How Estate Planning Can Reduce The High Cost Of Dying—Part 1

Death and taxes are unavoidable. We manage to pay taxes but very few are prepared for death – either our own death or the death of a loved one.


The pandemic might be changing this. According to Census figures, the pandemic caused the U.S. death rate to spike by nearly 20% from 2019 to 2020, the largest increase in American mortality in 100 years. More than two years and 1 million deaths later, it's clearer than ever that death is not just a reality but central and inevitable to our lives.


One of the few positive outcomes of the pandemic is the way people now face death, grief, and other issues that arise when we lose someone we love dearly. This sentiment is the mission of the new startup Empathy, an AI-based platform designed to help families navigate the logistic and emotional challenges following the death of a loved one. (https://www.empathy.com/)



“For far too many, COVID-19 has been a terrible reminder that death and loss are all around us,” notes Empathy CEO and co-founder Ron Gura in a recent company report. “But it also represents an opportunity to shift public perception, to bring a topic that has been for far too long shrouded in darkness into the light of day, where we can fully examine it and figure out how best to help those who have to shoulder its burdens.”


As anyone who has personally dealt with loss knows, when a loved one dies, those left behind face major emotional, logistical, and likely financial challenges. Empathy was designed to help manage and streamline these responsibilities for grieving families—and in the process, “change the way the world deals with loss.”


A Digital Assistant for Grieving Families

Empathy provides users with digital tools that offer step-by-step instructions detailing the administrative, legal, and financial tasks to manage while finalizing a loved one’s affairs and settling their estate. To help users prioritize their work and avoid burnout, the Empathy app flags the most time-sensitive tasks.


Empathy also offers human-centered support in the form of live Care Specialists who can be contacted via the app. The Care Specialists support you by answering questions, helping you locate services and providers, and even handling certain tasks for you if needed, such as calling funeral homes, contacting life insurance companies to speed up policy payouts, and helping executors file court petitions.


Determining the True Cost of Dying

To further shed light on just how vastly unprepared most of us are when dealing with death, Empathy released its first-ever Cost of Dying Report in March 2020. In partnership with Goldman Sachs, Empathy’s report surveyed more than 2,000 Americans—each of whom had lost a loved one in the previous five years—to get a clearer picture of dying’s true cost to families—and as Gura says, “bust open the taboo that has for too long kept it out of the public consciousness.”


The report looked not only at the financial burden dying brings but also at the cost “in time, in stress, in harmed productivity, and in strained interpersonal bonds.” Paired with the results of the research, the Cost of Dying includes a collection of insights from the study’s advisors, partners, and experts in the bereavement field.


These contributors examine what we can learn from the study’s numbers and how we can use them to rethink the way we serve the bereaved, “as individuals, as organizations, and as a society.” While you can read the full report, which can be accessed for free on Empathy’s website, the following are some of the study’s most notable findings, along with corresponding insights from some of the report’s contributors.


THE FINANCIAL COST

Following a loved one’s death, the total bill—including the funeral and hiring other professional support—cost families an average of $12,702. The average cost of a funeral was $7,267, and according to the National Funeral Directors Association, that cost has risen 7.6% in the last 5 years.


Families paid an average of $5,846 to hire additional professionals, such as lawyers, financial advisors, and realtors. The bill charged for these services include the following individual costs:


Professional Services


• $3,910 lawyer fees

• $4,461 real estate professionals

• $2,456 accountants

• $1,637 therapists or social workers


The $3,910 in lawyer’s fees was nearly double for estates that required the court process of probate, which was the case for one-third of families surveyed. When you include lawyers, court costs, and other related fees, the total cost to complete probate for families averaged $16,800.


Our firm helps families avoid the time, expense, and emotional burden associated with probate. By placing assets in a properly created and maintained revocable living trust, assets held by the trust will pass to your loved ones without the need for probate or any court intervention following your death or incapacity.


But that’s not the only way proactive planning can help your loved ones following your death. You can achieve a variety of other goals, including asset protection, avoiding family conflict, funding long-term care, estate tax mitigation, as well as family legacy creation and preservation, to name just a few. In a free educational meeting with us, we can help you find the most effective and affordable planning solutions based on your family dynamics, assets, and overall goals and desires.


Paying The Final Bill

How do families pay for all of these expenses? Only 1 in 7 families had any of the costs associated with their loved ones’ death paid in advance or were able to use payable-on-death funds. More than 50% of families had to deal with estates that included debt. To foot the bill for these expenses, 36.1% of respondents used their own savings or investments, while 42.4% used their checking accounts or credit cards.


For most families, the financial costs associated with loss were exacerbated by a lack of information about exactly how much money they should expect to spend, according to internal medicine physician Shoshana Ungerleider, MD. Compounding that stress, Ungerleider says, was the families’ fear of making a mistake that will make their financial burden even worse.


“A majority of families find themselves unprepared for and under-informed about the real financial costs of death, with few available resources for finding out,” writes Ungerleider. “They can spend months or years terrified that a wrong move will wipe out their inheritance or even their own savings.”


As an example of what such a mistake might look like, Ungerleider notes that a lack of proper estate planning can lead to the deceased’s home being seized after death “to pay off expenses incurred through Medicaid, even if the family member who was their primary caregiver is still living in the home.”


This is another area where thoughtful estate planning can be invaluable. We offer planning strategies that can help you or your senior parents qualify for Medicaid and other benefits, without putting the family home or other assets at risk.


Next week, in part two of this series, we will discuss more of the Cost of Dying’s most notable findings and detail other ways you can dramatically reduce the financial, logistical, and emotional burden for your loved one’s upon your death. Until then, if you are ready to create or update your estate plan, contact us today.


This article is a service of Jennifer Winegardner of Rayboun Winegardner, PLLC. We do not just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That's why we offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session.

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