Estate Planning: The Insurance of a Lifetime

Estate Planning: The Insurance of a Lifetime

Couple on phone and laptop

Most of us appreciate how important it is to purchase insurance as a means of protection from unforeseen circumstances.  We pay for our health insurance, auto insurance, and life insurance without blinking an eye because we understand the benefits gained from having those types of insurance policies in place.  For all three types of insurance, we know (and even hope) that we will never have to actually file a claim against our insurance because it means something bad happened – we had an accident, a medical issue, or worse, we died.

For whatever reason, when it comes to a critical form of insurance available to us, estate planning, we tend to baulk at the cost of getting that done. In this ever improving world of technology, there are multiple options available online for “do it yourself” estate planning. While the cost may be lower, the old adage of “you get what you pay for” definitely factors in to this type of estate planning. With online planning, there is no expert to provide advice relevant to your unique situation. Would you consider purchasing life insurance without consulting with a professional first? A cheap plan can effectively be the same as missing a premium payment for your life insurance – it will not be there to “pay out” when you or your loved ones need it the most.

If you take the time to learn all the benefits that a proper estate plan will provide you and your loved ones, you will quickly understand that estate planning is one of the most important types of insurance you can purchase during your lifetime.  A proper estate plan can give you the insurance that:

  • the individuals you trust will be the ones to handle your finances or make medical decisions for you when you no longer have the capacity to do so for yourself. 
  • your children or other dependents will be cared for by people you trust when you are no longer around to do so. 
  • your assets will be distributed in accordance with your wishes upon your death. 
  • your preferences for medical treatment at the end of your life will be honored. 
  • your heirs pay as little taxes as possible upon your death.
  • your funeral preferences will be honored.
  • your special needs child will not lose any state or government benefits they are receiving if they were to inherit your assets directly. 
  • your spendthrift child has someone else managing their inheritance so they don’t blow it all within six months. 
  • during your disability, your family won’t have to deal with drawn out court proceedings to fight over your care in a guardianship.

Unlike the premiums for health insurance, auto insurance, and life insurance that are continuous (and often costly) payments every year, the fee to set up an estate plan is typically a one-time flat fee for “insurance” that will last you 10 years, and sometimes even longer depending on your circumstances. Yes, you do have to pay to update the plan when your life circumstances change or to incorporate are changes in the law, but that is done on an as-needed basis and is typically a one-time fee for an updated plan that will last several more years. 

When you break down the total flat fee over the number of years that a proper estate plan can last, you cannot beat the annual cost.  For example, if you are a married couple who needs a more complex estate plan incorporating tax advice and trust planning, the total flat-fee cost of your estate plan could be approximately $5,000. If that plan lasts you for 10 years, that is equivalent to an annual premium of $500 per year (or $42 per month) - an incredibly reasonable cost for ensuring that you and your loved ones receive all the benefits that a proper estate plan affords. For an individual or married couple who does not need complex planning, the annual and monthly breakdown is even less. 

We pay for life insurance, auto insurance, and health insurance every year without question.  What is it worth to you to provide insurance for you and your loved ones by putting a proper estate plan in place? 

Jennifer McManus is an attorney with the Estate Planning practice group at Davis, Agnor, Rapaport & Skalny, LLC. For questions about this article or other questions about estate planning documents, please contact Jennifer at 410-995-5800.