The idea of planning is to stay one step ahead of split-second decisions and crisis troubles, but still a large percentage of families are reluctant to tackle an estate plan. This week a group of financial planners, retirement planners and fiduciaries sat down to discuss the most common reasons families avoid dealing with estate plans.
For this purpose, an estate plan is essentially a will and a trust, long term care insurance if needed, a power of attorney, power of health care directive and a Polst or DNR form.
Denial came up as #1 to avoid estate planning. Few younger people want to face the idea that they could be here one day, gone tomorrow, whether due to accident or illness. Older individuals tend to be better prepared, but that doesn’t mean they’re willing to talk about their end of life wishes, such as how much medical intervention they desire and when to access in-home care or assisted living options.
Often families think they don’t have enough assets for an estate plan, for example, those who are upside down in their mortgages right now.
The #3 reason to avoid an estate plan is procrastination. It’s this idea that we know we need an estate plan, and we’re going to get to it as soon as we can. Problem is, this lack of a firm timeline makes it possible to just continually kick the can down the road.
Many people don’t know how to start an estate plan, so they simply don’t start one. A good place to start is with a financial planner or trust attorney. There are also online resources that can help with basic preparations. Even a simple hand written will is better than none at all.
The #5 reason to avoid a trust is conflict. Many families end up arguing when financial or end of life issues are brought up. One case study involving this was an elderly couple who had fought over money their entire 60 year marriage. They never did agree on how to gift it upon death. When both spouses died within four months of each other, with no children, their substantial estate ended up in probate court.
Given the current economic realities, many people right now are just in “survival” mode, not planning mode. If someone is concerned about havign enough money to buy food, pay rent or the mortgage or pay high college tuition or student loans, they are less likely to be planning adequately for retirmement.
The #7 reason is that they just don’t understand the need. Many people think that their assets will simply pass to the heirs of their choosing without considering squabbles, tax implications, the cost of probate court and any number of problems they can’t forsee.
Especially for those experiencing loss or health issues, depression may be a reason to avoid an estate plan. That came up as reason #8. When someone is experiencing emotional pain, it’s hard to care about what may happen that day, let alone at some random point down the road.
Cohabitation is another reason people may feel uncomfortable making big decisions about their estate. Blended families, later in life marriages and multiple step-children and biological children can lead to conflict over wills and trusts.
Cost ended up the #10 reason to avoid an estate plan, as many people don’t realize plans can be worked out for a couple hundred dollars up to several thousand dollars, depending on the assets, the complexity and the amount of detail needed. In these tight times, it may seem like a financial stress to create a good estate plan, but having a plan could end up saving everyone involved from the creater losses than come from not having one.