How many people have a will (or a trust)? Most people? About half of them? How about a third? The answer is that around 60 to 70% of people have done zero estate planning, according to recent studies. That’s a dismal percentage considering that everyone is guaranteed to need some estate planning, whether to deal with periods of incapacity or to pass forward our stuff when we die.
If we all need at least some estate planning, then why do so many of us delay taking even the most basic steps? In part, it’s because we tend to put off things that seem difficult or unpleasant. And estate planning fits that bill. After all, who wants to think about dying or becoming incapacitated?
But avoidance of estate planning is not just because we want to ignore our mortality; it’s also the product of myths that justify our inclination to procrastinate. Let’s talk about five of those myths.
Myth #1: It will work out on its own
Sort of. To be sure, the state has created a default plan for dealing with your property if you failed to make your own. This default approach is known as the law of intestacy. Under it, your assets will be collected, your debts tabulated, and your stuff distributed. But you’ll have no say in who gets what or how much. And the entire process will last months, if not years, before your heirs receive anything.
The default rules are even less exciting if you are alive but unwell. For instance, what happens if you are in a coma or have dementia? In other words, if you are alive but not well enough to make important decisions on your own, who can do that for you? Without the right estate-planning documents, usually a court will need to decide that—a slow, expensive, and often embarrassing process. But if you have the right documents in place, these issues can be handled swiftly in a manner you already decided by someone you previously selected.
Myth #2: I don’t need it yet
The idea here is that estate planning is only for the old and unhealthy. But what about the simplest case: A young, single adult. What happens if they get in a serious car accident? Who can make medical decisions for them? The answer might surprise you. The reality is that even young people should have several simple estate-planning documents like a financial power of attorney and a medical power of attorney to address worst-case scenarios.
Myth #3: Planning will cause family conflict
People prefer to avoid conflict. It’s messy; it’s uncomfortable. And having conversations with your family about what they will—and will not—be receiving when you die can be quite uncomfortable. But if you think avoiding conflict now will save trouble later, then you are ignoring how the world works. Problems don’t go away; they grow until they explode.
That’s even more true in the estate-planning realm. Death is an inherently emotional time. Everyone is wounded and sensitive. It’s also an unstable time, especially if you were the family leader or the glue that held it together. Talk about a powder keg. And all it takes to go boom is two heirs disagreeing over who should get what. In short, not planning your estate is a great way to prime the stage for events that could splinter your family after you pass away.
Myth #4: I’m not rich enough to need a plan
This myth is a close cousin of Myth #2 (I don’t need it yet). It thrives on the mistaken belief that estate planning is just about money. It’s not. Estate planning is holistic. In addition to money, it’s about your legacy, how to handle health crises and, if you have children, what happens to them if you die or become incapacitated.
Myth #5: Planning is not worth the price
Estate planning is not free. It’s going to cost money. But not planning our estate also comes with costs—often the much higher price of hiring a lawyer to obtain a court order after we’ve died or become incapacitated, a court order decreeing something that we could have quickly and inexpensively done if we had planned our estate. So, the real question is not how much estate planning costs but whether the benefit of planning outweighs the cost of doing nothing.
To drive that cost down, some of us may be tempted to look online for a do-it-yourself template. If so, a word of caution: While some of these templates are fine, many aren’t. And none of them are written with the CNMI’s laws and practices in mind. Thus, these templates are a roll of the dice. And we won’t find out whether that roll was a good one until after we’ve died or become incapacitated—i.e., well after it’s too late to solve any mistakes.
To sum up: Everyone benefits from some estate planning—even young, single adults with no money. But not everyone needs the same amount of planning. To figure out how much you need, consider speaking with a qualified estate-planning attorney about your situation.
This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.