We talk a lot here at Saving Advice about the things you “should” do. Make a will and keep it updated, keep your financial affairs in order, plan for the succession/sale of any businesses you might own, get life insurance, arrange for your healthcare in the event you’re incapacitated, and generally plan for the future so that you, your loved ones, and your assets are protected in the event something happens to you. These are things we all “should” do.
Yet few of us actually do these things. We live in a constant state of denial that bad things can happen to us. We think we have plenty of time to make up that will, to handle our business affairs, or draw up that living will and power of attorney. We figure there’s no way we’re going to die tomorrow so we keep putting the “shoulds” off until “someday.”
Well, in the last couple of months, I’ve had it driven home to me very clearly why these things are important and why you need to deal with them now, not later. I’m going to share with you two very sad stories (that don’t, as of yet, have happy endings) that perfectly illustrate why doing what you know you should do is so important.
The first story is about a family friend, Mark. He dropped dead two weeks ago from an unexpected heart attack. He was only forty-six years old. I guess if you want to look at it this way, he was fortunate not to have a wife or kids to leave behind. However, he was the president of a business that had been handed down to him by his father, also a dear family friend. That business is now in jeopardy. The father is still alive and has been working there part time, but he is eighty-two and in not-so-great health. He can no longer run the business by himself.
Mark made no plans for what should happen to the business in the event of his death. He had no succession plan, no plan for the sale or liquidation of the business. His father is now left to figure out what to do and he needs to do it in a very short period of time because he may not live another six months.
Mark did one thing almost right. He did have a will. However, it was rather old and not very specific. It was a young man’s will, made before he acquired so much and before he met his long time companion. The will made no provision for the business, the dispersal of his new home, or the things he wanted left to his long time companion. So now his father is left to try and guess what should be done with his possessions and real estate, and what Mark might have wanted his companion to have.
Mark didn’t have life insurance, either. Without kids you could argue that it wasn’t necessary, but it would have been helpful for his father to have the life insurance settlement to draw upon while he tries to figure out what to do with the business and the assets. It also would have helped to pay off some of Mark’s debts, which I’m told were substantial. If his father cannot sell the house right away (and in this market it’s not likely) life insurance would have at least paid that off.
It isn’t that Mark wasn’t aware of the correct steps to take to protect his assets. He ran a very successful business, studied accounting and insurance, and he knew what to do. He just didn’t do it, or at least not all the way. Now it’s left to an eighty-two year old man to figure out what to do when he should be worrying about his own health. Now he has to grieve for his son, deal with a business that’s in turmoil, try to sell a home and settle an estate. All I could think was how unfair it was of Mark to leave that kind of burden on his father when he knew better and should have taken care of these things long ago.
The second story involves yet another family friend who was unexpectedly diagnosed with brain cancer. At the time he was diagnosed, he was operating a business and his sons were working for him. He was largely subsidizing his sons’ existences; paying school tuition for their kids, paying them a salary to work for him, making payments on a store front for a daughter in-law, paying down some of their debts, etc. Unfortunately, our friend quickly became unable to work.
Neither son is prepared (or even wants) to take over the business, yet my friend made no other provision for who should run it in the event of his incapacitation. For now the whole thing hangs in limbo, run by a series of helpful friends. When my friend dies, the business will likely be sold. If his sons try to take it over, they face a steep learning curve because they haven’t been prepared or taught anything about how to run it.
My friend also made no provision for what would happen to his sons and their kids. Since he was subsidizing their existences, they are hurting financially right now. All of my friend’s money is going to his health care right now and there isn’t much to spare for other things. I trust that, since his sons are grown, capable, men, they will eventually get on their own two feet and learn to manage their own affairs, but the transition for now is painful. Any money left will likely go to his wife for her support, so an inheritance (at least a substantial one) isn’t likely.
Whether my friend should have gone out of his way to make certain his son’s lives remained cushy is up for debate. (I honestly don’t think he should have been helping them as much as he was, but once he started down that road the expectations were set.) However, having decided to help them, there was evidently no additional discussion about when the support would end or what would happen to that support in the event that their father became incapacitated or died. As a result, the sons are wandering around trying to figure out how to deal with the impeding loss of a parent and the loss of the lifestyle they have become accustomed to.
More worryingly, this friend has no living will. He has no record of his wishes regarding life support or extreme measures to save his life. As he is now unable to communicate, it is too late for that. When the time comes, it will be up to his wife and sons to decide what to do and who knows if what they decide is what my friend would want.
Much of the suffering in these two stories could have been prevented by taking some of the financial actions that we know we “should” take, but never seem to get around to. The friend in the first story should have kept his will updated and taken out at least enough life insurance to pay off his house and clear his debts. He should have made his wishes known concerning his long time companion. More importantly, he should have had a plan to deal with the business. He should have named someone to take over in his place or, failing that, expressed his wishes regarding the sale or liquidation of the business. I doubt that taking these steps would have taken more than an hour in a lawyer’s office, yet now it will take his father months to sort it all out.
In the case of the second friend, he, too, needed a succession plan for his business. He assumed that the sons would want it, but that doesn’t appear to be the case. He should have sat down with them long ago and said, “Okay, if you don’t want it that’s fine, but I’m going to find someone else to take over or sell it after I’m gone,” and then made provisions accordingly. He also should have spoken with his sons about the help he was giving them. Explicit dates for its end should have been named and he should have let them know that they needed to be making other plans in case he needed to use all of his money on his own care. He also needed a living will so that his family won’t have to guess at his wishes. As with my first friend, I doubt all of this would have taken more than a couple of hours to hash out. Yes, the conversations with his sons about the money and the business would have been uncomfortable, but far better than leaving everyone wondering were they stand now. As it is, there is much to decide and the leader is no longer able to make those decisions.
Both of these men were/are relatively young. I’m certain that they believed they had many healthy years ahead of them in which to deal with all these pesky details. However, life is sometimes cruel and the time they thought they had disappeared. Both men have left large burdens for their loved ones to deal with, at a time when their loved ones should be focusing on other things. I know neither one intentionally set out to make things harder for their loved ones; they simply thought, as we all do, that they had time to deal with these details.
The moral of this piece is this: We all believe and hope that we will grow old before we die (and many of us will). We assume that we will get to all the pesky details of our wills and insurance policies “someday.” We figure that by the time it’s our turn to die, all of that stuff will be in place. Maybe we’re in denial that we will even die at all (trust me, the old saying, “No one gets out alive is true). The thing is, life and death are unpredictable. You can assume that you will have many years ahead of you and you probably do. But right now, while you’re alive, you should plan as if you won’t have those years. Ask yourself this: If you died tomorrow, are you comfortable with how things stand? Are your wishes known and will the burden on your family be light? If not, fix it and fix it right now. Because now may be all you have. Time is ticking for all of us and we need to take care of our “shoulds” before time runs out.