How to get over your estate planning fears

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How to get over your estate planning fears

Back when I had a day job, my co-worker told me how she and her husband, after several years of dilly-dallying, finally got around to creating a will.

"My husband was so funny about it,” she said. “He thought that after we got around to it, something really, really terrible would happen.”

Now that my mom and I are both creating our own wills and living trusts (how's that for cross-generational bonding?), I’m curious about what hangups people have when it comes to estate planning. I have a few fears of my own and have been mired in analysis paralysis.

I’m not the only one putting off an estate plan. Many Americans subscribe to the “let’s wait and see" plan, said Samuel Rad, a UCLA instructor and certified financial planner at Affluencer Financial. The price of doing this? If you live in the U.S., your assets are subject to probate, and court proceedings can cost an average of 5% to 8% of your entire estate value. (Life insurance could help pay probate costs.)

“Most Americans don’t plan their estate because there is no urgency since death feels so far away,” said Rad. “What they don’t understand is that an estate plan is also useful in terms of incapacity.”

Curious to learn what’s keeping others from creating an estate plan, I reached out to pros to see what fears and misconceptions folks have when it comes to creating their estate plans:

Fear of freak accidents & catastrophes

You’d be surprised at how often people see a professional to make changes to their estate plan before taking a flight, said Michael Dinich, adviser at the tax and estate planning firm Your Money Matters.

“It has even led to one of our advisers remarking that we should set up shop in the airport,” said Dinich. "It's remarkable how many individuals fear something like a flight, yet fail to worry about much more likely events.”

It's far more common for someone to develop, say Alzheimer’s disease, or need long-term care than to die in a tragic plane crash, so people need to plan for these types of events. As an estate plan includes health directives and assigns power of attorney.

Getting hung up over contingency agents

Back to fears creeping up right before flying: While you should pick beneficiaries and agents for worst-case scenarios, it’s also not likely a plane will go down, killing your entire immediate family, said Quentara E. Costa, a certified financial planner at Pow Wow, LLC. People may also find themselves in a state of analysis paralysis picking a charity or next-tier beneficiaries if their immediate family dies in, say, a fire.

“It’s not worth spending more than a few minutes mulling over options,” said Costa. “For instance, I’ve seen people agonize over beneficiary charity selections for weeks when it would mean the spouse and all four children would have to pass simultaneously in order for that to come into effect.”

The 'Once I Do I Will Die' syndrome

The fear of dying once you finish your estate plan is common, said Neal Frankle, certified financial planner at Wealth Pilgrim. Perhaps thinking about how your assets will be divvied up feels like mortality is staring at you straight in the face. Or it could be the thought that life for your loved ones will go on after you pass.

To help his clients overcome this fear Frankle shares his personal experience.

“When I found out I didn't die, and I realized that I could change the plan whenever I like," Frankle said. "Therefore, it wasn't an epic decision.”

You can also make changes to your estate plan. In fact, it’s a good idea to review it after a major life-changing event, such as getting married, divorced or having kids.

Creating conflict among your loved ones

Another fear many people have when creating a plan is that it will stir up conflict in the family, said Frankle. To overcome this, point out that having a plan in place, even a flawed one, is better than nothing.

“My parents died young, and they had almost no insurance and absolutely no plan,” said Frankle. “That made the tragedy of their deaths far more painful and frightening to the four children they left behind. Having a plan and the right tools to implement the plan will create far less conflict and fear than conveniently ignoring this issue."

Fear that it’s too complicated & costly

As many people shiver at the thought of dealing with legal language, they avoid estate planning lawyers altogether. Plus, they’re afraid it’ll cost too much. Most estate plans done by a professional costs an average of $2,500, said Rad. This may sound like a lot, it's nothing compared to a $500,000 home that ends up going through probate, which could cost you $40,000.

While the math might make sense to get an estate plan in place, your financial situation may be holding you back. It's hard to prioritize something that doesn’t feel urgent. But if you want to get your estate plan done by a professional, start socking away the funds now for a will or living trust.

Fear of a 'limited time' estate plan

Some people bear the misconception that, like a special promotion to one of those makeup box subscriptions, one’s estate plan will only be valid for a limited amount of time, said Somita Basu, partner at Norton Basu, LLP.

“We often come across people who ask questions about how long their estate plan is good for,” said Basu. “One client heard from a friend that their living trust was only valid for five years.”

A living trust is pretty much valid until it’s revoked or amended.

The bottom line: Whatever fears, concerns or hangups you have about creating an estate plan, it behooves you get over them and have an estate plan in place. Once you do it, you can give yourself a pat on the back.

Image: monkeybusinessimages