Estate Planning Documents You Need While Living

Statistically, we know without a doubt that we are all going to die. That’s 100% certain. However, we know that the chances of becoming disabled are also high. For that reason, everyone should have a Power of Attorney, or POA, as well as a will. In fact, says nwi.com in the article “Estate Planning: 3 important estate planning docs, and 2 maybes,” everyone should have a POA, a will, an advanced medical directive and more specifically, a living will.

How many times have you heard the story about someone’s aging mom becoming disabled and the hospital asking if she has a POA? The problem is we’re so reluctant to ask mom about a POA, that we tend to neglect this difficult conversation. Then, when we are faced with a medical emergency, it’s too late.

The time to have a POA created, is before an emergency or health crisis, not afterwards!

In a medical emergency, people are actually far more likely to become disabled or incapacitated than they are to die. Therefore, you need a POA.

The living will is equally important to have in advance of an emergency. With a living will to provide instructions for when you are terminally ill, and death is expected to occur in the very near future, you will have had the opportunity to state your wishes regarding medical care in advance.

A living will should be part of your estate plan.

The related document, which is not as well known, is the “life prolonging procedure declaration,” which says, in a nutshell, “Do everything you can to keep me alive, because I’m not leaving until I absolutely have to.”

The third must-have estate planning document is a will. The will is the document where you tell your heirs exactly how you want your assets distributed. If you have children who are not yet of legal age, you name a guardian for them in your will.

One “maybe” document is a trust. Trusts are used to protect assets. There are many different types of trusts. An estate planning attorney, the same one who will help you with your POA, living will and will, can also help with trusts, if you should need one. They are not simple to set up and you’ll want to get the one that best fits your needs.

Another document is called a “letter of instruction.” This is a set of directions that you leave to your family that tells them what you would like to happen. It’s not legally binding, so it falls into the “maybe” document category. However, you may find it satisfying to put down on paper what you would like them to know, what you would like them to remember, etc.

If you want to dictate your funeral, memorial services and the like, work with an estate planning attorney to execute a funeral planning declaration. This document can be legally enforced.

Remember, the laws about estate plans vary by state, so you’ll want to speak with a local estate planning attorney to ensure that your wishes, your documents and your estate plan will be properly prepared.

Reference: nwi.com (Nov. 25, 2018) “Estate Planning: 3 important estate planning docs, and 2 maybes”

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Why Do I Need a Medical Directive?

An important part of estate planning is a medical directive. This can include a living will, which details your wishes for end-of-life care; and a health care power of attorney that appoints a person to make medical decisions, if you’re unable to do so. A medical directive addresses important issues that are inevitable. However, many people just don’t want to think about them or discuss them with family. As a result, they’re left for to family members and medical providers to work through without any guidance.

The Watertown Public Opinion’s recent article, “Keep medical directives up to date,” says that it’s not uncommon to find situations, where medical directives that were valid when they were executed, become potentially useless. A family member could choose to make end-of-life decisions but then fall victim to dementia, which impacted their competency to make those decisions.

If your medical directive names your spouse, you should also name an alternate since your spouse, who’s aging along with you, may not be the best person to make hard decisions when the time comes.

In addition, you should communicate your specific wishes to both your primary and alternate designees. Ask them if they think they’ll be able to carry out your wishes. These conversations aren’t easy, but they’re essential.

On one hand, it may not be really hard for a family member to consent to become the designated representative in a medical directive. However, if the agent named in a healthcare power of attorney is in good health, the need to make hard decisions is somewhere in the future and can feel almost theoretical. When a medical emergency or an extended final illness occurs, a family member who’s frightened, grieving, and exhausted may then find actually making those decisions to be the toughest thing they’ve ever had to do.

You should provide your family with clear directions to make end-of-life decisions for you. This means you need to do more, than simply write their names into a document.

It requires selecting a person who’s willing to carry out your wishes. Tell that person about your wishes in a robust and meaningful conversation, and check in periodically to make certain they remain willing and able to carry out the solemn promise that a living will entails.

Reference: Watertown Public Opinion (November 20, 2018) “Keep medical directives up to date”

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Is Your Estate Plan on Track?

Investopedia’s article from this fall, “How to Get Your Estate Plan on Track,” tells us what an estate plan accomplishes. A good estate plan accomplishes three objectives:

  • End-of-life health care decisions are documented in a legally binding document;
  • Assets will be distributed according to your instructions, rather than state law; and
  • Loved ones avoid the time, expense and stress of the probate process.

A basic estate plan should include advanced directives, such as a health care proxy and power of attorney, will (perhaps a “pour-over” will and a revocable living trust). If you want to ensure that you have a valid will that follows the laws of your state, avoid pitfalls and best protect your family, hire an experienced estate planning attorney to make certain you have professional legal knowledge, when considering the nuances of trusts and estate law.

A health care proxy, also called a health care power of attorney, accomplishes two goals. First, it authorizes a designated individual to make health care decisions on your behalf, if you are ill or otherwise can’t make these decisions on your own. Without this, a judge would decide who has this authority in those circumstances. A health care proxy also allows you to document specific decisions for your health care, such as end-of-life decisions.

Your estate plan should also include a power of attorney, which allows you to authorize a person to make financial decisions in your stead. It’s used, if you’re not in a position to handle such affairs on your own (like a health care proxy).

Probate is the legal process where the court approves the distribution of your assets and gives creditors an opportunity to collect your debts. Going through probate can be stressful for your heirs. There are costs incurred and procedures that must be followed before assets are distributed. The probate process can take months and can be dragged out for more than a year in some situations.

Probate can be avoided with the right planning. For example, you can title certain assets like bank accounts, brokerage accounts, and property, so they pass directly by operation of law to your heirs, and bypass probate. Retirement assets are required to have beneficiaries and likewise will bypass probate. Make sure to have contingent beneficiaries, so these assets continue to bypass probate, if your beneficiaries predecease you.

For people with minor children, designating their potential guardian is one of the most critical elements of an estate plan. It is part of your will in most states. Remember, if you don’t name guardians in your will, and both you and your spouse pass away, the court will appoint a guardian, which may not be ideal for your children.

There are other unique situations that may warrant creating additional documentation and planning. These include having a business, adult children from a previous marriage, a potential liability against your estate or a special needs child. In any of these situations, you’ll definitely need to review your circumstances with an attorney.

Those assets held jointly (your home perhaps) and assets that have a beneficiary (life insurance) aren’t included in the will. Each state has its own rules about where the property goes, when a person dies without a will.

Estate planning is an ongoing process. Review your plan every few years or if you’ve had any major life changes, like a birth or adoption of a child, a divorce or a death of a family member.

Having your affairs in order can help prevent making things worse after you pass away.

Reference: Investopedia (October 17, 2018) “How to Get Your Estate Plan on Track”

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Time for a Series of Conversations with Aging Parents

We are in the midst of the holiday season. It is when family calendars start filling up with holiday gatherings from baking cookies to unwrapping presents piled up under the Christmas tree. This is also the season to start talking with parents about their future care, reports News3LV in “Tough talks over turkey: Is it time to have “The Talk” with your parents?”

It is not easy to approach this topic, especially if you have a parent who is not open to discussing the harsh realities of aging. Even if you try your very best to be sensitive, they may still bristle. They may feel like they are too young to be spoken to about these issues or worry that they’ll be considered a burden to your family, or that you simply want to get them out of the way. It’s a tough topic.

Here are some tips for these conversations:

Don’t wait. It’s easier not to have the conversations at all. However, then when an emergency strikes the family is faced with a series of decisions and missing paperwork. Explore options before a crisis. Let your loved ones get comfortable with the concept of talking about these difficult issues and then explore the different topics.

It’s important to get up to speed with your parent’s health care benefits and their wishes. Do they have the right health care plan in place? Talk with them about the Medicare Advantage plans that are available to help them stay independent longer.

Be sensitive. Let them know clearly that, at some point during their visit, you want to discuss their future. Give that thought time to sink in. You don’t want them to get defensive. Remember that talking about aging and death (or, as we often hear, “end-of-life”) is difficult for everyone. Decide which topics to dig into and which you can leave for another time.

Be prepared and be specific. What topics do you want to cover and what are the most important ones to discuss first?

Long-term care wishes: do they want to try to live at home? If that is not possible, what would they like? Do they have the ability to pay for an in-home caregiver or would they be better off in an assisted living facility? Could they live with any family members?

End of life decisions: is a living will in place? Do they have a durable power of attorney? Have they thought about what they would like, if they are no longer able to communicate their wishes?

Medical coverage: what kind of long-term care insurance do they have? Are they able to afford it and what does it cover?

Listen. Really listen. Hear what they are saying. Listen to their fears and their wishes. Speak in a loving manner and be patient. Let them know you will do the best you can to honor their wishes.

Take a break. If at first the conversation is halting, and they are visibly uncomfortable, it may not be the right day for them. Or, they aren’t yet able to share their thoughts with you.

Remain respectful and be empathetic. It is important to be patient. This is not a one-time conversation but a series of conversations to work through all of the salient points and make sure that everyone is focused on the same thing: taking good care of each other.

Reference: News3LV (Nov. 12, 2018) “Tough talks over turkey: Is it time to have “The Talk” with your parents?”

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Keep it All in the Family For Estate Plan Success

If estate planning were just about some basic math tasks, people would not put off going to their estate planning attorneys every few years to make sure their estate plan is in order. However,, as accurately described in the article “Estate Planning: A Family Affair” from Kiplinger, this is a highly emotional process.

If it helps to get you to move on this, consider that if you don’t have a will, the decisions about what will happen to your property–and if you are a parent of minor children, what will happen to your kids—will be decided by the laws of your state and the courts. That should be enough to get you to overcome the fear of mortality, that often keeps people from moving their estate planning forward.

Don’t have a will yet? You need to do that right away. If you have an estate plan, but haven’t reviewed it in a while, and your life has become more complex, it’s time for a review. By the way, just because you review your plan, does not necessitate an overhaul. However, laws and lives do change and the same goals your will and estate plan addressed four years or 14 years ago, may not be the same as they are now.

Every two or three years or whenever there is a major change in your life, such as a divorce, inheritance, financial loss, birth or a change in estate laws, it’s time for a review. Reviews should take place more often, when you are in your 50s or 60s. At that time, your assets may have grown, your children may have children of their own and your goals may have changed.

Your focus may have switched from protecting your children in the event of a premature death of a parent, to transferring wealth from one generation to the next.

The large changes to the tax law may mean that you no longer need some of the tax planning strategies you put into place prior to 2017. Several states have made major changes to their own estate tax laws. New Jersey eliminated its estate tax in 2018 and New York boosted its state estate tax exemption to $5.25 million that same year. Delaware eliminated its estate tax at the end of 2017.

One couple looked at their estate plans from almost 20 years ago, before two of their children were even born. They realized that the plan was out of date, their estate had become much larger, more complicated and they wanted to build in significant charitable giving.

The first task: updating their wills, health care proxies and advance directives for end-of-life care. They created a trust that will donate 11% of their estate to a charity that matters to them. Trusts were set up that will pay out a certain percentage to their children at ages 30, 35 and 40, rather than giving their kids lump sums. They set up a plan whereby a trustee has the discretionary ability to make payments for education, health care, emergencies and even a down payment on a house, which will be subtracted from the child’s future distribution.

An additional benefit: Because of their use of trusts, their distribution of assets will be private.

Trusts are considered the “work horses” of estate planning, because they can be used to accomplish so many different tasks within an estate. However, it is important to note that there is no one-size-fits-all trust. An estate planning attorney should review your situation and then will be able to recommend what trusts, if any, will be most useful for you and your family.

Don’t forget to have the talk. Sit down with your family members and tell them, to the extent you are comfortable, what you have decided. You don’t have to discuss numbers. However, your family will appreciate being part of the conversation, so they understand the reasoning behind your decisions.

Make sure the information shared is keyed to your child(s) maturity. Some 18-year-olds are mature enough to understand the impact that an inheritance can have, while some 30-year-olds see a future inheritance as a license to slack off. You know your children best—make thoughtful decisions about how much to tell them and when.

Reference: Kiplinger (Nov. 1, 2018) “Estate Planning: A Family Affair,”

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The Right Documents for Estate Planning

Having a properly prepared estate plan, that includes all the important documents, including a will and power of attorney, is one of the most important ways to protect your family and yourself. Despite this fact, many adults still neglect to take care of this important task, reports Consumer Reports in its article “8 Essential Steps for Estate Planning.”

A survey from Caring.com showed that as many as 60% of adults don’t have estate planning documents. When they asked families with young children, fewer than one in ten have even designated a guardian to take care of their children, if both parents should die.

What happens when there’s no planning in place? Even the simplest things become more complicated, and complicated things become financial and legal nightmares. When there’s an emergency and decisions need to be made, the entire family is subjected to more stress and costs than would otherwise be necessary.

Here are the eight steps you need to take, right now, to protect your family:

  1. Get the professional help you need. The change to the tax law may or may not impact your family and your estate plan, but you won’t know until you sit down with an estate planning attorney. Trying to do this online, may seem like a simpler way, but you will not have the same peace of mind as when you sit down with an experienced attorney—and one who knows your state’s laws.
  2. Create a will. This is a legal document that explains how you want your assets to be distributed after you die. It names an executor to carry out your instructions. If you have minor children, this is an especially important document, since it is used to name their guardian. If you have no will when you die (called dying “intestate”), then the laws of your state determine how your assets are distributed and who rears your children. Depending on where you live, your spouse might not automatically inherit everything.
  3. Discuss whether you need a Revocable Living Trust. In most states, when you pass away, your estate goes through a process called “probate.” The courts basically review your estate plan and determine whether everything looks right. The problem is that your will becomes a public document—and so does information about your assets. Some people prefer to keep their lives private by transferring assets to a revocable living trust, which distributes assets according to your instructions at your death. Titles to the assets must be changed, so they are “owned” by the trust. This is known as “funding” the trust. You still retain complete control of your assets, since you are the trustee. However, if you fail to retitle assets, the estate goes through probate. You will also still need a will to protect your minor children.
  4. Review your beneficiaries. Whether you remember it or not, when you open many different kinds of accounts—banking, investment—you assign a beneficiary to receive the assets upon your death. Your will does not override the beneficiary designation. Therefore, if you haven’t changed your life insurance beneficiary, for instance, and your ex-wife is still named on the document, she’ll get the entire proceeds of the life insurance policy when you die. This is a very important task.
  5. Have a Durable Power of Attorney (DPOA) created. This is something that protects you, while you are living. If you should become incapacitated, having a durable power of attorney in place will allow that person to manage your financial affairs. Make sure the institutions that have your accounts accept your attorneys’ POA form; you may need to get the one that the institution uses.
  6. Don’t forget the Advance Directive. This is also known as a Living Will. It explains your wishes for medical procedures, if you are unable to communicate and explains what you want for end-of-life care. Make sure that your family members know that you have such a document and keep it accessible in case of an emergency.
  7. Pick a Healthcare Proxy. The Healthcare Proxy, also known as the Durable Power of Attorney for Healthcare, names someone to convey your healthcare wishes. It should include a HIPAA release clause. This allows medical personnel to release your medical records and speak with the named person about your care.
  8. Get it all organized. Think of this step as creating a user’s manual for yourself. All these plans won’t do any good, unless your loved ones know they exist and know where to locate them. Don’t put your estate planning documents and records in a bank safe deposit box, in case it is sealed on death. Your attorney will likely have an original, and you should have your original in a fire-proof safe in a secure location in your home.

Reference: Consumer Reports (Oct. 24, 2018) “8 Essential Steps for Estate Planning”

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