Penny-Wise and Pound Foolish About Estate Planning

Most of us have heard the term “penny-wise and pound-foolish”, an idiom with British roots. A penny is a small amount of money and a (British) pound is a much larger amount of money. “Penny-wise, pound-foolish” is to be cautious (wise) with small amounts of money but wasteful (foolish) with larger amounts or, another interpretation, saving a few dollars now which in turn will cause you to have to spend a lot of dollars later.

I thought of this phrase after a call I received. The caller explained that she has been diagnosed with a terminal illness. She also explained that she has no will and no savings; however, she has real estate, a car and “the usual” personal and household items. In discussing her situation, she also said that she wanted to leave her estate to only three of her four children. She said that she had been advised to see an attorney about doing a living trust but felt that she could only afford a will. She asked me for my advice concerning the situation.

Some attorneys receiving a call like this would hasten over to the caller’s house and offer to do a will for free. The attorney would likely do so in anticipation of handling the inevitable probate of her estate. If the value of the real estate and the personal property was $500,000 when the caller passed away, attorney’s fees for handling the probate would be approximately $13,000. Preparing a simple will would take a couple of hours effort, at most. The attorney would make a small investment now for a larger reward down the road– a business strategy that estate planning attorneys have used for decades.

When responding to the caller, I tried to make sure she understood the penny-wise and pound-foolish principle involved in her decision. My advice was for her to do a will as soon as possible and then find the money someway, somehow to do a trust. By spending around $1,000 now her estate would be saved thousands of dollars later. I explained what my fees are and that I accept credit cards. I further explained that the trust package would also include other key documents that she would need during her illness such as a Power of Attorney and Advance Health Care Directive. The caller said she would think about it.

I don’t know if I will ever hear from the caller again; however, I do have the comfort of knowing that I gave her good legal advice and pointed her in the right direction. © 2014 by Marlene S. Cooper. All rights reserved.