Friday, February 14, 2020

Why Kobe Bryant's Death Was A Wake Up Call

Kobe Bryant's premature death was hard for many people, including me.  I'm not a Lakers' fan, but while attending UC Santa Barbara in the late '90s, I got to see the Lakers scrimmage at the Thunderdome (the Gaucho's event center).  This was early in Kobe's career, but already he was a superstar.  Living in Santa Barbara also enabled me to catch many Lakers games when they played my team, the Golden State Warriors.  Despite my support of the "Dubs," I was a Kobe fan.

As we know, Kobe Bryant didn't die alone.  His daughter, Gianna Bryant, as well as other people, tragically met their end when the helicopter they were flying in crashed.  It's been a few weeks now since the tragedy.  The Kobe Bryant Memorial Services are next week at the Staples Center.  The last I read, it appears the event will be huge.  Kobe was loved.

There's an inherent flaw in all of personal finance.  I've read countless articles on topics galore relating to PF.  The authors of countless blog posts and books (myself included) all assume one thing: that you will make it to retirement.  Those who are proponents and practitioners of the FIRE (Financial Independence Retire Early) have one thing going for them, early retirement.  In other words, by saving half their income or more, and investing mostly in safe vehicles like mutual funds with great track records (so they preserve capital), these individuals want out of the workforce by their 30s or 40s.  Done!  About the only thing I personally like about the FIRE movement is being young at retirement.

But no one is safe from the Grimm Reaper.  This is why Kobe's death was a wake up call to all of us.  Sure, young people die all the time.  Some from natural causes, and others tragically.  Some of these deaths make the news.  We may lament and feel awful for the surviving family members.  But the impact Kobe made in life magnified 100 times over or more, his premature death.  Kobe was not only a Hall of Fame NBA player, he was a successful businessman with quite the fortune.  Kobe had all of his affairs in order.  No doubt.  His family won't have to deal with extended family or quarrels.  But for every Kobe, there are 60 people who die every day without a Will or a Living Trust.

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According to a 2017 AARP survey, 6 in 10 Americans haven't done a will yet.  I'm one of them!  My wife, Jessica, and I were at our annual tax appointment with our EA yesterday.  We asked him about his Living Trust service.  It's going to cost us $1,500 to set up a Living Trust, and $175 for each rental property transfer.  Ouch!  Oh well.  Whereas a will goes into effect upon your death, a trust goes into effect as soon as it's created.  Another key difference between a will and a trust is that a trust avoids the courtroom, saving everyone time and money.  You have to figure out what works best for you.  A living trust works best for my family.

Okay, so you may be doing great saving for retirement.  That's not the norm in the U.S. as many people struggle just to make ends meet.  But I bet you haven't considered your death or potentially failing health, as much as you should.  Do you have a health care power of attorney?  Do you have term life insurance so your loved ones don't struggle without the loss of your income?  Do you have a trust?  You don't?  Then what the heck are you waiting for?

Do you think Kobe thought he was going to die at 41?  Obviously, no!  My wife and I go out on date nights, leaving the kids with a babysitter.  What if we get in a car accident and die together?  The what?  We feel incredibly fortunate to have several rental properties as assets and our residence here in coastal CA to leave to our two kids, but we feel like idiots for not having a living trust yet.  We left the EA's office with the forms in hand and are going to sit down this Presidents Day weekend to start working on them.  Perhaps it's time you talk estate planning with your significant other too.  Do it for Kobe!  Mamba Mentality. 

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