Eight lame excuses to procrastinate - Estate Planning

Although small-business owners create and manage successful companies, they are notorious for not doing estate planning. Many prosperous small-business owners die with no estate plan, leaving their heirs owing substantial estate taxes.

Proper estate planning can give small-business owners the confidence that their assets will be passed on in the manner that they intend and that the business they have worked so hard to build can continue without having to be sold to cover taxes.

One of the more frustrating aspects of trying to help people with estate planning is overcoming the strong inertia that in effect can prevent the process from getting started. Here are the "eight best excuses" I hear most often - along with my replies:

Excuse 1: I've just been too busy, but as soon as I have more time, I'll get started.

Reply: Letting yourself be too busy is simply a convenient excuse to put off something that you think you will always be able to do later. Unfortunately, an unexpected event such as an automobile accident or a stroke can occur before you make time to start planning.

Excuse 2: I don't really know what I would want to do for an estate plan.

Reply: If you can't decide what kind of estate plan to draw up, the state where you reside will decide for you. The estate of anyone who dies without a will is subject to settlement by state law. Those laws specify who is to receive your property and when. Unfortunately, the settlement supervised by the state may convey property and other assets to someone have picked, or it may divide assets in a way you would not have chosen.

Excuse 3: Estate planning costs too much.

Reply: Not doing anything can cost you even more. For example, you may be able to avoid or reduce estate taxes that can be as high as 55 cents on the dollar.

Simple planning can often save hundreds of thousands of dollars in estate taxes.

Also, through planning, it's often possible to avoid probate administration fees and delays involved in court settlement of an estate without a will. Those fees are based on statutory schedules that in California, for example, can cause a $100,000 probate estate to be subject to $3,000 or more in attorney's fees and $3,000 in executor's fees. A $1 million estate may be subject to $20,000 or more in attorneys' fees and an additional $20,000 in executor's fees. The minimum time to probate an estate is usually six months.

Excuse 4: I don't like having to think about my death.

Reply : A primary reason to do estate planning is to make sure that you have made appropriate provisions for your family upon your death. The focus is on planning to help protect their interests. Having completed your estate plan gives you the peace of mind of knowing that you have taken care of providing for your family's needs.

Excuse 5: I'm not comfortable having to talk about my personal financial situation and family matters with a lawyer.

Reply: Your lawyer treats anything learned about you as confidential and acts only in your interest. It makes as little sense to avoid seeing a lawyer to keep your financial situation private as it does to avoid seeing a doctor to keep your health situation private. Ultimately, that strategy is going to backfire.

Excuse 6: I don't own enough assets to make estate planning necessary.

Reply: No matter how small an estate you may have, usually there are reasons why it is better to have a will or a trust in place to provide for the disposition of your property than to have neither.

For example, if you have children who are minors, you need to think about appointing a guardian to take care of them if there is no surviving parent. There are numerous other issues like this hat should be addressed, even for someone with the smallest of estates.

Excuse 7: My spouse and I do not agree on what we should do.

Reply: If you do not agree and do nothing because of that, then your spouse win be able to control everything in the event you die first. If you have a will or a trust, you can at least make decisions to control your share of the property.

Excuse 8: 1 do not know whom to name (or I cannot decide whom to name) as my estate executor or guardian of my children.

Reply: If you do not name them, then the court that settles your estate will name them for you. They may be just the people you would not want to have those powers.

These "best" excuses are certainly not the only ones people use. But they are a good sampling. If one or more of them fits your own situation, it's time to take charge of your own estate-planning needs.

James R. McDaniel is a partner at the law firm of Reish & Luftman, with offices in Los Angeles and Washington, D.C He specializes in estate planning.

COPYRIGHT 1996 U.S. Chamber of Commerce
COPYRIGHT 2004 Gale Group