MONEY Ask the Expert

How to Control How Heirs Spend Your Money

Ask the Expert - Family Finance illustration
Robert A. Di Ieso, Jr.

Q: I’m 71 and my estate will be divided between my daughter and son; there are no grandchildren. My son and I differ radically on some political views. Is there any way to stipulate that none of my money will go to his causes? — Janet S.

A: The only way you can influence how heirs spend your assets from beyond the grave is with a trust, says CPA and financial planner Dina Lee, managing director of the Colony Group’s New York offices. This document goes beyond a will in that it not only outlines who will receive your property (and how much of it), but also helps guarantee your legacy and your intentions.

You can control the trust while you’re alive by drafting a living will with an estate planning attorney, but you will need to carefully appoint someone — be it a friend, family member, or third party like a bank — to manage the assets and distribute funds to beneficiaries after your death, following your instructions.

Beyond determining who inherits how much, a trust lets you include additional instructions to create hoops for heirs to jump through. An incentive trust, for instance, might force an heir to meet certain requirements — earning a degree, say, or passing a drug test — to receive funds. Staggered trust distributions allow your estate to pay out money incrementally over a certain timespan; such instructions are often aimed at allowing more money to be disbursed as heirs mature.

In theory, you can make the trust as restrictive as you like as long as those restrictions don’t break any laws — forbidding an heir from entering an interracial marriage, for instance.

But this is where your specific restriction may run into trouble. While you can specify that you don’t want heirs to give any of their trust funds to a specific political party, or certain political causes, your son could challenge that restriction in court — and the court could overturn it by finding it to be a violation of freedom of expression.

Alternate Strategy

A wiser tactic, suggests Washington estate planning attorney Bill Sanderson, would be to “only permit that which you want to permit.” Rather than trying to exclude certain activity, simply spell out which expenses you feel comfortable supporting, he suggests; the list could include such items as mortgage payments and rent, healthcare bills, insurance, and education costs.

This strategy is easier on the trustee, adds Sanderson, because he or she can simply ask beneficiaries to show proof of an expense and then issue a reimbursement — without having to play detective.

Understand, however, that such restrictive arrangements can cause resentment from heirs.

And there’s another issue. Lee points out that even if you craft the trust in a way that limits its use for political donations, simply giving your son money will increase his wealth, and thus free up more funds that he can give to those causes you disagree with.

Says Lee: “Indirectly, you are still enabling him to support his political beliefs — and accepting that the trust can’t change his behavior is part of letting go.”

MONEY Estate Planning

Does Grandpa Need a Prenup?

senior man and woman holding hands, diamond ring on woman's hand
Tryman Kentaroo—Getty Images/Johner Images

His estate -- and your inheritance -- could be at stake.

Prenuptial agreements are not just for the young and wealthy. As life expectancy has climbed for both men and women, a greater number of elderly adults are now finding companions later in life.

For seniors who have spent their lifetime building wealth — in the form of pensions, real estate interests, IRAs, stock portfolios, and perhaps even trust funds from a deceased spouse — a new marriage can be complicated by increased financial assets and obligations. Therefore, it’s important for seniors who are contemplating a wedding (as well as those of us with widowed or divorced parents or grandparents) to consider the following when it comes to prenuptial agreements.

Acknowledge Family Concerns

Even though we all want our mom, dad or grandparent to be happy, regardless of their age, adult children and grandchildren may feel threatened by a senior’s new relationship. Marriage can put seniors’ financial security at risk; not to mention jeopardizing a child or grandchild’s inheritance.

Specific concerns can include the potential loss or delay of an inheritance due to the appearance of a stepparent; or perhaps there are worries about an elderly parent becoming financially responsible for someone else’s continued care or assisted living.

Another major worry is how to divide assets in the event of a potential divorce. Therefore, it’s important to sit down with family members and discuss how marriage will impact everyone, both personally and financially.

What a Prenup Can Cover

A prenuptial agreement can help alleviate many family concerns by having each of the parties waive all rights to inherit a spouse’s property. In addition, the parties can waive any obligation to split assets in the event of divorce or pay alimony; an agreement can also detail who will be responsible for paying what costs — such as assisted living or nursing home fees.

If one party is moving into the other party’s house (or apartment at an assisted living facility), the agreement can detail what rights, if any, the spouse will have to live in the house or the apartment, and to be supported by family assets.

By clarifying the rights and expectations of the parties in the event of divorce or death, such an agreement can ease tensions with adult children — and, in turn, reduce the potential for later emotional battles between a surviving spouse and stepchildren.

Once both of the spouses have died, an agreement can minimize disputes among stepsiblings — who, in some cases, may barely know one another — as they wind up their parents’ affairs. An agreement that sets clear expectations and rights in advance should make it easier for children to divide up assets in accordance with their parents’ wishes.

Understand What’s Needed

Even though prenuptial agreements are generally governed by the law of the state in which the parties live, laws are (fortunately) fairly consistent from state to state. At a minimum, for prenuptial agreements to be valid, each party must have independent legal counsel and must disclose all relevant financial information.

Some states may have waiting periods between the time of signing the agreement and the date of the marriage. Even if your state does not have a waiting period, it’s generally better to have the agreement signed as early as possible before the wedding day, so negotiations don’t increase any wedding-day jitters.

Know When a Prenup Falls Short

While prenuptial agreements can be helpful, it’s important to know that they are not a cure-all. Generally speaking, married couples are responsible for each other’s assisted living or nursing home costs.

Even if a prenuptial agreement dictates what expenses each party should and should not pay, if one party runs out of money and wants to apply through Medicaid for help paying nursing home costs, the state will not respect the terms of the prenup. This means that even with such an agreement, one party may need to use his or her funds to pay for the other’s nursing home care.

In some cases, marriage may not even be the best decision.

Here’s an example: The widowed mother of one of my clients fell in love in an assisted living facility and wanted to marry and live with her new husband. My client’s mother had assets that could fully support her for the remainder of her life, but the potential husband had very few assets and was almost 10 years older. Since there was a very realistic concern that he could end up in a nursing home — making her financially responsible — she agreed to have her clergy oversee a commitment ceremony instead of getting married.

In this case, the couple also created a cohabitation agreement that clarified the expectations of parties regarding living arrangements, the return of the (relatively large) deposit required by the continuing care community, and the parties’ expectations about visitation rights at any medical facilities. Because such agreements may not be possible in every state, however, ask an estate planner to help you understand the available options.

Tracy Craig is a partner at Massachusetts-based Mirick O’Connell and chair of its Trusts and Estates Group, and a Fellow of the American College of Trust and Estate Counsel.

MONEY Small Business

How to Make Sure Your Small Business Outlives You

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Getty Images

Ensure your business's future with these estate planning tools.

If you’re a small business owner, you’re probably focused on day-to-day needs. But looking ahead to what will happen when you retire or pass away should be a top priority.

If you pass away without a plan in place, you’ll leave heirs without clears instructions, potentially jeopardizing the business you’ve worked so hard to build.

“Small business owners need to plan for their estate even more than the average person does,” says CPA Kelley Long. “Not doing so can destroy your family and business. And a good estate plan can take years to put in place, so this is not a conversation you want to procrastinate on.”

Add in the fact that your business likely accounts for the largest component of your net worth, and it’s easy to see why you should take some time to work on the future of your business—by meeting with an estate planning attorney to talk about these six key components of a solid estate plan.

Will

At the very least, your estate plan should include a will. This document allows you to specify how you want your assets to be transferred, and to whom, after you die. It also lets you identify an executor who will take charge of those assets and manage their disbursement according to your instructions.

You’ll also want to include a provision that gives your executor or another trusted individual access to a list of all online bank accounts, email accounts, file sharing sites, social networking sites, and their corresponding passwords. If you’re the only person running the business, important information will be inaccessible to heirs if you don’t provide this access. In some states, not even family members or appointed fiduciaries can get into these accounts if they don’t already have the information. Nor can they force companies to give them access, says estate planning attorney William Sanderson, co-chair of the American Bar Association’s real property, trust and estate law business planning committee.

This is why you’ll want to keep a document detailing all your accounts and passwords in a secure place that you can also easily access to update as needed.

“My most prepared client keeps a notebook filed with all his important papers locked away in a safe. He updates this list and his notebook regularly,” says Sanderson. “I recommend other small business owners try and implement the same strategy and let a spouse or trusted person know how to access them.”

Trusts

Like a will, a trust allows you to control what happens to your assets after you die. But this legal entity has several advantages over a will. Any items you place under the ownership of the trust will bypass the probate process. Thus assets owned by the trust can be transferred to heirs much more quickly; your estate will remain private; and, depending on the kind of trust you set up, it could dramatically reduce the legal fees and estate taxes your estate or heirs will have to pay. And with a revocable or living trust, the terms and assets can be easily changed if your decisions change.

Power of Attorney

When you have payroll obligations, you should consider creating a durable general power of attorney document, which allows you to name an individual to carry out your business affairs should you become incapacitated, says Sanderson. If you don’t have this in place and something happens to you, the court will appoint a guardian to handle your affairs. “It can add a lot of stress to a business owner’s life at a time when they don’t need any added stress,” says Sanderson. “This little bit of extra work upfront could save a lot of headache should it ever be needed.”

Buy-Sell Agreement

If your business has multiple owners, a buy-sell agreement is a must. This contract establishes an agreed upon plan for the business’s future should one owner die or become incapacitated, says financial planner Paul Pagnato, who specializes in advising business owners. It defines a sale price for the business and your share, and allows you to document whether or not you want your partners to buy out your share, whether you want to block certain people from stepping into the business, or if you’d prefer family members to sell your portion. Since the price has already been determined, your family will have piece of mind that they are receiving a fair price.

Without one, your beneficiaries may be stuck running a business they have no interest in, don’t want, and can’t sell—and your partners may end up with a partner they never anticipated and don’t wish to work with.

Negotiate this agreement when the business is still young and all the owners—as well as the business itself—are healthy. “You want everyone to approach this decision with clear eyes and reasonable thoughts,” says Sanderson. Pagnato recommends drafting the agreement as soon as the business has value and cash flow is positive.

Insurance

To raise the funds necessary to buy out a deceased partner’s share under a buy-sell agreement, the living partners often need life insurance. Each partner should purchase a term life insurance policy and name the other partners as beneficiaries. Or you could set up an irrevocable life insurance trust to avoid having the insurance proceeds count as part of your taxable estate. This will ensure that surviving owners receive tax-free capital to purchase the other’s portion of the business from the estate. “This does not have to come out of your pocket. It is a business expense and you should have the business pay those insurance premiums,” says Pagnato.

Whether you co-own the businesses or are the sole owner, you should also buy a separate term life insurance policy that names your spouse and children as beneficiaries. This will give your family time to adjust to life without your income and avoid financial hardship. Especially since a buy-sell agreement will take some time to complete and insurance can provide funds if there aren’t other sizable resources. For help determining how much life insurance coverage you should purchase, use this guide.

Succession Plan

If you’re a sole proprietor, you need a clear plan for what should happen to the businesses when you die. If you want to pass on the business, you need to begin delegating and preparing a successor. Be certain first that this person wants the role. If you’d prefer that the business be sold, help your heirs by doing research ahead of time that will make selling easy and inexpensive. Plus, your family won’t need to worry about whether they got a fair price for the businesses.

To prevent disagreements and ensure that things happen as you want them to, Sanderson recommends creating a document that outlines your wishes for the business’s future. You should clearly lay out important information about what the business owns and owes, and include a detailed list of of accounts and passwords. In addition to your family, Sanderson recommends involving professional advisers (like your financial planner or lawyer) as well as key employees and managers.

MONEY Estate Planning

What Happens to Your Airline Miles When You Die?

airplane flying off into the dawn with colorful clouds
Getty Images—Getty Images/iStockphoto

The official rules may say one thing, but heirs usually have options.

What would you do if you knew you had a potentially valuable asset that could vanish upon your death? Your bank account, empty. Your antique car, gone. Your grandmother’s jewelry, evaporated.

Globe-trotters appear to have that problem: Many airlines say officially that frequent flier miles are not your property and cannot be willed to your heirs upon your death.

“It is a big problem, because people accumulate lots of miles that they don’t use, and the policies of the different airlines are different,” says Gerry Beyer, a law professor at Texas Tech University School of Law. “They’re constantly shifting the policy, and sometimes it depends upon who you talk to and what you can get done.”

Frequent flier miles pose a bigger problem for estates than other loyalty programs because heavy travelers and rewards-card wizards can accumulate many hundreds of thousands (or even millions) of miles, Beyer says. And that adds up: By one estimate, 500,000 miles could be worth between $4,000 and $10,000, depending on the airline.

But can you pass your miles on? That depends. The secret is: Don’t take an airline’s written policy at face value. The terms of service often say one thing while the carrier’s practices offer another path.

Get the Paperwork

For example, American Airlines’ AAdvantage program terms and conditions say, “Neither accrued mileage, nor award tickets, nor upgrades are transferable by the member upon death.” That seems pretty clear.

But if you read on, you’ll see that the airline reserves the right to decide, “in its sole discretion,” to pass your miles on to beneficiaries “upon receipt of documentation satisfactory to American Airlines and upon payment of any applicable fees.”

American Airlines spokeswoman Laura Nedbal clarified that the airline does indeed transfer mileage to heirs. How it works: Upon request, American Airlines provides a special affidavit form for beneficiaries to sign, affirming that they are the rightful recipients of the miles. Your heirs will need to complete it and send that back, along with the death certificate. Happily, as of now, there are no mileage transfer fees.

Similarly, United has a procedure for transferring miles — but you have to know to ask about it. The MileagePlus program rules say mileage may not be transferred, except as “expressly permitted by United.”

Spokeswoman Karen May says the airline has made “case-by-case exceptions” when members have died. Should your heirs apply for one of those exceptions, they would need to send the death certificate, a signed and notarized affidavit provided by United, and a $150 mileage transfer fee, May says.

Ask Nicely

Smaller carriers don’t always have paperwork ready for heirs to sign, but they might have luck if they just ask nicely.

For instance, Virgin America’s Elevate Reward Points credit card program rules say points “may not be transferred upon death.” But although the small airline doesn’t receive that many requests to bequeath points, says spokesman Dave Arnold, he confirms that the airline does make “case-by-case” exceptions to its rules when heirs provide documentation of a bequest.

Even if you can’t pass on your miles, you can leave your username and password behind. At Southwest Airlines, for instance, you can’t will your miles to heirs — but the Rapid Rewards program rules say your points will live on in your account 24 months after your last account activity. During that time, if your heirs have your account information, they can go into your account and use the miles, or transfer them for a fee of about 1 cent per mile, says spokesman Adam Rucker.

And no rule is ironclad. Take Delta, which made headlines in 2013 when the airline said it would stop honoring bequest requests. Delta’s SkyMiles program rules still say points may not be transferred upon death, and a Delta spokesman confirmed that, officially, that’s still the policy.

But tell that to Roberta Bekerman, a widow who wrote to Delta, “It is with great sadness that I inform you that my beloved husband, Philip, passed away on Dec. 21 … Please be so kind as to transfer his accrued SkyMiles into my account.” Delta did, the New York Times reports.

The Takeaway

You simply can’t guarantee that your spouse or kids will get your miles. “One of the biggest problems is the airlines change their policies so many times, even if you do everything perfect when you write the will, it might not work anymore,” Beyer says.

Still, there’s a good chance your airline will honor your request anyway. The best you can do is add a line to your will that says, “I leave [name of heir] my airline miles, if allowed,” Beyer suggests — and advise your children to be polite to the airline customer service reps. Either that or spend down your miles when you’re still alive; now’s the time to enjoy them.

MONEY Estate Planning

Why My Grandparents’ Home Got Torn Down

Empty residential lot
Shutterstock

Estate planning can prevent a lot of heartache.

My family loves get-togethers—we find any reason to gather and eat. We credit this wonderful trait to my grandparents. They were gracious hosts with amazing culinary skills. Their home, built with my grandfather’s hands, was a sanctuary for family, friends, and welcome strangers.

My grandparents didn’t just leave legacy of memorable gatherings; they also left their home to their children, expecting regular family reunions after they were gone. My grandparents would not have it any other way!

My grandmother died in 1994, eight years after my grandfather’s death.

Their children tried their best to embrace my grandparents’ vision of maintaining the family home. But time, distance, and money wreaked havoc on implementing the plan. Our hearts sank as the house slowly fell into disrepair. It took almost 14 years before the children agreed that one sibling would buy out the other childrens’ shares of the home.

By then, however, the damage to the home was done. Now, only the land and memories remain.

I believe that if my grandparents had addressed certain questions about the house, they might have been able to protect it after their death with some thoughtful estate planning. Here are those questions:

  • Who wants to keep the home?
  • Who would prefer their inheritance to be cash instead?
  • Who can afford to buy the home?
  • How will the children handle multiple owners now? How would they handle ownership upon their own divorce or death?
  • Who will pay the property taxes?
  • Who will ensure upkeep?

One option might have been an estate-planning provision requiring the home be sold, with the first rights to buy given to the children. Or maybe the home could have been left to one or more children, and other assets left to other children to equalize inheritances. Maybe they could have established a trust in order to fund perpetual care of the home, and to manage generational ownership.

These considerations and others in the estate planning process might have allowed the children to preserve both their wealth and their legacy.

A significant amount of wealth is transferred through real estate. According to a 2014 study by Credit Suisse and Brandeis University’s Institute on Asset and Social Policy, the primary residence represents 31% of total assets for the top 5% of wealthy black families in the U.S. and 22% for the wealthiest white Americans. The percentage of wealth embodied in a primary residence is even greater for less well-off households.

Now it’s up to my aunts and uncles to get it right for the next generation. Will wealth be lost again or will it transfer for the benefit of their descendants? It’s a great question for the next family gathering…at a place to be determined.

———-

Lazetta Rainey Braxton is a certified financial planner and CEO of Financial Fountains. She assists individuals, families, and institutions with achieving financial well-being and contributing to the common good through financial planning and investment management services. She serves as president of the Association of African American Financial Advisors. Braxton holds an MBA in finance and entrepreneurship from the Wake Forest University Babcock Graduate School of Management and a BS in finance and international business from the University of Virginia.

MONEY

Shark Tank’s Daymond John Blew His First $20 Million Before Wising Up About Money

The Shark-Daymond John Presents "Xpensive Habits" Lavo Brunch Sponsored By: Jack Daniels, Miller Lite & Evian Water
Jerritt Clark—WireImage Mark Cuban and Daymond John attends The Shark-Daymond John Presents "Xpensive Habits" Lavo Brunch Sponsored By: Jack Daniels, Miller Lite & Evian Water at Lavo on February 14, 2015 in New York City.

The FUBU founder shares what he's learned about investing since then.

On ABC’s “Shark Tank,” Daymond John scrutinizes the business plans of wannabe entrepreneurs, but how does he manage his own finances?

A self-made businessman, John is actually pretty realistic – working his way up many ladders and learning from failures. A native of Queens, New York, John founded FUBU at age 23 in 1992, riding the wave of hip-hop fashion trends.

Now 46, he has been with “Shark Tank” since its debut in 2009. He serves as a consultant, gives motivational speeches, writes books and is a spokesman for other businesses, such as Gillette.

Reuters spoke with John about how his acumen for business translates to managing his own money:

Q: How much of your net worth is locked away for the future, and how much is at your disposal now?

A: I’ve probably put in 50 percent for long-term, and the rest I play with. I have squirreled away enough to not have to worry about it. Hopefully, I’ll never have to touch it, and it will be passed onto my kids or a great organization.

What I play with now, it can fluctuate. I can end up using a good percentage of it on a great acquisition, or I can hold it.

Q: How involved are you in the management of that money?

A: There are several levels of it. I’m involved when I’m doing my day-trading. When we’re talking about asset allocation, I have very different approaches. I’m with Goldman (Sachs) and various other firms. I kind of let three out of five of them do their own thing. For two out of five, I monitor (my account) over the course of every month or so.

Q: Most of what you do on ‘Shark Tank’ can be considered alternate investments, but do you do anything beyond that to diversify your portfolio?

A: My larger investments have been apparel brands. As for real estate, I’m part of a fund, but I’ve never been that great at real estate.

Q: When you do a promotion like for Gillette’s Shave Club, do you have an investment in that, or is it just for promotion?

A: It’s a brand association. It’s just an investment of my time and my face and my integrity. I don’t take it lightly.

Q: You lend your name to a lot of causes as well. How do you decide what charities get your time and money?

A: It’s not really a planned thing. I try to give on various platforms, and not do too much check-book philanthropy. For some, I will try to make more people aware of the plight, and help get more people to give. To some I will dedicate time, such as my desire to get out word about dyslexia.

Q: Do you have planned giving worked into your estate plan?

A: I don’t have that formal plan – some will go to family and certain small organizations. One is animal related, one is dyslexia, one is hip-hop against violence.

Q: Who first taught you about finance and money management?

A: I got the knowledge by blowing about $20 to $30 million the first time I made it. I’m not one of the few who hit lotto or peaked at 25 as an athlete. I have had several other bites at the apple.

Q: You have listed Robert Kiyosaki’s “Rich Dad, Poor Dad” as one of your favorite books. What have you learned from it?

A: The fundamental lesson to it is it’s not how much you make, it’s how much you save. You should go after small opportunities that have the potential to grow into large opportunities. That educated me on the tool of money.

MONEY financial advisers

The 3 Biggest Money Worries of First-Time Parents

first time parents
Ashley Gill—Getty Images

Good news, explains a financial planner: They're easily addressed.

Over the last 13 years I’ve worked with countless millennials preparing to embark on their journey to parenthood. First-time parents are concerned about many things, starting with feeding their newborn, keeping the little one healthy, or just sleeping through the night (for both parent and baby).

Amid the whirlwind of emotions a single parent or couple may go through leading into the birth of their first child, I’ve found that first-time parents all find themselves confronting the same three financial questions:

  1. How will we afford this baby?
  2. How will we pay for college?
  3. What if something happens to us?

As a financial adviser, I often find myself counseling first-time parent trying to process it all. The great news is that all three of these questions can be answered with a little bit of planning.

1. How will we afford this baby?
You can count on new and unexpected expenses with your little one on the way. Many of my new-parent clients have found that three of the most significant expenses in the first year are daycare, diapers, and baby food. By increasing your monthly contributions to a liquid investment savings account, you can get a head start on changing your spending habits and begin to prepare for costs you know are coming.

2. How will we pay for college?
College is getting more expensive every year. If you want to put your money to work, start saving early and take advantage of time and compound returns. A 529 college savings plan offers you 100% federal tax-free growth for qualified higher-education expenses. (State tax advantages vary from state to state and may depend on whether you are a resident of the state sponsoring the plan.) As the parent, you retain complete control of the assets. To help bolster their child’s college fund, many parents encourage family and friends to contribute to their child’s 529 plan instead of giving toys or other presents for major events like birthdays and graduations.

3. What if something happens to us?
It probably isn’t going to hit you in the first trimester, or maybe even the second, but it’s a realization so many parents reach by the time their newborn comes home to the nursery: What if something happens to us? Most new parents have never had to sit down and plan for contingencies like death. But the moment you have someone depending on you — both financially and emotionally — for the next 20-plus years, it hits you: “I need a plan.” For many, this plan has two major pieces that ultimately answer two questions:

a. Who will take care of my baby? An estate planning attorney can help you gather information and consider some important issues designed to protect your family. Through your estate plan you can dictate guardianship instructions for your baby, control over the distribution of your assets, and medical directives.
b. Who will pay all my baby’s expenses? Life insurance can provide your child, or your child’s guardian, with a lump sum payout upon your death. Term life insurance is typically the least expensive, and thus the most common, option; you pay a set amount each month over a certain number of years, and in turn are guaranteed a death benefit should you die during that term. The policy’s lump sum payout can help your beneficiaries cover the costs you would have otherwise paid.

By starting your planning early, you can set aside the extra cash you’ll need when your family’s newest addition arrives, split the college bill with your old pal “compound returns,” and prepare for the unthinkable. Once you have these pieces in place, you’ll have your mind clear to focus on what is most important — your family. (And your sleep.)

Joe O’Boyle is a financial adviser with Voya Financial Advisors. Based in Beverly Hills, Calif., O’Boyle provides personalized, full service financial and retirement planning to individual and corporate clients. O’Boyle focuses on the entertainment, legal and medical industries, with a particular interest in educating Gen Xers and Millennials about the benefits of early retirement planning.

MONEY retirement planning

This Popular Financial Advice Could Ruin Your Retirement

two tombstones, one saying $-RIP
iStock

The notion of "dying broke" continues to appeal to many Americans. That's too bad, since the strategy is ridiculously flawed.

You may have heard of the phrase “Die Broke,” made popular by the bestselling personal finance book of the same name published in 1997. The authors, Stephen M. Pollan and Mark Levine, argue that you should basically spend every penny of your wealth because “creating and maintaining an estate does nothing but damage the person doing the hoarding.” Saving is a fool’s game, they claim, while “dying broke offers you a way out of your current misery and into a place of joy and happiness.”

I love a good contrarian argument, but for whom did this plan ever make sense? Perhaps people like Bill Gates who have so much money that they decide to find charitable uses for their vast fortune. But for the rest of us, our end-of-life financial situation isn’t as nearly pretty, and we’re more likely to be in danger of falling short than dying with way too much.

In a recent survey, the Employee Benefit Research Institute found that 20.6% of people who died at ages 85 or older had no non-housing assets and 12.2% had no assets left at all when they passed away. If you are single, your chances of running out of money are even higher—24.6% of those who died at 85 or older had no non-housing assets left and 16.7% had nothing left at all.

Now, perhaps some of those people managed to time their demise perfectly to coincide when their bank balance reached zero, but it’s more likely that many of them ran out of money before they died, perhaps many years before.

And yet the “Die Broke” philosophy seems to have made significant headway in our culture. According to a 2015 HSBC survey of 16,000 people in 15 countries, 30% of American male retirees plan to “spend it all” rather than pass wealth down to future generations. (Interestingly, only 17% of women said that they planned to die broke.)

In terms of balancing spending versus saving, only 61% of men said that it is better to spend some money and save some to pass along, compared to 74% of women. Perhaps that’s why, as a nation, only 59% of working age Americans expect to leave an inheritance, compared to a global average of 74%.

There are so many things wrong with this picture. The first is that Pollan and Levine’s formula of spending for the rest of your life was predicated on working for the rest of your life. “In this new age, retirement is not only not worth striving for, it’s impossible for most and something you should do you best to avoid,” they wrote. Saving for retirement is certainly hard, and I don’t believe that all gratification should be delayed, but working just to spend keeps you on the treadmill in perpetuity.

Besides, even if some of us say we’re going to keep working all our lives, that decision is usually dictated by our employer, our health and the economy. Most of us won’t have the choice to work forever, and the data simply don’t support a huge wave of people delaying retirement into their 70s and 80s. And as I have written before, I don’t buy into the current conventional wisdom that planning for a real retirement is irrational.

But perhaps the most pernicious aspect of the “Die Broke” philosophy is that it takes away the incentive to our working life—to get up in the morning and do your best every day, knowing that it’s getting you closer to financial security—and the satisfaction that goes with it. In the end, I believe what will bring us the most happiness is not to die rich, or die broke, but to die secure.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

Read next: This Retirement Saving Mistake Could Cost You $43,000

MONEY Estate Planning

This Is When You Actually Need to Make a Will

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Justin Horrocks—Getty Images

The simple answer will surprise you.

If there is one thing we need to get done before we die, it’s making a will, but you probably won’t find it on anyone’s bucket list. A lot of us never get around to it. In fact, more than half of Americans between 55 and 64 (presumably at or close to retirement) are without wills, according to a survey by Rocket Lawyer.

What that means is when they die, the state where they live will determine how their assets will be divided. (And if they are parents of minor children, the state may also decide who will raise them.)

Jim Blankenship of Blankenship Financial Planning in New Berlin, Ill., said the arrival of a first child is often what prompts couples to make a will. The desire to choose a guardian then leads to considering how the chosen person will fund the raising of the child. The other impetus for writing a will may come when a close friend or family member dies unexpectedly.

But it’s clear from the statistics that many of us either think we don’t need wills or that we’ll do it later. The real answer to when you need a will is when you have obligations or assets, Blankenship said. If, for example you’re just starting out and you used a co-signer to get a loan, if something happens to you, your co-signer is most likely on the hook for your debt. Or if you have children, then you have someone who depends on you. You’ll want to be sure you have insurance and a will to take care of them.

Homeownership can also prompt people to make wills, Blankenship said. In most cases, a home is both an asset and an obligation, and it should be included in a will.

For the very simplest wills, Blankenship said the kit type you can buy online or at an office supply store is probably adequate. You’ll need to be sure you get the version for your state. For more complicated situations (say, a second marriage, a business or more complex assets), you probably will want legal advice, he said. And remember that some assets can be passed to heirs outside a will — 401(k)s, IRAs, insurance benefits, “just about anything that has a beneficiary,” Blankenship said.

Will kits can walk you through making a will, step by step. The biggest mistake you can make, Blankenship said, is putting it off. The second-biggest, one he sometimes sees with his own pre-retirement clients, is failing to update it as life circumstances change, which is a great time to revisit your beneficiaries.

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