Whether starting a diet, buying or selling a business, or discussing your family’s wealth with your children, there are always reasons (real or otherwise) that sidetrack us from doing something to put us in a better place.
In the last half of 2021, wealth firms and trust companies, attorneys, accountants and valuation experts were inundated with existing and new clients running headfirst to complete their wealth planning to beat the year-long threat of significant federal tax changes. It seemed that everyone went from “cold” to “piping hot” on their planning.
So, why do clients procrastinate on wealth planning? Why does it so often taken a significant event to cause us them take action that could lead to a better place?
We see procrastination coming from four directions. Any of these reasons can derail one stage of the planning process from getting started to implementing decisions. The stakes can be emotionally and financially high for the family delaying action on their planning.
But by knowing these triggers, advisors can help clients overcome them and make life infinitely easier for themselves and their beneficiaries.
Negative Emotions
Negative emotions are, by their nature, unpleasant. They can mean dealing with feelings about our mortality, failure, incompetence, lack of confidence, lack of control and anxiety.
It follows that wealth planning can sometimes invoke these negative feelings. It might mean having to discuss your wealth with family members or making difficult decisions for or about your beneficiaries.
Delay in dealing with these issues could compound the problems. Usually, what we are avoiding does not magically disappear. The reality is that we are not given a set amount time on Earth. Ideally, we see ourselves walking off into the sunset under our own power and terms after living a long and happy life. But, there is no crystal ball to tell us whether, when, and if we will lose our ability to make decisions for ourselves whether through a physical or mental illness or, ultimately, because of death.
But kicking the can down the road can place those we are trying to protect in a far worse situation as they no longer have the benefit of our guidance if they are called to act. For example, if we happen to die without a will, anonymous court officials will name an administrator to probate our estates, perhaps someone we did not intend to serve in that position, potentially causing unnecessary family conflict.
The earlier we begin planning, the more time we have to navigate through emotional issue that may arise and plan for difficult conversations with family members, including engaging professional advisors to assist us.
“Perfect” Planning
Trying to achieve the perfect plan can lead to failure—as “perfect” can be a moving target.
There can always be reasons our plans will not be perfect. If we can reframe our goals to think of the planning process as ongoing with periods of productivity (active planning) based on our priorities that match time and energy, we may incrementally improve our situations or make significant progress on a major issue.
Planning is never really “done.” It evolves as family needs, wants, and desires change. It will be influenced by external factors such as tax laws and the economy as well as internal events such as births, marriages, divorces, purchase and sale of a business, and health.
Whether evaluating the performance of our life insurance policies, reviewing beneficiary designations on accounts; or considering the role of our wealth in family, philanthropy and legacy, there will always be additional planning to do. Something always comes-up. Accepting that our plans will not be perfect can help free us to take on more pressing issues. None of us should avoid the “good” in order for an outside chance at achieving the “perfect.”
Fear of “Permanence”
A common reason some delay engaging in planning is the concern the planning will be irrevocable. Sometimes, we become concerned that a planning strategy cannot be unwound if it is not working, or if our life facts materially changed since implementation.
Our wealth plans should be expected to evolve over time to meet changing family needs. Our core estate planning documents such as our will and revocable trusts can be modified until we die. Beneficiary designations, fiduciary appointments, and supporting documents, such as powers of attorney and durable power of health care, can all be changed until the time of disability or death.
A well-thought-out plan should provide safety valves and mechanisms to meet unexpected future events. Importantly, plans should be revisited periodically. Permanent is rarely as “permanent” as we might think.
Overwhelmed By Planning
The wealth planning process may involve a team of advisors including attorneys, accountants, valuation firms, bankers, investment firms, trust companies and more. It can feel like a lot.
Planning may involve complex income, estate and gift tax laws while dealing with the emotional issues that come with making decisions about how to care for an protect your family in the event of your disability and death.
It can be an overwhelming experience that can delay making important decisions -- or worse, stop the process.
Moving the process forward does not have to be overwhelming. Developing a project plan and timetable is a manageable approach to breaking down larger issues into manageable steps which can be prioritized based on our goals and desired outcomes. Having the right advisory team on board can be an important and valuable asset to lead us through many of these issues.
The reasons we all procrastinate in financial planning are completely understandable. However, the danger of not having a plan in place is the worst outcome.
Prioritizing our objectives, and working on issues we feel are most time-sensitive, will minimize the potential to be overwhelmed. In addition, having time to be deliberate and thoughtful in our planning allows us the time to fully understand the benefits and opportunities of decisions before making them.
As soon as we put ourselves in motion, we become more likely to stay in motion. Planning can take some time. But understanding the barriers to getting started will help make progress and put us in a better position tomorrow than we are today.
Drew Horwitz is Wilmington Trust’s National Director, Wealth Strategies.
