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How To (Financially) Survive Death

How To Financially Survive Death

What happens when you die?

According to the Catholic tradition . . . no, don’t worry. This is not a religious or philosophical discussion about what happens to you when you die. We want to know what happens to your stuff and your money when you die. Now that’s interesting.

Think about it. A person was alive yesterday and that person had a kid, an Xbox, some IRA investments, a house, and a bank account. Today, that person is dead. But what happens to all that stuff?

Ask five friends and I bet you’ll get five different answers.

You really have about three main options when it comes to handling what happens to your stuff after you die:

1. Do nothing.

2. Will.

3. Trust.

Do nothing.

Well, this is surely the easiest . . . for you. But, for your family, this is definitely not the easiest. Why? Here’s how it works. Either you write down where you want your stuff to go or the state you live in will decide. Yup. Each state has their own rules for what happens to someone’s stuff when they die. It might go to your spouse, it might go to your kids, and it might go to your spouse and kids. It’s all over the map. So this is a problem. What if you want your money to go somewhere else? Remember, either you say where you want your stuff to go or your state will. So doing nothing is not the best estate plan.


Now this is getting better. A will is really just a letter where you say where you want your stuff to go and who gets what. You might say your brother gets $50,000 and your aunt gets your house. Whatever you want. That’s the beauty with a will – you get to decide exactly who gets what. And you want to know something else? If you have kids, it is in your will where you decide who you want to look after them. That’s huge. No, really. That is huge. If you die with young kids and did no estate planning, it’s up to the courts to decide who takes care of your kids. This is a terrible outcome. The only solution is to name a guardian in your will.


Now we are getting a bit more sophisticated. A trust, often a called a living trust or family trust, is kind of like a will in that you get to say who gets what when you die. So if they are similar, why even bother with a trust? There are many reasons, but this is the most important.

You get to have a whole lot more say and control over your stuff after you die. With a will, it’s basically, “So-and-so gets my $1 million investment account.” End of story. But with a trust, you can say, “So- and-so gets my $1 million investment account, but they can only get $25,000 of it a year until they are 25 years old, and then they can get $50,000 a year until they are 30, but if they get a master’s degree, then they can get $75,000 a year, etc.” You have total control over who gets your stuff, how much they get, when they get it, and you can set certain restrictions. A lot of families will use a trust because with just a will, the kid would get the full $1 million when they turn 18. And parents think, maybe, just maybe, they may not make the best decisions with a $1 million at age 18. So, they’ll set up a trust so Junior can’t blow through all the money at 18.

Okay, so that’s it?

As my daughter likes to say, easy peezy lemon squeezy. Do nothing and let the state decide. Write a will. Or create a trust. At a minimum, you need a will, but if necessary, you can also have a trust. Capisce?

The proceeding blog post is an excerpt from Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth, available now on Amazon.

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About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

Reach us at (949) 305-0500