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Imagine your spouse or adult child asks, “I am not trying to bother you, but don’t you think it is time to sit down with someone and develop a financial and estate plan?”
Will your reply be one of the following?
- “Things need to settle down first.”
- “Our situation is complicated, so I need to set aside a real block of time.”
- “The business is our retirement plan.”
- “We’re healthy. We have time.”
When I ran these ever-so-common situations by a friend of this column, author and regular Kiplinger contributor Cosmo DeStefano — I recently chatted with him about his book Wealth Your Way — he laughed, only it wasn’t because any of these excuses are truly humorous.
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“Things never fully settle down,” he said. “That ‘real block of time’ will never materialize. The complexity becomes the excuse. Yes, the family business can become your retirement plan, but only if it can be sold, transferred or wound down in an orderly way, which requires an estate plan.
“Finally, the unexpected health crisis does not announce itself months ahead of time with a knock on your door and someone saying, ‘You need a durable power of attorney for health care.'”
Meet Rick and Linda
For over two decades, my clients, “Rick and Linda,” both 55, have built one of the most respected disaster remediation franchises in the Western United States.
Flooded basements, smoke-damaged kitchens, mold-infested walls — whatever havoc life inflicts on a home, the high school sweethearts and their crew, most of whom have been with them for years, show up, work fast and are professional and thorough.
They clean up other people’s disasters for a living, treating their employees like members of the family, a testimony to their character.
Their own disaster, however, has been quietly building in the background. They have a million-dollar business, a sizable estate, several adult children and exactly zero estate planning documents in place.
No wills. No buy-sell agreement. No powers of attorney. No life insurance structure.
I have raised these issues with them, and their answer is always the same: “We know, we know. We just haven’t had the time.”
The high cost of ‘we just haven’t had the time’
DeStefano notes that “the cost of delay for a 55-year-old business owner with significant assets and a large family is not abstract. It is specific, measurable and often irreversible.” He gave some examples:
Likewise, without a trust, assets aren’t protected, wishes aren’t followed, and your preferred heirs could be disinherited.
No buy-sell agreement. Without a buy-sell agreement, your spouse may become an involuntary business partner with your employees or co-owners. It happens every day, taking a wrecking ball to businesses and families simultaneously.
No life insurance structure. A million-dollar business can trigger significant estate tax exposure. Without proper planning, your heirs could be forced to fire-sell the business to pay the IRS. Often, these kinds of under-pressure sales happen at a fraction of the business’ value and at the worst possible time.
No health care proxy or power of attorney. A sudden illness or accident creates more than a medical crisis. Without these documents, a legal and financial crisis can follow, often requiring court intervention at enormous expense and emotional cost.
The remedy is easier than you think
“The initial meeting with an estate attorney and a financial planner,” DeStefano assures, “is typically two to three hours. That is it. You talk, you share some basic financial information, and the professionals take it from there. They do the heavy lifting.
“You do not need a ‘real block of time.’ You just need an appointment — and to be absolutely candid and open about all of your finances.”
So, how do you find a good financial planner and estate attorney? One way is to ask your CPA or other professionals you already know for a referral.
My approach, with my clients in the office, is to pick up the phone and call people I know, from experience, do a competent job, have compassion and good listening skills and make an appointment right then.
If they protest and say, “Dennis, please, I can call when I am ready,” my reply is, “Yes, I know you can, but you won’t. Now, you have the appointment. Please keep it. Your family and your employees will thank you.
“If you must reschedule, that’s OK. Just don’t waste my colleagues’ time by not showing up and not calling to cancel or reschedule.”
The takeaway
It is easy to see why DeStefano’s Wealth Your Way has become a bestseller. He cares, and he wrapped up our discussion with some down-to-earth commonsense advice:
“Dennis, no one is ever too busy to prevent a disaster. They are just not yet motivated enough to act before one arrives. Rick and Linda have spent 20 years making sure everyone else’s disaster gets cleaned up. Maybe it’s time for them to spend a few hours making sure their own never happens.”
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
