People avoid estate planning for many reasons. Some don’t plan because estate planning involves discussion of unpleasant, sensitive subject matter. Other people – the focus of this discussion – are people who avoid estate planning because they think “my family knows what I want, and I trust them.”
To the latter category I offer this rejoinder; if your family knows your wishes and you trust them, then there should be no harm in memorializing your wishes. It is also important to remember that you cannot know the circumstances for your surviving family at your death. Perhaps your situation is a second marriage, and at your death your surviving spouse who you trust implicitly becomes very ill, accumulates medical expenses, and uses the funds he “promised to pass along” to your children from a first marriage. If the assets had been left in trust for the spouse, the funds could’ve been saved and preserved both for the surviving spouse (potentially providing protection from the medical creditors) and for the children of the first marriage.
Another common problem with leaving post-death planning to trusted family is that even if they want to try and honor your wishes, the assets you have and the way you leave them may have adverse tax consequences. For example, leaving a tax deferred asset (like an IRA) to one child to share with siblings can result in negative income and gift tax outcomes: both of which are avoidable with planning.
The revelation of these surprising, avoidable outcomes can be stressful. Even if there are ways to rectify the lack of planning they typically involve more time and expense than planning in the first instance. A frequently posed (or implied) question in this process is – “why did he leave such a mess? Didn’t he care enough to get it right?” These questions linger in the hearts and minds of the family for years in some cases. There is a phrase heard around parenting “if you love ’em, tell ’em” and in the case of planning an additional statement would be, “show ’em.” Plan.