Why Estate-Planning Fatigue Hits Some Rich Folks
There’s no doubt that estate planning is a critical part of managing one’s wealth. Yet many wealthy people inexplicably seem to avoid it even though they have a lot more to plan and protect than the average person. This reluctance to engage in estate planning is sometimes referred to as estate-planning fatigue. This article explores some of the reasons why high-net-worth individuals experience estate-planning fatigue and what they can do to combat it.
#1: A Belief that Estate Planning is Only for the Elderly
One of the reasons why the wealthy sometimes avoid estate planning is because they believe it is only a concern for the elderly. Many people think that since they are young and healthy, estate planning can wait. However, since estate planning deals with the distribution of assets in case of death or incapacity, it should be a priority regardless of age. Waiting too long can lead to disputes among family members, court battles, and additional expenses.
#2: A Belief that Estate Planning is Too Expensive
Another reason why some well-to-do folks avoid estate planning is because they think it is too expensive. They believe that the process of creating a trust and/or will requires a lot of money and isn’t worth it. Estate planning, however, is not a one-time expense. It is a process that takes consistent monitoring and updating to reflect changing financial situations and life events. In truth, proper estate planning can prevent larger and more expensive problems from occurring down the road.
#3: A Fear of Mortality
Being afraid of one’s mortality is another common reason why some people avoid estate planning. They may feel that creating an estate plan is akin to acknowledging the fact that they won’t live forever. However, although understandable, this fear is ultimately irrational. Estate planning is about creating a legacy and helping to ensure that one’s assets are distributed according to their wishes. By planning, an individual can potentially rest easier and help avoid leaving their loved ones in confusion and turmoil after their death.
#4: Privacy Concerns
Those with significant wealth often have legitimate concerns about privacy, and estate planning and wills can potentially lead to a loss of privacy through the probate process. Probate is a public process that requires the distribution of assets to be made public. However, estate planning can be carried out in such a way as to protect privacy. Trusts and other legal entities can be created to protect assets while still maintaining one’s privacy.
#5: A Belief in Informal Agreements
Finally, some individuals believe that informal verbal agreements with family members or friends are enough to safeguard assets. This is a common mistake that can result in chaos for the family members left behind. Verbal agreements are often not legally binding and can lead to disputes over assets, which can become acrimonious and expensive. Estate planning can create legally enforceable plans that help guarantee that one’s assets are distributed according to their wishes.
Estate planning is an essential aspect of managing one’s wealth and creating a legacy. Unfortunately, estate-planning fatigue frequently prevents many from engaging in the process, particularly the wealthy. However, the reasons for avoiding estate planning are mostly unfounded and can lead to larger problems in the future. By overcoming these obstacles, individuals can help ensure that their assets are better protected, their family members are taken care of, and their privacy is maintained. Estate planning may require some time and expense, but it is surely an investment worth making.
Note: Lincoln Financial Advisors Corp. does not offer estate planning services. One should consult a qualified tax professional and/or estate planning attorney to develop the documents necessary for an estate plan.