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Estate planning: Emotional but essential
They say there are only two certainties in life – death and taxes. And both are at the top of most people’s “dreaded” list.
Estate planning combines both of these issues, making it one of the toughest exercises to undertake. The difficulties arise from both practical considerations and emotional issues. Addressing both is necessary for success.
Complicated process – Most people see the estate planning process as confusing and complicated. The process seems overwhelming.
Where do they begin? How will they know whether they are making the right decisions? Who should lead the process – lawyers, CPAs, financial planners? Questions like these become excuses for putting off the process indefinitely, often until a crisis makes it critical and time sensitive.
Time-consuming process – Gathering all of the information needed for estate planning seems daunting. Most people aren’t meticulous record keepers, so finding the financial information, current insurance documents, wills and such doesn’t excite them. They have many other things they’d rather do with that time.
Confronting relationship issues – Estate plans deal with family members and the impact of the planner’s death on each of them. If relationships have been strained, unpleasant memories may surface.
The planner may need to decide whether repairing the relationship is the best course of action. That decision can be very emotional.
Facing mortality – Few people want to consider a world without them, so having conversations about how assets will be handled once they are dead doesn’t make for a pleasant discussion. Everyone knows that death is a given, but most people would rather not give it a great deal of thought.
Accepting their choices – Preparing an estate plan requires an accounting of what has been accumulated throughout a lifetime. For some, the accounting may not add up to the level they had hoped for themselves and their families. Feelings of failure are commonplace.
Even people who have done well may second-guess decisions they made that could have turned out better. It’s a bit like receiving a report card on their financial life to date, and the grades are not always as high as they would like.
Dealing with blended families – In today’s world, most families are really a combination of several families because of a divorce from, or the death of, a prior spouse. Determining how to share assets with various contingents can become extremely charged. Choices made in this regard may adversely affect ongoing relationships.
Both the practical and emotional issues can hijack the estate planning process. None of them is a good reason for failing to plan, but these issues can make the process painful enough to delay it.
It’s important for people to consider the chaos and financial burden that will occur if they don’t have a proper estate plan. As difficult as the planning process may be, it is the responsible thing to do for those they will leave behind.
The technical information here is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS.
© 2012, CPAmerica International. All Rights Reserved.