If you’re reading this article, I’m genuinely glad you’re here.
Maybe you’re new parents who are thinking for the first time about how you safeguard the future of your children. Or perhaps you’re approaching retirement, and now you’re looking ahead to the legacy you want to leave. Heck, maybe you’ve gotten remarried (Congratulations!), and you want to make sure none of your loved ones are accidentally disinherited in the event of your passing.
Regardless of the circumstances, I want to acknowledge how challenging and emotional this topic can be. Because a conversation about estate planning requires us to think about our own death. As a result, many folks won’t even bother thinking about this topic at all. So, the fact that you are thinking about estate planning, even in the most general sense, puts you ahead of many other people.
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Yes, you may experience complicated emotions you don’t expect; that’s entirely normal, so I encourage you to be kind to yourself. And yes, sometimes this process can be frustrating — to the point where we want to toss our hands up in the air and say, “Forget it! I’m just going to leave everything to my family, and that’s that. When the time comes, they’ll get it all sorted out.”
However, the importance of estate planning asks us all to approach the task with purpose, intention, and thoughtfulness. To be clear, what follows in this article is, in no way, legal advice. Rather, my goal here is selfless education. I’m going to discuss why estate planning is so important, common mistakes you want to avoid, and hypothetical examples to help guide your next steps.
This was the moment I decided to create my first estate plan for myself. I only had a few weeks before I left, when my worldview entirely changed — you see, I found out my wife, Christie, was pregnant with our first child.
Up to that point, I was an assertive adrenaline junkie. But now? I was responsible for somebody else who cannot take care of themselves. Suddenly, I was thinking about my future child, as well as my wife. What if I died on that airplane ride to Russia? I’d be lying if I said this didn’t make me emotional.
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With my departure imminent, I didn’t have time to make a more comprehensive plan. So, I sat down and outlined what I wanted to have happen with my estate, if I died. Then I signed it and handed it to my mentor and sales manager.
I share this story to illustrate why estate planning is so important. For the vast majority of you reading this, you are likely thinking about planning your own estate in order to (at least in part) take care of loved ones.
At its core, estate planning requires us to apply logic and reason to a topic that is emotional — we’re concerned with the welfare of family members, while also having to face the realities of our mortality.
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For instance, you may want to pass your wealth, or whatever your estate may entail — we all have something to pass down — to your family. OK, you can absolutely do that. However, there is a complex legal process that needs to be followed to make that happen, and the last thing you want to do while navigating these complexities is allowing your emotions to take over.
Sound Financial co-founder and President Joel Holden underscores this point with this powerful example:
Meet Pat and Shirley, a happily married couple with two children and a home. Sadly, tragedy strikes, and Pat passes away without an estate plan in place. All of the assets move to Shirley’s name, and life goes on.
Eventually, Shirley remarries Mark, and he has two children of his own. Now, we have a blended family. They sell Shirley’s original home and buy a new home together under Mark’s name. The years go on and, eventually, Mark passes away. Again, without an estate plan in place, all assets (property, money, etc.) passes directly to Shirley.
But let’s say Shirley doesn’t like her stepchildren. Even if Mark would have wished otherwise, she is under no legal obligation to share anything with them. Or, let's say Shirley does love her stepchildren. Depending on how the house was titled upon her passing (i.e., it was only in her name), it may pass directly to her children, no matter what her wishes may be — unintentionally disinheriting Mark's children.
The moral of the story here is that emotional decision-making in the estate planning process — or failing to make a plan at all due to avoidance or lack of priority — can have unintended consequences that cannot be undone.
And these types of scenarios, although extreme, are more common than you think. In 2021, the Congressional Budget Office reported that 54% of Gallup-surveyed Americans did not have a will. Even those who were considered “wealthy” weren’t immune, with only one in five stating in the same survey that they had an estate plan in place.
In addition to examining your wishes surrounding your assets and wealth, you will also need to develop an end-of-life plan as a part of this process. Your end-of-life plan covers what you wish to have happen when you are no longer able to take care of yourself.
More specifically, you need to put someone you trust in charge, when you are either physically or mentally incapacitated to the point where you cannot make sound decisions regarding your assets, your body, and your overall well-being. This can be accomplished with a few simple legal documents (e.g., a power of attorney and a healthcare directive).
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Now, as to who you leave in charge, that’s a personal decision. However, I often encourage folks to think about the person who will be sitting by your bedside, as a starting point.
In estate planning, “shortcuts” can assume other forms from what we’ve covered so far. For example:
But one of the most common ways I see individuals cut corners with an estate plan is by choosing to not work with a professional. In the short term, you may think you’re saving yourself the cost of an estate plan, but what you’re effectively doing is costing your family money, time, and (usually) a lot of stress down the line.
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Don’t get me wrong, cost aside, I know it can also be challenging to sit down with a financial planning professional to discuss such delicate matters. My strongest recommendation here, as hard as it may be, is to not be intimidated. Most professionals in this line of work got into it because they’re not only good at what they do, they also genuinely care about what they do.
Now, I know that, for some of you, this article may have confirmed your “worst fears” about estate planning — that this process can be emotional, it can be complex, and it will require focused time and commitment of resources on your part.
As a man of faith, I want to speak plainly to this. You are going to die, or Jesus is going to come back — those are the only two things that are going to happen. More than likely, what you can count on is that, 50 years from now, someone else will own every one of your assets, as we will all spend eternity somewhere else.
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This is where you need to bring your thinking into the physical by making an estate plan now and not deferring to distant time in the future — when you’re “in the right headspace” — or indefinitely. I’ve sat down with too many people who regretted not getting started sooner, or waiting until it was too late to get their affairs in order.
The good news is that there are plenty of folks out there who are passionate about helping you through this process. You don’t have to go through it alone.