The other day, during a medical test aided by a physician’s assistant new to me, she asked me what I did for a living. I told her I was a lawyer, and waited for the frown. Instead, she asked the next question, “What do you do as a lawyer?” My answer was “Estate Planning, that is Wills, Trusts, and that sort of thing.”
Inevitably, she said, “I need to do that. I have an 18 month old at home, and I need to do that.” I asked her whether she had some life insurance, in case she were to pass away untimely, and she said she had a new policy. I told her that she and her husband, at the least, should have Wills that left everything to the other but, that if they were both to pass away, the Wills would provide a trust for the child that would manage the proceeds for the child until it reached at least 25 years of age. The secondary beneficiary of her policy should name that trust. (I assume she names her husband as primary.) And I said she would need to find someone suitable whom she could name as the trustee, if both she and her husband died. Otherwise, I said, the child gets the estate at age 18 if both parents have died, ready or not.
She asked me for a card. People always ask me for a card when they learn what I do, especially people who are not wealthy but have heavy responsibilities. It is rare that they call.
Several months ago, I had an initial interview with a young entrepreneur, a father and husband. A good insurance salesman had gotten hold of him, and he had a very large portfolio of life insurance, some on himself, some on his wife, and some even on his young children. I had analyzed the insurance before he came in, and the beneficiary designations were inconsistent. Furthermore, he had a set of obsolete estate planning documents that needed an update. I sent him a follow-up letter with an engagement agreement and some recommendations. He never got back to me (which is very rare in my practice, if a prospective client goes to the trouble to gather up his papers and come in.)
Maybe it was the way I parted my hair that accounts for my not hearing from him again. Or maybe he was too busy, and young entrepreneurs always are. Maybe he thought that, whatever might happen, he had bought so much life insurance that the plenitude of ready cash would compensate for his lack of planning. Maybe he had.
How do we bring focus into estate planning? How do we create urgency? What can we say that will help people do the work and figure out how to pay for it?
I think part of the problem is that people think that they have plenty of time to get to the project. Unless someone has been given an unhappy medical diagnosis, his working assumption is that he is, practically speaking, more or less immortal and that the time horizon in question is well in the future.
My thinking is that people should assume the following:
- They will die within three years.
- However, they have six months to get ready for that certainty. In other words, they have a six month window to prepare.
- But six months from now, prepared or not, they will die by the end of year three. They will certainly be dead in three years.
So what would you do, based on that assumption? Does that help?