Why Is a Will So Important?

A 2020 Gallup poll found that less than half of Americans have a will or have made plans regarding how they would like their money and estate handled in the case of their death. The poll also showed that Americans ages 65 and up are the most likely to have one.

Yahoo News’ recent article entitled “How To Write A Will: The Importance Of A Will And Living Will” says that no matter your age, it’s important to have a will to be in control of what happens with your own assets. A will is a legal document that establishes a person’s wishes regarding the distribution of their assets — money, real estate, etc. — and the care of any minor children.

Without this type of legal document, the state law may control who gets your “probate” assets and when. Having one can save an enormous amount of time and money in estate administration and the process of having a guardian appointed for your minor children, if needed.

There’s a big difference between a will and a living will. A living will is a document that lets you state in advance how you want to be treated under certain medical situations, if you’re unable to make those decisions for yourself at a later time.

These differ by state law. However, they generally cover end-of-life decision-making and treatment options. General medical decisions unrelated to end of life care are typically covered in a health care power of attorney. Some states combine these two documents into one directive.

Unlike a living will, which specifically provides instructions for medical care during your lifetime, it lets you to decide in advance who you want to receive your assets upon your death, and who you want to be in charge of handling the administration of your estate. If you have minor children, it also allows you to nominate a guardian for them.

When creating a will, think about the “what,” the “who” and the “how.” To do so, ask yourself the following questions:

  • What assets do you have?
  • To whom do you want to leave them?
  • Who do you want to be in charge of making sure that happens?
  • Who do you want to be responsible for your minor children?
  • How do you want the assets transferred?

Reference: Yahoo News (Aug. 17, 2022) “How To Write A Will: The Importance Of A Will And Living Will”

Why You Need an Estate Plan

Did you think you had to be rich to have an estate? Think again! From a legal perspective, your estate includes everything you own, from tangible property like a car, house, furniture, as well as intangible assets like insurance policies, bank accounts, retirement and investment accounts. You don’t have to be rich to have an estate, says the recent article “How to Plan Your Estate” from The Military Wallet. However, you do need to have an estate plan, and the best time to start planning is right now.

An estate plan is more than simply passing your property along to heirs. It is also how you prepare for the unpleasantries of life, including becoming incapacitated or being unable to make decisions on your own.

Your estate plan protects you and your beneficiaries. Without a will, the court will determine who will get your assets subject to probate, following the laws of your state. With a will, you determine who should receive your probated property, from family members to charities.

Your estate plan protects your children. Your will nominates a guardian who will care for your children if you die before they turn age 18, or, if you have a disabled child with special needs, who will care for them for the rest of their life. Without a will nominating a guardian, the court will make these decisions.

Your estate plan protects your family by preventing conflict. Your wishes are made clear in a will and in other estate planning documents. The more details, the better. No one can say they knew what you really wanted, because what you really wanted is documented and memorialized in your estate plan.

Getting ready to meet with an estate planning attorney will be easier if you take it step by step.

Make an inventory of all assets, including

  • House, land and any real estate property
  • Cars, boats and any other vehicles
  • Bank, investment and retirement accounts
  • Life insurance policies
  • Health savings accounts
  • Jewelry, valuables and collectibles
  • Digital assets, including website URL, username and password
  • Cryptocurrency, including all information for an executor to be able to access accounts

Create a plan for the different scenarios in your life. Who would you want to raise your children if you and your spouse die while children are minors or are unable to care for them because of illness or injury? How will your spouse pay the mortgage if you die unexpectedly?

Make a list of all accounts with designated beneficiaries. This typically includes life insurance, retirement plans and annuities. Any time you have a major life event like marriage, divorce, birth or death, these designations should be reviewed.

You’re now ready to meet with an estate planning attorney. Your estate plan should include a last will and testament, outlining who should receive your property, who will distribute your estate (your executor) and who should raise your children if you die while they are under legal age.

A Health Care Proxy is used to name a person who can make decisions about your healthcare if you cannot. A Living Will outlines the details for medical treatment you want or don’t want when you are near death.

Power of Attorney is a document giving someone else the power to take care of your finances at any point, if you can’t because of illness or incapacity. This avoids your family members having to go to court to obtain a guardianship, which takes time and is a costly proceeding.

Reference: The Military Wallet (Aug. 25, 2022) “How to Plan Your Estate”

What Does a Living Will Do for Me?

During a medical crisis, families frequently must make decisions quickly regarding whether to withhold or provide life-sustaining treatments. A living will is a part of advance care planning. It’s a legal document that provides specific instructions on how to carry out your wishes to receive or decline such treatments when you otherwise can’t communicate those wishes yourself, explains, Forbes’ recent article entitled “How Does A Living Will Work?”

Your estate plan may already include a durable power of attorney for health care, which is a legal document that lets your designated agent or proxy make medical decisions for you if you become incapacitated. However, unlike that document, the instructions in a living will can be used only when the person named in the living will has no hope of recovery or cure.

A living will provides limited authority to an agent on behalf of the principal who’s no longer able to communicate their preferences to withhold or withdraw artificial means of life support or life-sustaining treatments. A living will should have your wishes noted for receiving or going without treatment when your condition isn’t expected to improve and treatment would extend your life for only a limited time.

A living will is designed to apply only in very limited situations when the principal who signed the document has an incurable or irreversible medical condition or conditions that will most likely result in the principal’s death within a short period of time—typically six months or fewer.

Life-sustaining treatments addressed in a living will may include:

  • Ventilators
  • Heart-lung machines
  • Nutrition via a feeding tube
  • Hydration via feeding tube or IV
  • Cardio-pulmonary resuscitation (CPR) or other extraordinary measures; and
  • Dialysis.

Living wills can also address issues, like pain management and palliative care. You may even include provisions such as “I would prefer to die at home” in a living will.

Provide as much information as you can to make certain that your proxy isn’t making the decision for you, but rather your wishes and words are moving through your proxy. The more information you can provide in your living will to your proxy to illustrate for them the type of care that you’d want to receive or decline, the better.

Reference: Forbes (Aug. 18, 2022) “How Does A Living Will Work?”

The Risks of Creating Your Own Estate Plan
Living trust and estate planning form on a desk.

The Risks of Creating Your Own Estate Plan

We call it the brother-in-law syndrome: your brother-in-law knows everything, even though he doesn’t. He tells anyone who’ll listen how much money he’s saved by doing things himself. Sadly, it’s the family who has to make things right after the do-it-yourself estate plan fails. This is the message from a recent article titled “Dangers of Do-It-Yourself Estate Planning” from Coastal Breeze News.

Online estate planning documents are dangerous for what they leave out. An estate plan prepared by an experienced estate planning attorney takes care of the individual while they are living, as well as taking care of distributing assets after they die. Many online forms are available. However, they are often limited to wills, and an estate plan is far more than a last will and testament.

An estate planning attorney knows you need a will, power of attorney, health care power of attorney, a living will and possibly trusts. These are essential protections needed but often overlooked by the do-it-yourselfer.

A Power of Attorney allows you to name a person to manage your personal affairs, if you are incapacitated. It allows your agent to handle your banking, investments, pay bills and take care of your property. There is no one-size-fits-all Power of Attorney. You may wish to give a spouse the power to take over most of your accounts. However, you might also want someone else to be in charge of selling your shares in a business. A Power of Attorney drafted by an estate planning attorney will be created to suit your unique needs. POAs also vary by state, so one purchased online may not be valid in your jurisdiction.

You also need a Health Care Power of Attorney or a Health Care Surrogate. This is a person named to make medical decisions for you, if you are too sick or injured to do so. These documents also vary by state,. There’s no guarantee that a general form will be accepted by a healthcare provider. An estate planning attorney will create a valid document.

A Living Will is, and should be, a very personalized document to reflect your wishes for end-of-life care. Some people don’t want any measures taken to keep them alive if they are in a vegetative state, for instance, while others want to be kept alive as long as there is evidence of brain activity. Using a standard form negates your ability to make your wishes known.

If the Power of Attorney, Health Care Power of Attorney or Living Will documents are not prepared properly, declared invalid or are missing, the family will need to go to court to obtain a guardianship, which is the legal right to make decisions on your behalf. Guardianships are expensive and intrusive. If your incapacity is temporary, you’ll need to undo the guardianship when you are recovered. Otherwise, you have no legal rights to conduct your own life.

DIYers are also fond of setting up property and accounts so they are Payable on Death (POD) or Transfer on Death (TOD) accounts. This only works if the beneficiaries outlive the original owner. If the beneficiary dies first, then the asset goes to the beneficiary’s children. Many financial institutions won’t actually allow certain accounts to be set up this way.

The other DIY disaster zone: real estate. Putting children on the title as owners with rights of survivorship sounds like a reasonable solution. However, if the children predecease the original owner, their children will be rightful owners. If one grandchild doesn’t want to sell the property and another grandchild does, things can turn ugly and expensive. If heirs of any generation have creditors, liens may be placed on the property and no sale can happen until the liens are satisfied.

With all of these sleight of hand attempts at DIY estate planning comes the end all of all problems: taxes.

When children are added to a title, it is considered a gift and the children’s ownership interest is taxed as if they bought into the property for what the parent spent. When the parent dies and the estate is settled, the children have to pay income taxes on the difference between their basis and what the property sells for. It is better if the children inherit the property, as they’d get a step-up in basis and avoid the income tax problem.

Finally, there’s the business of putting all the assets into one child’s name, with the handshake agreement they’ll do the right thing when the time comes. There’s no legal recourse if the child decides not to share according to the parent’s verbal agreement.

A far easier, less complicated answer is to make an appointment with an estate planning attorney, have the correct documents created properly and walk away when your brother-in-law starts talking.

Reference: Coastal Breeze News (Aug. 4, 2022) “Dangers of Do-It-Yourself Estate Planning”

Is it Important to have an Estate Plan?

Everyone needs to have an estate plan to ensure that their family can take part in medical care, assets will pass to the heirs they want and to protect minor children, as explained in a recent article titled “Estate Planning Considerations That Apply to Nearly Everyone” from mondaq.com. An estate plan does all this, and more. Having an estate plan can also protects privacy; any assets moved into a trust do not become part of the public record.

Here are the documents making up the foundation of an estate plan.

Last Will and Testament. This is used to direct the disposition of assets and appoints an executor to handle final affairs after your death. If there is no will, the state law controls how your estate is distributed.

Revocable Trust. Trusts permit more control of the management and disposition of assets in a more private and tax-efficient way during your lifetime and after death.

General Durable Power of Attorney. This document usually names a spouse, adult child or trusted individual who can take over your legal and financial affairs, especially if you should become incapacitated.

Health Care Power of Attorney. Everyone over age 18 should have this document. This nominates a person you choose to make health care decisions. Without it, parents of teenagers and young adults may not be involved in their care. Treating physicians will not be able to discuss your loved one’s care, or you may need to petition the court for guardianship.

Living Will. This document allows you to express your wishes with regard to end-of-life care and medical treatment decisions. It alleviates the emotional burden of guessing what you would have wanted by family members.

HIPAA Authorization. Your medical and health insurance records are protected from being released to third parties without the patient’s consent. While this is helpful for patients seeking to maintain their privacy, it also means parents or loved ones will not have any access to medical records and healthcare providers will not discuss the patient’s medical condition with family members. Fines and penalties for professionals and facilities are strict.

Asset and Beneficiary Designations. Part of an estate plan includes ensuring that assets are in alignment with your wishes. Your will does not control how assets with a beneficiary designation or those with joint ownership titles will be inherited. For your estate to achieve the outcome you want, you’ll need to dig deep into your records and ensure that all assets are properly titled, including insurance policies, investment accounts, retirement accounts, property and any other assets.

If you have an estate plan in place and have not updated it in recent years, or failed to get one or more of the above-mentioned documents, there is no time like the present to do so. Unexpected events are always around the corner and being prepared in advance helps ensure your wishes will be achieved and your family will be protected.

Reference: mondaq.com (July 29, 2022) “Estate Planning Considerations That Apply to Nearly Everyone”

Do Young Adults Need a Will?

Everyone, age 18 and older, needs at least some basic estate planning documents. That’s true even if you own very little. You still need an advance health care directive and a power of attorney. These estate planning documents designate agents to make decisions for you, in the event you become incapacitated.

The Los Angeles Daily News’ recent article entitled “Estate planning, often overwhelming, starts with the basics” reminds us that incapacity doesn’t just happen to the elderly. It can happen from an accident, a health crisis, or an injury. To have these documents in place, you just need to state the person you want to make decisions for you and generally what those decisions should be.

An experienced estate planning attorney will help you draft your will by using a questionnaire you complete before your initial meeting. This helps you to organize and list the information required. It also helps the attorney spot issues, such as taxes, blended families and special needs. You will list your assets — real property, business entities, bank accounts, investment accounts, retirement accounts, stocks, bonds, cars, life insurance and anything else you may own. The estimated or actual value of each item should also be included. If you have life insurance or retirement plans, attach a copy of the beneficiary designation form.

An experienced estate planning attorney will discuss your financial and family situation and offer options for a plan that will fit your needs.

The attorney may have many different solutions for the issues that concern you and those you may not have considered. These might include a child with poor money habits, a blended family where you need to balance the needs of a surviving spouse with the expectations of the children from a prior marriage, a pet needing ongoing care, or your thoughts about who to choose as your trustee or power of attorney.

There are many possible solutions, and you aren’t required to know them before you move ahead with your estate planning.

If you are an adult, you know generally what you own, your name and address and the names of your spouse and children or any other beneficiaries you’d like to include in your plan. So, you’re ready to move ahead with your estate planning documents.

The key is to do this now and not procrastinate.

Reference: Los Angeles Daily News (July 24, 2022) “Estate planning, often overwhelming, starts with the basics”

What are Big Mistakes to Avoid in Estate Planning?

Whether it’s a change in domicile, the death of a family member, new grandchildren, or a significant change in assets, it is important to make sure you adjust your estate plan accordingly, says Kiplinger’s recent article entitled “Updating Your Estate Plan? Don’t Make These Top Mistakes.”

  1. Updating a will or trust but forgetting to update ancillary documents. When updating an estate plan, people tend to home in on updating their wills and trusts without also having their powers of attorney, health care directives, or guardians reviewed. This prevents them from completing a full update to their estate planning. While these ancillary documents are good forever, that doesn’t mean they shouldn’t be reviewed and updated.
  2. Using flawed reasoning when selecting agents to act on your behalf. Some people choose their executors, trustees and other agents by trying to appoint all their children together or appointing agents by age or profession, instead of who is best suited to serve. The best person should live nearby and have the time to address issues you may need.
  3. Forgetting to update an estate plan when moving to another state. Estate planning documents drafted out-of-state, provided they were drafted with the legal requirements of that state, will be effective in all states. However, practically speaking, having out-of-state documents can complicate trust or estate administration, or the ability to exercise powers of attorney or health care directives. You should always update your plan when they move to another state to make certain that the plan functions correctly.
  4. Forgetting to create an asset cheat sheet or failing to keep that list updated. Most of us accumulate different assets and investments as we get older. It’s not uncommon for a person to have stocks, life insurance, annuities, securities, or other investments at many different institutions. When you update your estate plan, create a list of your accounts and assets and update that list as things change. Be sure to include the name and location of the account and the last four digits of the account number.

When making changes, if you avoid the above mistakes, it will ensure that your plan is properly updated and will not cause any unnecessary future complications.

Reference: Kiplinger (June 30, 2022) “Updating Your Estate Plan? Don’t Make These Top Mistakes”

Does ‘Gray Divorce’ Fit into Estate Planning?

According to the Pew Research Center, the divorce rate has more than doubled for people over 50 since the 1990s. The Pandemic is also adding to the uptick, says AARP’s recent article entitled “Getting Divorced? It’s Time to Update Your Caregiving Plan.”

A divorce can be financially draining. Moreover, later-in-life divorces frequently impact women’s finances more than men’s. That is because in addition to depressed earnings from time spent out of the workforce raising children, women find themselves more financially vulnerable post-divorce and more likely to serve as caregivers again in the future. Even so, for partners of all genders, it is important to consider the longer-term financial outlook, not just the financial situation you’re in when you are actually dissolving the marriage.

You and your spouse will be dividing assets and liabilities and the responsibilities regarding spousal support. How one of you will live if the other gets sick or passes away should also be part of this conversation.

Consider where you’ll need to make changes. One may be removing your spouse from beneficiary designations on all your accounts. (In some states, this is automatic.) Your divorce agreement may also include buying life insurance or maintaining a trust or beneficiary designations for one another.

Create or update your estate plan immediately. You should also ask your estate planning attorney to review your marital agreement. They will have suggestions about how to align your estate plan with your divorce obligations. If you and your ex are co-parenting children, your estate plan should address who their guardians will be, if both biological parents pass away. It is also important to address who will manage any inheritance, if you don’t want your ex-spouse handling assets you may leave to your children.

Create your life care plan, which means naming health care proxies or surrogates (who will take care of your medical affairs, if you’re in need of caregiving), designating a financial power of attorney (who will take care of your finances and legal affairs), and naming a guardian for yourself if you’re incapacitated.

Consider the way in which your divorce will impact your children and extended family if you need caregiving. At a minimum, agree between yourselves what level of contact you can manage and, if you share children and loved ones, know that your lives will cross along the way.

While your marriage may not last, the connections will, so make a wise plan.

Reference: AARP (Jan. 25, 2022) “Getting Divorced? It’s Time to Update Your Caregiving Plan”

What Is a Digital Estate Plan?

Traditional estate planning is step one, from creating a will to setting up a durable power of attorney and health care proxies. However, when you and your estate planning attorney create a comprehensive estate plan, you’ll now need to include digital estate planning. A recent article titled “Digital Estate Planning: 5 Things to Do Now to Make Things Easier in a Crisis” from Consumer Reports provides a step-by-step process.

First, get your important information organized. Create a document and either store it in a fireproof, waterproof safe in your home or share it with a secure digital password manager. Include complete contact information for doctors, estate planning attorneys, business partners, financial advisors, family members and important friends. Include land line and cell phones numbers and email addresses. Next, list your medical information, health conditions, prescriptions and pharmacies. Add information for your workplace, schools, houses of worship and community organizations. Anyone you interact with on a regular basis should be included.

Provide information for personal documents, including your birth certificate, Social Security card, estate planning documents, passport and Medicare or other health insurance information.

Your estate planning documents include your advance care directives, including a living will, durable power of attorney and healthcare proxy.

Financial information including bank accounts, account numbers, investments, credit cards, mortgages and car loans or leases should be listed. Make a note about all recurring bills when they are due and how you pay them.

Password sharing with trusted family members. Someone will need access to your online accounts. Ideally, share this information with two people—one who lives with you and one who does not—just in case one cannot help. Phone and computer passwords should be written down or write down a hint you know will easily be understood by someone who knows you well. You can also use a password manager. However, be careful to select one with extremely good security.

Create a legacy contact for major online accounts. A handful of major online platforms now provide an option to name a person who can access your accounts, if you designate a “legacy contact.” Apple, Facebook and Google are among those who offer this important feature. In the future, other platforms may follow.

Add digital assets to your will. Major platforms without a legacy contact feature have strict access requirements. Microsoft says it must be served with a valid subpoena or court order to provide access. LinkedIn and Instagram can memorialize accounts but require legal documentation or proof of death for an executor to gain access to the accounts. Go through all platforms and find out what your executor will need to do to obtain your digital assets. Make sure that they are added to your will. However, don’t include account numbers or passwords, as the will becomes part of the public record during probate.

Digital assets are still tricky. The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which has been adopted by most but not all states, allows people you designate in your will to access digital property. However, it is not a complete solution. RUFADAA doesn’t allow for access to the content of emails and other digital communications because of privacy laws. Your will needs to have language clearly stating your wish for your fiduciary to be able to access and read your emails.

Call a planning meeting with your family. Talk about your wishes, the planning you’ve done and your expectations for who will handle your affairs. It’s not the easiest conversation, and some family members may be more comfortable than others, but when the inevitable occurs, they’ll be ready.

Reference: Consumer Reports (May 4, 2022) “Digital Estate Planning: 5 Things to Do Now to Make Things Easier in a Crisis”

Senior Second Marriages and Estate Planning

For seniors enjoying the romance and vitality of an unexpected late-in-life engagement, congratulations! Love is a wonderful thing, at any age. However, anyone remarrying for the second, or even third time, needs to address their estate planning as well as financial plans for the future. Pre-wedding planning can make a huge difference later in life, advises a recent article from Seniors Matter titled “Your senior parent is getting remarried—just don’t ignore key areas.”

A careful review of your will, powers of attorney, healthcare proxy, living will and any other advance directives should be made. If you have new dependents, your estate planning attorney will help you figure out how your children from a prior marriage can be protected, while caring for new members of the family. Failing to adjust your estate plan could easily result in disinheriting your own offspring.

Deciding how to address finances is best done before you say, “I do.” If one partner has more assets than the other, or if one has more debts, there will be many issues to resolve. Will the partner with more assets want to help resolve the debts, or should the debts be cleared up before the wedding? How will bills be paid? If both partners own homes, where will the newlyweds live?

Do you need a prenuptial agreement? This document is especially important when there are significant assets owned by one or both partners. One function of a prenup is to prevent one partner from challenging the other person’s will and trusts. There are a number of trusts designed to protect loved ones including the new spouse, among them the Qualified Terminable Interest Property Trust, known as a QTIP. This trust provides support for the new spouse. When the spouse dies, the entire trust is transferred to the persons named in the trust, usually children from a first marriage.

Most estate planning attorneys recommend two separate wills for people who wed later in life. This makes distribution of assets easier. Don’t neglect updating Powers of Attorney and any health care documents.

Before walking down the aisle, make an inventory, if you don’t already have one, of all accounts with designated beneficiaries. This should include life insurance policies, pensions, IRAs, 401(k)s, investment accounts and any other property with a beneficiary designation. Make sure that the accounts reflect your current circumstances.

Sooner or later, one or both spouses may need long-term care. Do either of you have long-term care insurance? If one of you needed to go into a nursing home or have skilled care at home, how would you pay for it? An estate planning attorney can help you create a plan for the future, which is necessary regardless of how healthy you may be right now.

Once you are married, Social Security needs to be updated with your new marital status and any name change. If a parent marries after full retirement age and their new spouse’s benefit is higher than their own, they may be able to increase their benefits to 50% of the new spouse’s benefits. If they were receiving divorced spousal benefits, those will end. The same goes for survivor benefits, if the person marries before age 60. If they’re disabled, they may still receive those benefits after age 60.

Setting up an appointment with an estate planning attorney a few months before a senior wedding is a good idea for all concerned. It provides an opportunity to review important legal and financial matters, while giving both spouses time to focus on the “business” side of love.

Reference: Seniors Matter (April 29, 2022) “Your senior parent is getting remarried—just don’t ignore key areas”