2 stories from my childhood that convinced me to spend my career championing estate planning

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• As a child, I remember the confusion and questions inspired by a person’s death.
• Working now as a financial planner, I never want my clients’ families to be in that position.
• So, I make sure that they’re leaving some money behind, and that they take care of basic estate planning.

As a fee-only financial planner, I have a responsibility to address all areas of a client’s financial life, but estate planning is a specific passion of mine given the impact — positive or negative — it can have on families.

Estate planning, I’ve found, is important for everyone to address no matter how much money you have. Upon the death of a loved one, I believe that financial stability and preparation can allow family members to grieve in a healthy manner. 

In the following two stories from my childhood, some level of estate planning could have vastly improved each situation. The names have been changed, and these stories are over 30 years ago old, so I don’t remember every specific detail.

Don’t overlook life insurance, especially if you don’t have savings

Bill worked extremely hard during his life, and never seemed to have any money concerns. He had a house and it appeared that he lived somewhat comfortably. Unfortunately, he was diagnosed with cancer in his early 60s and subsequently died.

Multiple family members started collecting money to pay for Bill’s funeral, which caused some disagreements because some family members were asked to contribute more money than others. I was always puzzled by these types of occurrences. Why are people arguing when they should be grieving the loss of a loved one? After working for so many years, how did Bill not have enough money available when he died for our family to pay for his funeral? It made no sense to me.

As I look back, I now understand that Bill did not have the proper knowledge about money. Like many Americans today, Bill probably lived “paycheck to paycheck” and did not maintain any level of cash savings. Even further, he did not have any life insurance.

Lesson learned: Maintain some level of cash liquidity by having emergency savings, which allows family members to address immediate costs upon someone’s death, like funeral costs. If applicable in your financial plan, then also obtain life insurance, which can be a great legacy tool for efficiently transferring larger sums of wealth to beneficiaries. The type and amount of life insurance, and when to purchase it, depends on your specific situation.

Decide what happens to your assets before it’s too late

Mark lived a very simply life and did not possess a sizable amount of wealth, but he was a homeowner. His house would be considered “modest,” but having it still was a sense of accomplishment given the financial challenges that he faced throughout his lifetime. He battled some health issues for years and eventually died in his late 70s.

Mark’s wife predeceased him so there was no real clarity on who would get ownership of his house as he had multiple children and there was not much estate planning completed.

Some questions began to arise: Who would live there? Who would be the new owner? Would the house be sold? Would each one of his children get their share of the equity in the house? I do not remember what eventually happened with that house, but I do recall that there were misunderstandings between family members that could have been avoided.

Lesson learned: Provide clarity by completing at least the basic estate planning documentation:

• Last will & testament: designates who gets ownership of someone’s assets when they die
• Living will: indicates a person’s wishes for end-of-life care if they cannot make the decision themselves
• Power of attorney: authorizes a person to handle matters on someone else’s behalf if they are unable to do so themselves

There are situations where an individual needs more advanced estate planning, but it is prudent to at least start with getting the basic ones completed. Losing a loved one is difficult enough, but adding financial stress to an already sad situation can be devastating.