Estate Planning: Fairness & “Entitlemania”

Talk to any daily money manager, financial advisor or CPA, and we all agree that having a current estate plan is a must, especially if you own real estate. But there’s an underbelly to estate planning that many don’t like to discuss. Family squabbles. Hurt feelings. Broken relationships. You can help your survivors and beneficiaries now by managing emotions and expectations before it’s too late.

It’s Cheaper to Plan

Many Americans don’t have an estate plan simply because they are uncomfortable talking about their death. In fact, 55% of American adults do not have a will or estate plan in place according to LegalZoom. Die without a plan, and your heirs will spend money in probate court. It’s estimated that $2 billion a year is spent on probate court costs and attorney fees. Imagine the cost savings by having a plan in place. Depending upon the attorney and your estate’s complexity, plans can start as low as $500 and average $2,500.

Communicate Your Wishes

If you’re uncomfortable talking to your beneficiaries while you’re alive and kicking, then speak from the grave via a letter. Your estate plan can include a general letter as well as individual letters for specific loved ones. Smooth potential ruffled feathers by explaining your decisions of how you’ve divvied up your wealth and belongings.

Involve Your Beneficiaries in Decision Making

In her book Missing Pieces Plan, certified financial planner Jody Giles shares two ingenious ways of involving beneficiaries in decisions about dividing assets:

Round Robin – each beneficiary gets a turn picking an asset or heirloom. You’ll need a list of sentimental items and valuables such as jewelry, furniture, art, cars, etc. At the end of the round-robin process, you’ll know what each of your loved ones wants and what items should be sold or donated.
Play Money — give each heir an equal amount of play money. Each has an opportunity to “buy” items from the estate. You’ll need a list of items as well as their appraised value.

Too Much or Too Little

In his provocative book Entitlemania, Richard Watts writes about the “me” generation and the dilemma well-intentioned parents enabling them. Watts is an advisor to many well-known, successful American families; he’s seen the extremes of entitlement and the damage it can cause.

If you’ve made (or are aspiring to make) the Forbes’ 400 Richest People in America list, then this book is a must read. Parents are urged to ask some important questions from “how much is too much?” to “how much is too little?”

Watts’ advice? Give your children enough that they do something, but not so much that they do nothing.

It’s Your Legacy

In working with several senior clients, I’ve seen them scrimp when they didn’t have to. They were worried about leaving money for their loved ones. However, when asked, their adult children were most concerned about their parents’ comfort, health, and happiness.

If you haven’t already, I urge you to create an estate plan. Give yourself the peace of mind. If you need help in pulling together your finances and making sure it will last your lifetime, call me for a complimentary 30-minute consultation.

Photo credit: Jay Phagan, Liz West

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