July 17, 2019. By Jennifer Wolfsberg:

It’s human nature to avoid that which makes us uncomfortable.  It’s also human nature to avoid topics we may not enjoy or have little to no interest in.  And how about topics we are scared to discuss?  These too get pushed aside.

This series of articles is not designed to provide yet another “To Do List” but instead to challenge people to reflect and activate self-awareness to identify why, as humans, we avoid addressing certain topics.

Our industry can often be seen by most as a wall of numbers.  A vocabulary of terminology that can leave many overwhelmed as they find themselves starting, stopping, and restarting the financial planning process over and over again.  They later find that their procrastination has robbed them of crucial planning years that could have made a positive impact on their financial or estate plan creating safety, transparency and financial security for themselves and their family.  

Is this due to the intimidation of legacy planning, investment return discussions, and industry verbiage? Or is it because we, as people, don’t want to know the truth behind our finances or face questions about our own mortality or incapacitation? 

This article is formatted and designed as a two-part series addressing human psychology around planning avoidance and the block that we see in so many families and individuals as it pertains to estate and financial planning. 

The Avoidance Dance and Estate Planning

The truth is, no one wants to discuss estate planning. I mean, who REALLY does?  Luckily there are families and individuals that are proactive in nature, likely because they have experienced the loss of a loved one and witnessed firsthand what plan avoidance can do to a family.  There are many others, however, that are superstitious in nature… Yes, it is true.  These hesitant planners think that if they create and execute an estate plan it somehow accelerates the possibility of their passing. While an interesting thought this has yet to be proven scientifically.

There are others that will avoid this topic for years, insisting they will just pass it to a family member, stating they can deal with it. “I will be gone anyway” is a commonly heard phrase as they make light of the issues they will leave behind, using sarcasm or humor as their avoidance tool.  And then there are those who have the best intentions and may actually make a formidable attempt to start documentation yet will never, ever, actually finish, sign or execute their plans.  Fidelity recently published a shocking statistic that although many families have stared the estate planning process, only 8% of Americans have an executed estate plan. 

This article speaks to all planning perspectives and personalities noted above and beyond.  I am sure you can find a fit of your personal profile and identify within one of these scenarios- possibly smiling to yourself at this very moment.  I recently had a meeting with an estate attorney, and when I went to her office there was a large stack of manila folders reaching well over 12 inches high.  I casually mentioned, “It looks like you are busy with upcoming appointments and meetings.” As I pointed and referenced the stack of folders behind her, she turned to look at the towering stack and said, “Those are all the clients that have met with me to draft and design their estate plans, but have yet to sign any of their final documents.”  I was in awe. Virtually speechless.  These families have taken the time, paid a professional for drafting, guidance and counsel, and these folders have remained unopened, unexecuted for years regardless of her ongoing follow up and countless calls to the families.  They are frozen with indecision which she confirmed is all too common.  The sad part was several clients whose plans lie in that stack later passed away. Having never finalized planning they have left behind a lack of direction and months, if not years, of probate issues to family because they could not bring themselves to talk about the unimaginable. 

The thought of addressing what may happen upon your passing, whether through a long illness or accident is of course, unsettling.  What is more tragic however, is asking a loved one or family to try to physically and emotionally function through such horrific sadness and grief while dealing with an unorganized estate and possible probate issues.  Let’s add some additional layers …. Balancing work, running a company, caring for small children, elderly parents or special needs children, at the same time as addressing estate administration needs and navigating the process.  Many aspects of this are avoidable.  Without proper planning and simple titling adjustments, assets can be frozen and inaccessible for many months, limiting the liquidity that families need for running their home, providing for burial services and childcare.  It can also create turmoil and friction within a family unit if directives are not provided or discussed, or if conferring of heirlooms and personal items are not spelled out.  We all hope family members come together in perfect cooperation like in the movies, setting aside differences and reuniting for the sake of the loved one. A more likely story, however, is that greater turmoil ensues even in the best of families.  

We have indeed seen both the supportive and combative family scenarios during times of loss.  Individuals all grieve in very different ways from one another.  Emotional decision making during this time can leave families with permanent poor financial results, the impact of which can affect them for years and often can have a negative permanent impact.

We work closely with families and their estate attorneys to facilitate and execute estate plans. We take a very personal and intimate role in talking through the need and process.  The psychology of planning and avoidance is something we experience on a daily basis, and while it may not be a topic you feel comfortable with (as most do not), addressing the basic foundation of an estate plan can indeed bring great relief and peace to your family and to yourself;  it can actually create a sense of confidence and peace, knowing that you are leaving behind a roadmap for finances, so that surviving family will be able to grieve in their own personal way, and will feel secure with financial stability. 

What legacy do you want to leave behind for your spouse, for their protection or that of your family?  The greatest gift you can give is to allow your loved ones the raw, beautiful memories you shared, and not allow these to be polluted by the effects of settling an estate for the next several years that can slowly erode what you spent a lifetime building. 

If you got this far and are ready to take planning seriously, you will want a few summary items to reference as you move forward.  Here are a few questions to ask yourself as part of your own planning considerations:

  • Was your estate plan created within the last 5 years?  If not, we recommend reaching out to your estate attorney to inquire if any language should be reviewed due to estate tax or state language requirements. Review guardians and beneficiaries listed, and ensure there are no amendments you wish to make.
  • Are you confident that all asset registrations and transfers were made aligning with your plan? (ex. Investment and bank accounts or homes moved to trust registrations).  It is quite common that clients will confirm they have a trust, yet they never executed the funding instructions to fund their trusts.  Many do not even know what to do with their documents once completed. 
  • Do you have an updated Power of Attorney and Health Care Proxy?  Not all estate documents are related to the death or passing of an individual.  Protection and selecting a trusted individual to serve on your behalf should you become incapacitated and make health and financial related decisions on a temporary or permanent basis is just as critical.
  • Do you know who has all original copies of your estate plan?  The attorney will often hold one original and you should hold the other set of original documents in a safe and organized place.
  • Have you had a discussion with your spouse or loved ones on your wishes or directives regarding your healthcare decisions, place of burial, or types of memorial services? Are there sentimental items you wish to share or direct to specific family members?

Talking through misconceptions on estate planning and discussing what is common practice is often helpful for individuals and families to gain comfort in designing and drafting their own personal plan with a great estate attorney.  These open discussions with the attorney can provide an opportunity for families to establish comfort by sharing examples of what other families have done to serve as a reference point.

We know the topics of financial planning and estate planning can cultivate a feeling of uneasiness, of discomfort.  We are here to help navigate the process and serve as your sounding board and advocate. 

Part two in the series by Jennifer Wolfsberg will address the avoidance factors surrounding financial planning and long-term saving.