Legacy Law Blog

Part 2 of a 2-Part Series

According to Caring.com, in 2025 approximately 75% of Americans do not have a will, let alone an estate plan to protect their assets in the event of incapacitation or death.

That’s a truly scary number when you think about the fact that many people have spent their entire lifetimes building some level of savings, a retirement account, and even purchasing a family home.  Along life’s journey, they also likely amassed some level of debt that will be left to their loved ones to address.

As we saw in part one of this series, we are almost hardwired to avoid talking about death and all that it entails for those we leave behind. But why?

Legacy Planning Has Neuroscience and Psychological Components

The human brain's "fight or flight" response is an automatic, survival-driven reaction to perceived threats, triggered by the amygdala, which sends signals to the hypothalamus, activating the sympathetic nervous system and releasing stress hormones to prepare the body for action.  In other words, if we perceive death to be a threat, we physically respond and find ourselves feeling anxious, or worse. 

Death has long been a mystery and from the unknown come superstitions. Superstitious thoughts around death or worrying that we will create a self-fulling prophecy for ourselves creates a physical response. Whatever our aversion might be, our brain seeks to protect us from the perceived danger.

Fear and Anxiety

It is natural for humans to experience the fear of the unknown, especially when it comes to death. While fans of YouTube can find plenty of life after death testimonial videos by people who allegedly died and came back to tell the tale, no one really knows for sure what death is like.

Is death scary or is there a bright and welcoming light at the end of a tunnel to walk towards? Do we carry our regrets with us into the afterlife or face a biblical Judgment Day of reckoning for the lives we’ve lived? 

The fear of the unknown often results in anxiety. If you have ever experienced an anxiety attack or been with someone who has, the physical reaction to fear is very real. So, our natural tendency is to avoid situations that are likely to trigger anxiety. In reality, the uncertainty of death and what lies beyond is a fact in our lives. Finding acceptance for what cannot be changed could result in a better outcome for you and your family.

Denial and Procrastination

I think denial and procrastination are close cousins when it comes to the subject of death. Some people avoid the subject altogether. To me, it seems much more reasonable to assume it’s not happening any time soon. And I believe for most of us, the odds are in our favor, hence procrastination. 

According to the Centers for Disease Control and Prevention (CDC), the top three causes of death in this country are heart disease, cancer, and accidental death, in that order. Heart disease may be prevented. So may some cancers and certainly treatments continue to improve for types that aren’t correlated to lifestyle. 

Accidental deaths are a little trickier. One never intends to have an accidental death, yet they occur frequently enough to be the number three cause of death. For deniers and procrastinators, there is never a sense of urgency, time is always on your side, the issue will still be there tomorrow. Right? 

I have discovered through life experience that time is usually not our friend when it comes to issues we know need addressed. More often than not, time will only make the situation worse, not better.  

Case Study #1 – The Smith Family

I met with two families in similar situations, but which experienced very different outcomes. The first family, the Smiths, own a small, closely held manufacturing company. Twenty years ago, Mr. Smith leveraged his house and maxed out his credit cards to purchase the shares held by his uncle and cousin to become the sole shareholder. He then began the process of improving and expanding the business to pay off his loans.

At that time, his corporate attorney and accountant advised him to take out two life insurance policies, one term and one whole life, as well as a long-term disability policy in the event something happened to him. These policies would pay his wife an amount she would need to cover the outstanding loans, pay off the family home, and provide money for college and living expenses. 

Additionally, the corporate attorney introduced Mr. Smith to an estate planning attorney in his firm so that the business and personal assets were protected and could be transferred according to Mr. Smith’s wishes.

However, seven years ago Mr. Smith had a heart attack and open-heart surgery. For several months it was not certain if he would survive. He is now uninsurable, so maintaining those insurance policies is critical for him, and thankfully, he received good advice from his advisors early on.  

Fast forward 20 years, and now Mr. Smith has no personal or company debt, the company has ample free cash flow, there is an investment account for him and his wife, and both children are college educated with the oldest working for the business. Mr. Smith is now focused on making his business sustainable and sellable with a succession plan designed to ensure the business continues to support the family whether he is running it or someone else. 

Additionally, his estate plan has been updated to reflect his current financial position while still providing for his wife and children in the ways that are important to him. 

Case Study #2 – The Jones Family

Contrast the Smith story to the Jones’ story. Mr. Jones was a specialty retailer with one employee. Mrs. Jones had a professional job working for a large company that earned her a salary and provided the health insurance benefits for the family.

Ten years ago, Mr. Jones was diagnosed with a treatable form of cancer. He went through treatment and returned to work. He was deemed in remission and went for regular testing with a good prognosis. After several years, one of the tests confirmed that the cancer had returned. He entered treatment again and after successfully finishing it, he returned to work. Shortly thereafter, he passed away. 

Mrs. Jones came to see me because she was left with having to tie up all the loose ends for the funeral, the business and the family. It was the business that caused her the most heartburn because, never having been involved, she wasn’t prepared to take over and run it in order to keep the income flowing to the checking account.  

Mrs. Jones also didn’t understand the business financials, what vendors supplied the inventory, who the customers were, or the policies and procedures of the business. She was forced to rely on her one employee and the accountant to guide her while they were also trying to figure it all out. Essentially, her husband kept the operations of the business in his head and when he died, all of that information died with him.

Additionally, there was no estate plan to protect the assets and so everything that had been Mr. Jones’ was now going to probate court. Because there was no plan, the state’s intestacy statute was going to distribute not just to Mrs. Jones but also to their teen-aged daughter. A minor receiving an inheritance triggered a law that required a court-supervised conservatorship for the daughter until age eighteen, at which time the assets were hers to spend. 

Unfortunately, Mrs. Jones needed the assets that she and Mr. Jones acquired during their marriage to support herself and their daughter. Having assets transfer directly to their daughter created financial hardship for her. Adding insult to injury, Mrs. Jones will have to account every year to the court on the assets in the conservatorship and justify any spending she does from it.  

Obviously, this was not the result that either Mr. or Mrs. Jones wanted. It was not advantageous to the family, nor did it protect the business, its sole employee, its vendors or its customers. And yet, by not planning, it’s what they chose. 

Legacy Planning:  The Final Act of Love

When a client comes to me and prepares a written plan for their family and/or their business, it tells me they recognize the value of creating certainty and peace of mind at a time when their loved ones are feeling the emotion of profound grief. It tells me they understand the responsibility of protecting their assets for the ones they love. 

They acknowledge their loved ones will not be in any frame of mind to begin making major decisions, run a business or navigate the probate process. The legacy plan communicates to your loved ones that you intended to care for them and ease their burdens, even after you’re gone.

When we put the care and security of our loved ones at the forefront of our decision-making process, what greater act of love is there?