Guest Post: Getting Real on Estate Planning


[Editor’s Note: Reader ToddR noticed, correctly, that I know very little about estate planning, despite my having written a post about it last week.  He offered up his real-life experience with the topic.  I’m pleased to have a great guest post on the issue of estate planning.  I am also doubly pleased since I’m on vacation this week!  – The Banker]

The Banker dangled the idea of elaborating on estate planning.  Thrillingly, I’m jumping at the chance to briefly upstage a Harvard man.  [1]

As was previously noted, this isn’t legal advice so, reader beware.  The Average Joe thinks that estate planning consists of calling a guy that your cousin recommended to have him draw up a “last will and testament,” and voila – estate planning can be crossed off of the to-do list.

This is both patently wrong and exactly how the estate-planning legal cartel actually wants you to approach the topic.  The facts are this:

1)     Estate planning needs to be thought out and executed when everyone involved is of healthy mind and healthy body

2)     Estate planning professionals will either make money on the front end or the back end

3)     Each member of the estate needs to have a basic understanding of wills and trusts (even if a trust isn’t selected)

4)     4) It’s not a one-time event, it requires a little maintenance.


So, I’m not going to analyze all of these rules.  In fact, I’m not going to analyze any of them.

Instead, I’m going to present a quick story that will hopefully illustrate all four (and perhaps even a few other) codicils when it comes to what can happen when someone dies and isn’t prepared.

In June of 1997, my father’s first cousin passed away.  She was a simple woman.  She never married and had no children, nor any siblings.  What she did have was a lot of money and as it turns out, a lot of cousins.

Few of these cousins were familiar to me until after the rich cousin passed away.  Then, those cousins’ names became regular features in our lives.

My father was the executor of the estate.  He quickly found his late cousin’s will, flipped to the very last page and called the number of the attorney who had prepared that will back in the 1980s.

That attorney was saddened by the news but promptly invited my father in to his office for the first of several meetings to settle the estate.  My unsuspecting father says that it wasn’t until the third or fourth meeting with the attorney that he figured out what was going on.  The attorney, my father alleged, was milking the estate with unnecessary meetings and discussions, all of which would be tallied and paid out, by the estate.

What a cash cow.  What’s more, this licensed professional failed to propose to my dad’s (now deceased) cousin that she might consider a living trust, IN ADDITION to a will.  So simple, but we’re confident that there was never even so much as a suggestion of this device.

Why might that lawyer have omitted introducing this simple technique?  Because with a trust, the people involved pass their assets privately and simply, and without the involvement of anyone.  Most notably, the estate skips (read: has no involvement with) the probate system.

What’s probate?  Something you won’t like if you’re an heir to the estate.  Probate is the judicial and administrative process whereby dead people have to pay off their debts and settle claims before the living people get their post-tax share.

This process typically involves a minimum of one judge, one court reporter, and you guessed it, one attorney.  All of those people require income to survive and guess who pays that income?  The deceased person’s estate.

But, pretend that the dead person had created a trust which collected and held all of his/her assets.  The judge, the reporter, AND the attorney would never even be made aware that someone had died.

The assets held by the trust (house, bank accounts, IRAs, cars, and everything else) would belong to the trust but be under the absolute control of the beneficiaries of the trust.

And the trust is like a little ghost who only takes instruction from the trustees.  When my dad’s cousin passed away, the moment that a doctor declared her no longer with us, all of her belongings would have immediately transferred to the people named in her trust – bypassing all of the legal roadblocks.

Beware, unless there are elaborate trusts, foundations, contracts, etc…the IRS will get their cut.  There’s just no way to get around the tax man.

But, there is a way to get around the lawyer.

That way is decent estate planning and that starts with a trip to the library.  A Dummies book will probably suffice to get you started.  Just please get started.

So, my father’s cousin’s estate was separated from many thousands of dollars.  The people on the receiving end (luckily) didn’t haggle with one another too much.  So, the divvying went smoothly.

But, if they had been hagglers and the estate hadn’t been given at least some forethought, it would have been a lawyers’ gravy train for some time to come.  Hit fast forward on this story – after this debacle was concluded, my parents sat each of the siblings down and reviewed their wishes with whatever remained after the last one of them passes away.

We’re all clear on how things will go down when that day arrives.  The advice that was also imparted to us is listed above, in facts one through four.

Don’t take it lightly.

When someone dies, everyone is bummed out for a while.  Sitting down with bummed out people and trying to divvy up that person’s property is completely the wrong way to do it.  It needs to be planned out so that the exchange is smooth and doesn’t even become a topic during funerals, wakes, and sitting shiva.

Realizing and reflecting on the fact that you, me, our collective parents (and cousins), and everyone else is going to die, is heavy subject matter.  But I would much rather have a Nietzschean-meaning-of-life crisis when people are alive than when I’m mourning a loss.

So, please, get reading and start reading about estate planning.


[1] Editor’s Note: Here’s where I remove the pipe from my mouth, dust the tobacco ash off my v-neck cardigan sweater, and chuckle softly to myself.  “You know ToddR” I say, “you can always tell a Harvard man, but you can’t tell him much.”

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2 Replies to “Guest Post: Getting Real on Estate Planning”

  1. First of all, doing the ‘math’ to get to reply to this post is a challenge when one’s synapses are not connecting so well, which brings me to the reason I am responding to the recent post about wills and trusts and planning. I am 71 and have an expiration date.

    I am a ‘death’ freak in this society, because all of my life I have been acutely aware that we are all perishable and that unforeseen events can happen any second and they do. So I always sent my precious little children off to school with a kiss and the reminder that if I was dead when they came home, to remember that I loved them well. Naturally my children and my friends think I am nuts.

    Talking about death and planning for the inevitable is one of the hardest things to do in this society. I won’t elaborate on my mother’s planning for her demise and what ensued when she died because everyone involved was not on the same page, or about making sure that a new wife doesn’t get what I worked like a dog for if I kick off tomorrow (both things having to do with wills and trusts). I want to underscore that health care planning is almost as important and critical (no pun intended) as wills and trusts, because before you drop dead or waste away, you are owned by the medical society. Very few people ‘get it’ until they have been stamped with some disease, like cancer which I have, and then you are caught in another mill that has huge financial implications because let’s face it, doctors are taught ‘first do no harm’ and they are trained to save lives. If it takes 80 procedures (and more than half are to protect against malpractice in that they didn’t neglect anything), there’s all the more reason to know where you are headed and what you are headed into.

    I think that ethically it is extremely difficult to separate the service from the remuneration. I was a psychotherapist for 17 years. I had a private practice. I tried to set realistic goals and work within understood time frames. A therapist who works that way works toward getting ‘patients’ back into society and managing independently, can put themselves out of business because if I encourage you to ‘end’ treatment, maybe I can’t go to Wellfleet for the month of August. Just like the eldercare attorney or the medical service person, the financial connection to the services rendered become one of those pre-conscious issues that rarely is tapped (maybe conscious).

    I’m thinking of beginning to post my four-year-old cancer journal to tumblr, as much to add more written word to my credit (or not credit) as it is intended to be a thoughtful diary of what all well people need to know before their bodies crash. Who would ever have thought that I’d be donating my body to medical science years before I was dead. Money talks.

    1. Paula,
      Thanks for reading and commenting. I’d be interested in your Tumblr blog, and of course any advice you want to share. The kiss and reminder to the little children is a bit odd 🙂

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I founded Bankers Anonymous because, as a recovering banker, I believe that the gap between the financial world as I know it and the public discourse about finance is more than just a problem for a family trying to balance their checkbook, or politicians trying to score points over next year’s budget – it is a weakness of our civil society. For reals. It’s also really fun for me.

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