Estate planning—it’s not about the money

/in /by

Few people inherit anything, very few inherit much, and half the average inheritance is spent immediately. That’s what this study from 2012 says.

I ran across the study through this New York Times article, which talks about a middle-aged woman who inherited $1 million. The article includes sensible advice for heirs from financial professionals: pay off debt, put aside an emergency fund, and invest. But the examples in the article are of people inheriting hundreds of thousands of dollars.

The study, on the other hand, found that only 1 in 5 U.S. families inherit anything. Only 25% considered it “very important” to leave an inheritance. The average inheritance was only $50,000, half of which was spent right away. These numbers lead to a stark conclusion. For most people, estate planning is not about the money.

That might seem odd. Most people, when they think about getting a will, think about who is going to get their property. But I wasn’t surprised at all. Although my clients are usually leaving somewhat more than $50,000 to each beneficiary (but less than $1 million!), they aren’t all that concerned with the amount of money or what their beneficiaries are going to do with it. Instead, they say things like:

  • “I just want to make it as simple as possible.”
  • “What my kids do with the money is their business.”
  • “I don’t want to control or limit anything.”
  • “I want everything to be even.”
  • “I don’t want to leave anyone out.”
  • “I’m okay if there ends up being nothing left.”
  • “I don’t want to put my kids through a lot of trouble.”
  • “I want to make things as easy as possible for my kids.”

The fact is that most of my clients are not all that concerned about the money. What they worry about is accidentally causing trouble, putting their children through burdensome legal and financial processes, and sparking family conflicts. Their largest goal is not to preserve assets or control property, but to make everything after their death as simple, easy, and fast as possible.

It’s tempting to look at the sum total of a person’s estate and focus on what that amount of money can accomplish. Think of all the good it could do! Think of the debts paid off, the dreams given a chance, the charities supported and causes advanced. These are, certainly, good things to think about. Yet most of my clients are content to simply leave these decisions to their heirs. Given that most inheritances are not all that large, I have to admit their approach is a sensible one.

When estate planning is no longer about preserving or controlling money, what is it about? It’s about family. It’s about making the unpleasant but necessary business of final affairs as simple, easy, and fast as possible. It’s about minimizing stress and avoiding potential conflict. To sum it all up, it’s about avoiding the negative things about money and administering it after death: the stress, the bureaucracy, the management, the emotions, the taxes, the complications. For most people, these are their most important goals.

That’s why my mission is to make estate planning simple. That’s why my values are being short, simple, human, and correct. I think these things are more important than money, because these are the things my clients talk about. Enough ink has been spilled over the money that’s inherited—how to spend it, how to invest it, how to avoid making mistakes with it. This study shows that those are problems for a minority. The bigger problems are about the complexity and bureaucracy of settling a person’s final affairs.

Thankfully, estate planning can address those problems—if we make that, rather than money, the primary focus.