Estate Planning Can Help Minimize Taxes
Some advance planning can save your heirs from getting a big tax bill. For 2023 the gift and estate tax exemption is $ $12.92 million ($25.84 million per married couple). This doesn’t apply to a lot of people, but if you have a very large estate and hope to take advantage of today’s generous gift tax exemption amount, you might want to act fast. The current threshold is set to expire at the end of 2025, at which time it will revert to the pre-2018 exemption level of $5 million (indexed for inflation) for an individual taxpayer.
Financial planning coupled with estate planning can help the rest of us when it comes to taxes. For instance, your beneficiaries will need to pay income tax on money they inherit in a traditional IRA. However, money you leave them in a Roth IRA can be withdrawn tax-free. That’s just one example. Careful estate planning and financial planning can create less of a tax burden for your relatives.
Estate Planning Protects Those You Love
Minor children, special needs children, and sometimes even pets need to be addressed when preparing your estate planning documents. Special provisions in the estate planning documents will nominate a guardian or trustee to protect the ones you love and their assets.
We here at the Farr Law Firm have strategies in place to help all types of people at all ages to plan for themselves and their loved ones. By planning in advance, each person can retain the assets it has taken a lifetime to accumulate and the peace of mind that their family’s needs will be adequately and properly addressed. If you or members of your family have not done Incapacity Planning, Estate Planning, or Long-term Care Planning, or if a loved one is beginning to need more care than you can handle, please contact us as soon as possible to make an appointment:
Northern Virginia Estate Planning: 703-691-1888
Fredericksburg, VA Estate Planning: 540-479-1435
Rockville, MD Estate Planning: 301-519-8041
Annapolis, MD Estate Planning: 410-216-0703
Washington, DC Estate Planning: 202-587-2797
About Evan H Farr, CELA, CAP
