Pull Your Head Out of the Sand
By Vicki Cook and Amy Blacklock
Before I sat down to write this post, I re-read The Simple Path to Wealth. This quote from JL…
“As individuals we only have one obligation to society: To make sure we, and our children, are not a burden to others.”
…is a great segue into addressing a topic that some people take in stride, yet others avoid for various reasons.
I also believe we should do everything in our power to avoid being a burden to others. That’s why a few years ago, I spent some time and money to create a “life & death plan” and make it legal.
A “life & death” plan? You may have guessed that I was talking about an estate plan. I call it a “life & death” plan because the word estate causes some people to tune right out.
They (wrongly) believe that estate planning is only for really rich, old, or sick people.
The truth is that your estate plan protects you while you’re living and your loved ones when you die. It also safeguards the nest egg you’re working so hard to build and maintain.
If you want the freedom to choose what happens to your health and wealth, you need at least some of the essential documents in an estate plan. This goes for every adult over the age of 18.
I’ll describe the documents you need in more detail below. But first I want to share what prompted me to stop procrastinating a few years back and get serious about finishing my plan.
Bad Things Come in 3’s
I made my last will and testament back when my kids were little. While it was a good first step, I never reviewed it over the years or completed advance medical directives (aka living will and health care proxy) or power of attorney documents.
While I knew it was important (and should be a priority), my 40’s was an incredibly busy time with my family and career. I also thought the chances of anything bad happening to me were slim.
But within a year of my 48th birthday, something terrible happened to three healthy and vibrant women I knew very well. A colleague and two neighbors – all in their 40’s – whose kids went to school and played together with mine.
One died of an aneurysm. Another suffered a massive stroke. And the third underwent multiple brain surgeries to remove a large benign tumor. A life-ending and life-altering medical events before the age of 50.
As I dealt with the shock and sadness of what had happened to my friends, I committed to taking care of my “life & death” business. Our neighbor shared some of the difficult decisions he had to make for his wife, and I didn’t want to put my loved ones in that position should something tragic happen to me.
Protected, but in the Minority
If you already have an estate plan that’s up to date – congratulations! But unlike you and me, recent surveys show that most Americans don’t have any estate planning documents prepared.
While it makes sense that Boomers have them in greater numbers, Gen Xers, Millennials, and even some in Gen Z need a few of these crucial forms too.
No matter your age or net worth – if you’ve put “life & death” planning on the back burner or failed to realize that you need to get started, it’s time to pull your head out of the sand.
You know that “nothing is certain but death and taxes” – right? You don’t skip paying Uncle Sam each year, and you shouldn’t put off planning for your death. Even if it is an emotional topic.
Remember, your lack of planning shouldn’t create a burden for others – especially the people you love – during a crisis or time of mourning.
Learning From the Mistakes of Others
It’s hard to argue with the old saying that “we learn best from our own mistakes.” But I think there’s plenty to learn from the missteps of others too.
In the introduction to The Simple Path to Wealth, JL talks about why he started writing letters to his daughter. The goal was to help smooth out and accelerate her path to financial freedom by sharing what took him decades to learn.
If you haven’t been involved in or heard details about the settling of an estate gone bad, pay close attention. There’s plenty to learn from these situations too.
And many of the issues stem from a person becoming incapacitated or dying without having completed estate planning forms.
Neither Karen Ann Quinlan nor Terri Schiavo had advance directives when they were deemed incapacitated as young women in their 20’s. The legal battles that ensued over continuing various life-sustaining measures took years to conclude.
And Prince, Sonny Bono, Amy Winehouse, Bob Marley, Aretha Franklin, and oh so many more celebrities died from serious illnesses or injuries without having a will in place.
Think about who gets a massive cut of complicated estates when someone fails to act. It’s the lawyers who rake in cash!
Their grieving loved ones are left behind to face the burden of reliving the death over and over while dealing with attorneys and the probate court system for years.
The lessons you should take from their mistakes are clear. You don’t want to want to become incapacitated without advance directives and power of attorney documents. And you don’t want to die intestate – without having a will.
Instead of just saying that your family always comes first, back up your words by making an estate plan.
The (Fairly) Simple Path to an Estate Plan
You probably know Warren Buffett’s quote about investing. The one about it being simple, but not easy. It shouldn’t be that difficult to stick to your investing plan to reach your financial goals. But your emotions can often get in the way – especially during significant market swings.
JL addressed that in The Simple Path to Wealth. He taught you how to get there and manage your feelings and reactions along the way.
We recently wrote a book for Adams Media (an imprint of Simon & Schuster) called Estate Planning 101 and took a similar approach. Estate planning is a fairly simple process to understand, but it may not be easy to deal with the feelings involved.
Our goal was to explain not just what to do but also address the emotional aspects involved in estate planning.
The book is a comprehensive guide to help people start estate planning. It explains each of the following forms in detail and what you need to consider as you complete them.
Add these three documents to your must-do list:
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- Advance Healthcare Directive (aka Living Will and Medical Power of Attorney). A living will is a free document you complete that describes your wishes concerning the types of treatments you agree to and the end-of-life care decisions, including life support measures, pain management, and organ donation. If you’re deemed unable to make decisions (incapacitated), your medical power of attorney takes over to make healthcare choices for you.
- Financial Power of Attorney. If you’re unable to manage your finances at some point, this legal form lists who you authorize to take over managing your money and under what circumstances.
- Last Will and Testament. You need a will unless you are single, childless, have very few assets to distribute to heirs, and have an uncomplicated family life. Your will directs how to distribute your assets and names a guardian for your minor children.
As your assets grow and your life situation becomes more complex, you may also want to consider starting a trust. These aren’t just for uber-wealthy people!
A living trust is a legal tool allowing you to keep control of your assets while you’re alive and direct how heirs receive an inheritance after you’re gone. Trusts also keep your matters private, unlike the results of probate proceedings.
Examples of when drafting a trust makes sense include protecting a special needs dependent or children from a previous relationship. You can also set up a trust to prevent your young adult child from inheriting a large lump sum of money all at once when they might not be ready to handle it responsibly.
You might be wondering if you can DIY any of these documents. You can definitely fill out your own living will. But use caution when it comes to the other legal documents.
While plenty of online services offer various options to help you with estate planning, we can’t suggest that unless you have few probatable assets and uber-simple family life. You don’t want your documents to be deemed invalid or fail to meet legal challenges because you chose the most frugal option.
There are plenty of ways to save money by DIY’ing, but for many people – this shouldn’t be one of them.
Also, be sure to review the beneficiaries you’ve listed on various policies and accounts. An ex-spouse will inherit assets if they’re listed as a beneficiary. Don’t make the mistake of assuming your will has your wishes covered. Beneficiary designations trump what’s in a will.
Spend Some Time and Money on What You Value Most
While I much prefer to write about more uplifting topics, I feel strongly about this one. I wish it didn’t take the scare from witnessing what happened to my friends to get me to act. But I’m proud of my husband and me for getting our plan done.
It took less time and energy than I predicted and cost about half of what I had budgeted. If you do your homework (and use resources like Estate Planning 101!), you’ll have drafted much of your plan before you even meet with an attorney. Then you can use the time with an attorney to answer questions and craft the plan that best meets your unique financial and family circumstances.
If you still think it’s too soon to tackle this project, what’s the worst that can happen? You might need to spend a little time and money updating it. But that’s a small expense to relieve what could be a considerable burden on your family.
I shared some examples above about some of the worst things that can happen if you become incapacitated or pass away before you get these forms done. If your assets and family circumstances are uncomplicated, it might not be a big deal. But as you get older, there’s more urgency to finalize your plan.
Don’t skip over these essential steps as you walk The Simple Path to Wealth. When you finish your estate plan, you can relax and follow the words of the flip-flop-wearing Jimmy Buffett and breathe in, breathe out, and move on.
You’ll find several more estate planning articles here, and you can grab free planning checklists here.
For more information on “life & death planning” and getting started with estate planning, check out our new book Estate Planning 101:
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Estate Planning 101 happened to hit my desk at exactly the right time. We’ve had the documents Vicki and Amy describe for about 10 years now — yes, we should have had them sooner — and they are due for an update. We’ll be meeting with our attorney this fall, and I had been reviewing what we had and creating a list of questions and things we need to add and/or subtract.
This book is simple, to the point, very well organized and clearly written. It is exactly the guide I needed. That’s coming from a guy whose eyes glaze over on this subject. You probably need it too.
JL Collins
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For more from Vicki and Amy, check out: Women Who Money
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Some other books I’ve been reading…
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