Prepare

Prepare

For whatever reason there’s been a few deaths in my world lately—neighbors, friends of friends, family of family—that sort of thing. And there is a pretty common theme that I’m hearing from the surviving family members: surprisingly, most of the deceased had not left a Will or trust. 

As you likely know, when someone dies without leaving a Will or creating a trust, their assets have to go through probate, which is a drawn-out, expensive bureaucratic process. And generally something to be avoided whenever possible. 

I get it, in our busy lives creating a Will and trust are the sorts of things that are particularly easy to keep kicking down the road, especially since every single day we’ve been alive we haven’t needed one. But the cost of not doing so could be enormous.

Because I am clearly not a professional estate planner I did some research and came up with a few bullet points that stood out to me (and might be helpful to you):

• Probate typically costs between 3%-8% of the entire value of the estate in question. Meaning that a million dollar estate could cost $30k-$80k in probate costs alone (and often takes 6-12 months to complete). Imagine working your entire life in order to save and invest enough to leave a big chunk of money to your heirs, and suddenly 3%-8% gets lopped off the top simply because you didn’t create a trust while you were alive. What a shame!

• I also learned that a Will, by itself, does not necessarily mean you avoid probate—many Wills still have to go through probate. What does avoid probate, in most cases, is creating a “Revocable Living Trust” paired with a “Pour-Over Will.” This combo appears to provide the best balance of cost, control and efficiency (for many estate sizes).

• Even if you don’t currently have a Will or trust, a really easy first step of estate planning is to log-in to all of your financial accounts (bank, investment, retirement, life insurance, etc.) and make sure that you have beneficiaries listed within those accounts. In the event of your death, your listed beneficiaries for that particular account will receive their inheritance quickly, easily and without probate. 

• If you’ve read the book Die With Zero, you’ll know that there are plenty of legal and tax-efficient ways to begin passing along some of your assets to your heirs before you die. As the saying goes, "it's better to give with a warm hand than a cold one." 

The reality is that it isn’t difficult to create a Will or living trust, you just have to make it a priority. There are plenty of legal professionals that would gladly help you draft one (for varying fees), and these days there are tons of free templates and resources online. Personally, I used a free template to create a “Revocable Living Trust & Pour-Over Will” which I then got notarized. It took me around 2 hours of work and cost a nominal fee at the notary. 

I know that this topic has been unusual in comparison to what I normally write about, but this has been on my mind and I felt like it was important for me to understand it better, and to hopefully pass along some of that learning to others. If this has given even one of you the nudge you’ve been needing to finally start, or complete, your Will and trust, I’ll consider this a success. 

“Only put off until tomorrow what you are willing to die having left undone.” —Pablo Picasso

P.S. It’s entirely possible that my research contains errors or simply doesn't apply to you and your situation—so please do your own research, or consult a professional, before making any changes or decisions regarding your estate.