Does Your Estate Plan Expect You To Die Broke?

by Jacques Sprenger on April 3, 2009

How are you planning for retirement?

Die Broke bookI have met my share of parents who lived for their children without ever considering their own needs at retirement. Sacrifice for their education, sacrifice for their well-being, sacrifice for their future and rescue them when they get into trouble. By the time they reach 60, these mothers and fathers often struggle to survive or, even worse, they hoard a lot of resources thinking that their heirs will inherit and be comfortable. But this is the wrong philosophy! Let the kids struggle and be successful on their own. After all, we deserve to enjoy life once they have left the nest. Selfish? You bet, I deserve it.

There is of course nothing wrong with making a will and leaving some wealth to your kids; but if I did this while losing the opportunity to live my retirement to the fullest, I know I’d regret it. I once consorted with a family of 8 grandchildren who had a very wealthy grandmother; most of them never tried to succeed in life on their own; they were just waiting to inherit. When the matriarch finally passed away, they rushed to the nearest bank to collect. Talk about greed! Half of them had lost everything after 4 years. If the grandparents had at least conditioned their inheritance to specific achievements, some good would have been obtained.

Don’t Retire: Die Broke!

I am not sure I want to retire….because leisure is lethal. My wife and I are both 78. Age is a matter of what’s between your ears. Stephen Pollan, the author of the excellent book “Die Broke” says that most of age is created by attitude; he also recommends that we never stop working. If you are over 65 and you have some cash stashed away, spend it, says Pollan; don’t worry whether it’s going to last or whether there’ll be something for your kids.

Those with adult kids should perhaps think this way: if your kids haven’t found a way to succeed in life, leaving them money will only make them more dependent. It’s of course different when you leave disabled children who need constant care; in that case, your hard-earned retirement savings will play an important role.

Estate Taxes and Giving Your Money Away

If you are worried about estate taxes, there is good news (so far): Congress approved a schedule that increases the amount you can leave your heirs tax-free from $1.5 million in 2005 to $3.5 million in 2009. But Congress may change the law in 2010, though experts believe that legislators will simply freeze the exemption at the 2009 level. Also, the annual exclusion of $11,000 is still in effect without causing a tax (so you can still make annual gifts of up to $11,000 to as many people as you wish without triggering the tax).

Work On Your Estate Plan

If you have some goodies left over when you transit to a better world, make sure you mention them in your will. It will save your children a lot of grief, who may get into a family feud or tend to quarrel when parents die intestate. I guess we all have a bit of vulture inside our genes because families can split asunder sometimes, over muddled estate plans and convoluted trust funds. So let your heirs know very clearly what your intentions are and put it in writing. Add a clause that says that anything not mentioned in the will will (pardon the pun) be divided so and so. But before you go, make sure that you enjoy life to the fullest without any guilt: you earned that money so enjoy spending it!

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{ 6 comments… read them below or add one }

1 SeekingLemonade April 3, 2009 at 6:18 pm

Even if you plan to leave nothing for your heirs to inherit, at least pre-pay all your funeral expenses! Funeral home and cemetery plot, etc.

You can imagine what it feels like to be informed of a loved-one’s death, and in an instant need to pay out at least five thousand, and in many cases up to twenty thousand dollars, just to get them buried. And funeral homes and cemeteries demand to be paid in full before they do anything.

I once told my father: “let people be angry about what you did, not about what you didn’t do.”

2 PW April 6, 2009 at 5:56 am

Be careful currently about pre-paying funeral expenses. We did that for some seniors that passed away a few yrs ago. The company that the funeral homes use to place the cash recently “mis-used” the cash, paying high admin fees to themselves, and the account filed bankruptcy. Many funeral homes are no longer accepting pre-payments. Verify what company the funeral home uses to manage the money and check it out . This was in the Chicago Tribune about 3 months ago. It is a nationwide problem. Sign of the times.

3 Jacques Sprenger April 6, 2009 at 6:18 pm

Both of you are absolutely and positively correct; don’t let your children face the burden of a funeral. There are some insurance plans that will take care of it and they are cheap. PW, thank you for the warning. I guess scam artists will even become ghoulish to make a quick buck. And “seeking lemonade” has an excellent philosophy: don’t make them angry at what you failed to do, i.e. prepare for the inevitable. In tight families, there is no such problem, but how many of those do we have?

I’d love to hear from senior citizens (like me).

4 Kaye - SandwichINK April 22, 2009 at 6:31 pm

One other problem with pre-buying cemetery plots is that people can move unexpectedly, even when they are older. Our family has at least two cemetary plots around the country that are in limbo because of unplanned moves later in life.

5 Liz July 25, 2009 at 2:57 pm

Don’t die broke, Die$mart instead! Check out the book at This book tells you how to die smart with info on money management and estate planning, common mistakes people make that costs their families money when they die.

There’s even information on pre-death planning and post-death paperwork, plus funeral self help.

No one likes to think about dying. But I have a dying relative right this moment and I am so relieved that, by and large, there’s a good plan in place. Otherwise, we’d have a nightmare on our hands.

6 Mindy Stein January 27, 2010 at 2:18 pm

Many of my elder clients are increasingly turning to the purchase of prepaid cremation services as a more economic alternative to pre-paid burial. Comprehensive packages are available that lock in the price and guaranty that what the individual pays today will be all that’s required in the future – with no surprises or additional charges to the family at the time when the services are needed.

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