You may have heard that old story about the newlywed wife who, when making a pot roast for her husband for the first time, cut both ends off the roast and placed them in the pan. When her husband asked why she did this, she said “I don’t actually know – that’s how my mom taught me to do it.” She called her mother and told her that her husband had asked why she cut off the ends of the pot roast. Her mother laughed and explained “my pan wasn’t large enough to hold the roast so I had to cut off the ends to fit it in the pan”. Turns out that cutting off the ends was a practical measure, not a culinary secret. This story epitomizes a cognitive shortcut known as anchoring bias: sticking to an initial piece of information or process, even if it's irrelevant to our current circumstances.
A recent CNBC article delved into how anchoring bias impacts financial decisions, from retirement plan contributions to shopping sales. It made me think of a crucial yet overlooked area: estate planning. Many consider a will as the ultimate ticket to ensure their family’s financial future. However, similar to the pot roast tale, people often go by what they've seen or heard their parents or friends do, not always questioning if it's the most suitable method.
When you draft a will, you're essentially sending your family on a journey through probate court. Many envision this process as straightforward, assuming that the will merely serves as instructions to the judge. But let's dissect that further using the concept of anchoring bias.
1. The False Security of a Will: Just as shoppers get anchored to an original price, believing the sale price is a "bargain", many believe that having a will is a failsafe. However, much like that sale price, a will which costs next to nothing, when viewed objectively, might not offer the protection and ease they assume.
2. Underestimating the Probate Process: Probate can be lengthy, expensive, and public. Some might feel secure knowing they have a will, similar to those investing small amounts into their retirement plan, thinking it’s enough. But just as those contributions might provide a false sense of security, so can having a basic will.
3. Anchoring to Traditional Estate Planning Methods: The pot roast story is a classic example. We sometimes draft wills or make decisions based on what our parents did, not necessarily because it’s the best choice. It’s the classic “this is how it’s always been done” syndrome.
4. Negotiation and Legal Advice: When negotiating or understanding the legal facets of your will or any estate planning method, anchoring can be a detrimental tactic. Just as companies might anchor prospective hires to a lower salary, individuals might anchor to a singular method of estate planning without exploring other, potentially more beneficial, avenues.
So, what’s the takeaway?
Much like the newlywed wife making pot roast, when it comes to estate planning, it's crucial not to merely take actions based on past practices without understanding their relevance. And more importantly, always be prepared to challenge conventional wisdom and ask for expert guidance.
At Stouffer Legal we look well beyond basic will drafting. We explore all avenues to ensure your loved ones are protected and your wishes honored. Just as anchoring bias can influence financial decisions, the same can occur with estate planning. By learning more about the process, you can be sure that your decisions won't be influenced by the outdated or irrelevant "size of the pan" but by what truly benefits you and your family.
Chances are there’s lots you don’t know about Estate Planning – and that’s understandable, few people do. We make it easy to learn what you need to know – just visit https://www.stoufferlegal.com/steps-to-estate-planning-in...
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