The Four Horsemen of the Estate Planning Apocalypse

THE FOUR HORSEMEN OF THE ESTATE PLANNING APOCALYPSE

I’ll explain the dangers and flat-out financial and time costs of these sinister enemies that come with a death and ensuing probate if you don’t have the proper estate planning.

Nobody likes spending money to think about their own death. It’s not very fun, and it’s not even something you get to enjoy the benefits of yourself!

But estate planning can buy you some peace of mind while you’re alive. A clear to-do list. An easier night’s sleep, knowing your family is taken care of.

It buys you protection from THE FOUR HORSEMEN OF THE ESTATE PLANNING APOCALYPSE.

I’m talking about:

Loss of Assets

Family Frustration

Future Fights

Future Costs

I’ll explain the dangers and flat-out financial and time costs of these sinister enemies that come with a death and ensuing probate if you don’t have the proper estate planning.

There’s simply no way you can expect to avoid the Four Horsemen without a complete estate plan. What do I mean by that? Well, obviously you need a last will and testament. But JUST having a will isn’t nearly enough. You need to consider lifetime agency and directive documents like Powers of Attorney, Advance directives, and declarations of guardianship. You also might need to plan for estate taxes or set up trusts. Having a complete, well-rounded plan will be your greatest weapon against the Four Horsemen. Now, let’s examine these looming estate planning doom bringers.

The First Horsemen: Loss of Assets

If your plan is incomplete, your assets are not safe from creditors, the government, or even unwanted family members. Your family might not even know some of your assets exist, let alone where to find them!

Now, one of the biggest problems in probate is finding assets. Think about it—if you passed right now, would your family know where to find your stuff? Here’s how we can limit Loss from upsetting your plan.

Do you have a list of your assets? It doesn’t have to list the exact, to-the-penny balances, but a rough list of where everything is located so people can actually find your stuff is a first step.

Do you have any digital assets (like photos, accounts, domains, NFTs, or cryptocurrency) that should be preserved? (We need to know where these things are to save them. Or maybe just need to know to delete your Ashley Madison account.)

Have you checked Unclaimed Property? (There’s a lot of unclaimed property out there, possibly yours. Go get your stuff.)

Does an advisor or family member have a list of all your financial accounts? (Financial Advisors don’t always have the full picture, and just focus on the accounts they manage. But we don’t want to lose those accounts.)

Are there any assets you haven’t identified, like points and miles? (Again, don’t leave anything out.)

Do you have a safe deposit box? (There’s no automatic record of it, so we need to know about it before you can’t tell us)

The Second Horsemen: Family Frustration & Delays

An incomplete plan invites even more stress into the situation in the form of frustration and delays.

Nobody wants to leave a mess, and there will surely be some frustration when you pass. But you want to minimize that frustration so there are no surprises, the process doesn’t take longer than necessary, or the plan doesn’t fail in any other way.

So how can we minimize that frustration?

Where’s your original Last Will stored? (Having the original is a MUCH better answer than just a copy)

Does your executor know they’re appointed? (They can’t act if they don’t know they’re supposed to be doing so.)

Have you protected yourself from identity theft? (Freeze your credit reports if you can.)

Do you have any requests for your funeral? You should communicate those requests so people know what you wanted. Even better if it’s written somewhere.

When you pass, the banks will freeze your accounts. Will that cause a problem? Short term liquidity issues are potentially crushing to families.

The Third Horseman: Future Fights

A death in the family can cause a lot of turmoil, and when there’s a lot of money and assets at stake, it’s a recipe for conflict. Sometimes certain family members are able to keep fights at bay while they’re alive, but once they pass, the gloves come off, and everyone is ready to get their pound of flesh for every real and perceived grievance from the last few decades that they’ve saved up until now to unleash.

A good plan will identify and defuse some of those potential fights that may happen once you’re gone. How? Ask yourself:

Does your attorney have a list of all your family members? (Who are the players?)

Are there any people who could cause problems when you’re not here by challenging your plan?

Does your plan address how to distribute those special assets so that there won’t be fights over assets that can’t be split? Not every asset can be easily divided among your beneficiaries, but your plan may result in your beneficiaries receiving undivided interests in assets that they can’t share (like a business, a house, or a car).

The Fourth Horseman: Future Costs & Taxes

The end of a loved one’s life is an incredibly difficult time for the family. A complete plan makes sure they’re left with the greatest benefit possible.

There will be some costs, but if you know what’s coming, you should be able to minimize or eliminate some of those costs now. You shouldn’t have to pay more than you should. What are the unexpected costs? The unforced errors?

Ask yourself:

If you have a plan, when was the last time your Last Will/Trust was reviewed? (We want it to still work!)

When was the last time you confirmed your beneficiary designations on all your accounts? (Like the Last Will, this is important to be sure the plan works.)

What are the expected income tax consequences of your death? There are many things that change for income tax purposes when you die, and your beneficiaries may be paying more in income tax if your plan has certain mistakes.

While most people aren’t thinking about estate tax right now when the exemption is $12.06 million per person, that amount is going to come down in a few years. And planning for that change now should be part of your plan, even if you don’t have the seven Porsches and manicured gardens.

Have you included all the life insurance death benefits when determining if the estate tax will be an issue? (That’s a big issue in not evaluating tax exposure. The death benefit is subject to Estate Tax, even if it’s not subject to Income Tax.)

In Summary

Now, not every one of these questions will be an issue for you and your family. And this isn’t a complete list of everything thing that could go wrong. But what you’ll see is that there are many ways to address your issues, and it’s better to address them while you’re still alive.

And the best way to do that, the best protection against the Four Horsemen of the Estate Planning Apocalypse is an estate plan tailored to you, your family, and your unique needs.