Do Your Friends and Family Have Proper Estate Planning in Place?

I was talking with my parents this weekend about estate planning.  We got around to the fact that many people are putting off estate planning due to misperceptions about an uncertain economy and the effect that has on the need for estate planning.

My parents have had their planning complete for some time now and I was curious about whether their friends have been as diligent.  As it turns out, they'd actually discussed the matter with a close group of friends.  The group is all 55+ with a high average level of education.  Many had, prior to retirement, been government employees at some point during their careers.  The level of personal assets/income in the group varies widely.

As you've read other places in this blog, elsewhere around the Internet, and in many/varied periodicals - a majority of Americans do not have a meaningful estate plan in place.  So, what do you think?  What were the results of my parents' informal poll of friends?  50% or less having this critical part of their lives properly taken care of?  That's what I thought.

I was pleasantly surprised to learn that every member of the group has some sort of planning in place.  Outstanding!

Now, the next important questions are:  1.)  When was that planning last reviewed? and 2.)  Does the planning still reflect their family situation and wishes?  My guess is that a significant portion of this group hasn't had a review of their plan since before the year 2000 (that is to say, no review since before EGTRRA took effect).  Almost certainly, they've not reviewed their plan in light of this year's estate tax repeal, the attendant tax basis/capital gains tax changes, and what now looks like a fair likelihood of a shrinking estate tax exclusion starting next year.

To those of you have a plan in place - bravo!  You have put yourselves head and shoulders above most of your contemporaries.  The responsibility to yourself and your family does not, however, end there.  If your estate planning attorney has not been in touch with you regarding review of your plan - contact him or her.  If you do not have a relationship with an estate planning attorney you trust, and would still like a review, contact us today.

Don't Put Off Creating an Estate Plan

Any of you who've ever heard Mike or me speak on estate planning know that the main barrier to most people getting their planning done is procrastination.  In fact, it could be that you're reading this site right now thinking, "Wow!  I can't believe I still haven't even started my planning.  Let's see ... the kids have soccer tomorrow, the in-laws are coming in next week, and then I'll be out at that conference in San Diego.  Well, I'll definitely take a look at this when I get back..."

You are not alone.  The majority of Americans have no estate plan at all.  No will, no trust, nothing.  "Tomorrow, and tomorrow, and tomorrow," is the constant refrain.

I recently heard, from an estate planning colleague, the following story of a family that failed to plan and the burden it wound up putting on the children in the family.  Please read this story, take the opportunity to learn from these mistakes, and start your family's planning today:

"Recently, a 21-year-old college student we'll call John came in to my office.  John had received a call from his father last summer.  John was in class so he didn’t answer.  After class John's sister called and asked, “what is wrong with Dad”?

"Immediately, John called for Dad and found out that he, age 44, was at the hospital in ICU.  Dad had a stroke while mowing the lawn.  Dad was now in a coma.  He didn’t have an estate plan allowing John to help make any decisions or get any medical information.  He would need to go to court to get a guardianship over Dad."

"So I asked, “Where is Mom”?  John said Mom had a stroke 4 years ago at age 38 and has been in a coma ever since, living in a nursing home.  He'd have to go to court to get a guardianship over her, as well."

"Soon, I got a call from John’s only living sibling.  She lives in another state and is 24 years old with 4 kids.  She asks about her deceased sister’s children (3 of them) who had been living with Dad.  John failed to mention the children who now have no one with legal authority to care for them or to make decisions for them.  One of the children has special needs and is wheelchair bound.  He'll need to go to court for 3 more guardianships!"

"So now, 21 year old John is looking at 5 guardianships – with no job and no real parenting/caretaking skills.  No friends that qualify as guardians have stepped up.  No one.  This is the worst situation I’ve ever had walk into my office.  Now the 21 year old has 5 guardianships under his belt and a forever altered future."

One of the least expensive forms of education we have is learning from other people's mistakes.  Don't let this lesson pass.  It's never too early to start planning.  No one thinks anything will happen to them, especially if they're only 38 or 44 - but it does happen.  Do something today.