One of the realities of my profession is that I ask people what they would like to happen when they die.
That’s a question that some people don’t give a lot of thought to. Not me. I think about my own death all the time. I’m not morose about it. I just think it’s a damn cruel joke that, just when a guy starts to figure out a few things, his time comes to an end.
I hate it that one day I won’t be here to watch over my family. It’s no consolation to me that day is not likely to be here for another 50 years or so. I still hate it.
Metaphysics aside, if you have people in your life that you care about, what happens when you die is something that warrants consideration. And often this is something that gets neglected.
It’s not uncommon for people to say to me, “if I die”. As in, “if I die, my wife would have the insurance from work, and she’d be able to sell the house…”
There’s a fundamental problem with that line of thinking, and it has nothing to do with whether your group insurance coverage is adequate, or whether your wife wants to sell the house. The problem lies in the use of the word “if”.
It’s not a question of “if” you die. It’s a question of when.
Don’t confuse the appearance of good health with immortality. In fact, don’t even confuse the appearance of good health with actual good health. Not all diseases are overt, nor are all diseases easy to diagnosis. Something could be killing you insidiously right now, and you might be blissfully ignorant of it right up until its final, lethal stage. And, of course, there is always the chance of a moose coming out of a dark highway ditch right in front of your truck on an icy winter night.
All of us are going to die. We know that. The only unknown is when that last breath will be.
It seems to me that planning for something that has a 100 percent chance of happening is the wise thing to do. Further, given that death could happen at any time, to procrastinate this planning is foolhardy.
Sometimes people don’t make planning for the inevitable a priority; perhaps they are under the impression when they die that things will somehow just kind of work themselves out. That’s not good enough. I can tell you unequivocally that doesn’t really happen, except in perhaps the very simplest of situations.
Estate planning is about arranging your affairs so that when you die the things that are important to you are addressed with a minimum of delay and expense. This goes beyond just simply making sure that your will is current, although that’s a fine first step.
Simple steps may work fine for simple situations, like an all-to-wife scenario. But if you have a significant assets, or a blended family, or relatives that don’t always agree on things, or business partners, or you want to pay less tax, or you want to leave a legacy, or you don’t want things to be tied up for longer than necessary, or you don’t want to leave a mess behind for your executor to sort out, then you’ll want to be proactive on this.
Let’s say you own a home worth $300,000, and you have $300,000 in your RRIF, and you want the money to be split between your two adult kids. Simple, you think, I’ll just leave the house to one kid, and the RRIF to the other. Only problem is, the kid who gets the house gets an asset worth 300,000. The kid who gets the RRIF doesn’t get 300,000, he gets what’s left of the 300,000 after taxes, and taxes might eat up around a third of the RRIF.
Or let’s say that you have a family business, and one of your kids is involved in the business, but the other is not. What’s the right way to distribute your assets? Splitting the business asset 50 /50 between the two kids might be equal, but is it equitable? One of the kids helped make the business what it is, while the other one did not contribute. Should the kid that was active in the business see the fruits of his efforts?
Or let’s say that in an effort to avoid probate fees you own an asset jointly with one of your kids. The problem is that your kid gets into financial trouble, and now his creditors are going after his portion of the jointly-held asset. Or the kid gets divorced, and now the ex-wife wants her due.
Clearly estate planning is a field where consulting with a knowledgeable professional can save a lot of time, money and aggravation. What people need to understand is that estate planning isn’t just something for other people. There is a 100 percent chance that you are going to die one day. The question is, are you affairs going to be in order when that day comes?