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Articles Posted in Estate Planning

Although a lot of estate planning advice is written for people who are married and have multiple kids, this is obviously not everyone’s situation. Last week’s post covered a number of estate planning needs of individuals who are not married, and I will continue writing about that today.

It’s important for unmarried individuals to think carefully about who will be executor of their estate and make sure to discuss this role with that person to make sure they are ready to take on that responsibility. Otherwise, the person appointed executor may be someone you would not want to fill the role.

For assets such as IRAs, retirement plans, annuities, life insurance, and others for which you can name beneficiaries, be sure to complete beneficiary designation forms, keep copies of these forms safely storied, and update these forms when needed. You’ll also want to let beneficiaries and your estate executor know about these decisions and where these documents are kept.

Discussions about estate planning often leave the impression that every senior in the United States is a married person with children. This is clearly not the case, and everyone who doesn’t happen to fall into this category needs the same amount of estate planning guidance as those who do. In this week’s post as well as next week’s, I’ll write about estate planning needs for unmarried people.

Individuals who are not married should prioritize traditional estate planning documents that don’t have to do with disposition of property: the health care proxy (or advance medical directive or living will) and financial power of attorney. These documents are needed so that when an unmarried person is unable to make medical or financial decisions, they can choose someone and make sure that person’s authority is recognized.

For your financial power of attorney (POA), you need to choose someone(s) who can take care of financial matters if you become unable to. Make sure that this person then understands your financial affairs so that they can take over when necessary. Show them how you’ve set things up and how to find any important information. You’ll also need to make sure they have a copy of the POA and that your financial services firms will accept it.

You might think that wills are only for wealthy people, or maybe you are young and think you don’t need to write one yet.

According to Caring.com’s 2020 Estate Planning and Wills survey, only 1/3 of Americans over 18 (and only 1/2 of those over age 55) have a will. However, every adult can benefit from having a will, and having one already written will make things easier for those left behind when you pass away.

Wills don’t necessarily need to be complicated or cost a fortune. Here are 5 things to know as you start writing your will:

The death of a loved one should be a time for family members to come together, but instead, estate and trust disputes can cause families to fall apart. Every family’s situation is unique, but certain issues commonly arise to cause these conflicts. It may be uncomfortable to address these issues, but doing so may prevent unnecessary discord and expensive litigation after one’s passing.

Here are some of the most common issues that cause trust and estate disputes:

Subsequent Marriages: Issues can easily arise when the surviving spouse is not the parent of one’s surviving children.  The surviving spouse often receives a decedent’s wealth for the remainder of their life, leaving the decedent’s children to only inherit what remains. Tension builds between children who feel entitled to and want to preserve family wealth and the surviving spouse with their own needs and lifestyle choices. Many problems can be prevented by addressing this tension ahead of time.

Often, the emotional aspect of thinking about death and planning for one’s own passing can be one of the most challenging parts of estate planning. If you’re finding it difficult to begin planning, here is an idea for a 3-step process to create a framework for your entire estate plan.

Begin by making three columns on a sheet of paper. Write the words ‘health’ and ‘money’ in the first and second row of the first column. In the second column, next to ‘health,’ write the name or one or two people in your life that you talk to about your health and doctor’s visits and who might take you to medical appointments. This is probably someone such as your spouse, adult child, or another family member or close friend.

After you have listed these people, use the third column to write down one or two alternative people to serve as backups for your first choice agent.

As we grow older, our mental capacity for decision-making and ability to deal with change declines. Although we may notice when we are “slipping,” we might not know the extent to which this capacity has reduced.

Most people experience periods of life where they have the ability to make decisions, periods of being mentally or physically incapacitated, and finally, the time when they pass. Your estate plan should address all three time periods, but the middle stage is often not addressed as well as it should be.

Trusts contain standard clauses regarding wishes in the event of one’s passing, and most estate document pages are designated to the handling of assets after someone has passed. However, most people are likely to spend some amount of time incapacitated, so it is important to acknowledge this and prepare for it to happen.

You may want to revise your legally valid will for a number of reasons as changes occur in your family’s circumstances over time. Adding a newborn grandchild as a beneficiary, removing an adult child’s spouse after a divorce, or changing a named executor, guardian, or beneficiary after the original has passed away are all common reasons to want to make revisions to your will.

However, resist the temptation to revise the will yourself without first understanding what is required to ensure the validity of your will and these revisions. The laws regarding these revisions vary depending on the state in which you live, so following an online template to change your will may be insufficient.

The amended will usually needs to be witnessed, and could even need to be notarized in your state. It is best to work with an experienced attorney to ensure the validity of your will.

Long-term senior planning can be an uncomfortable or sensitive topic for many people, as it involves planning both for long-term care that one might need later in life as well as an estate plan that best fulfills one’s wishes after they have passed away.

Arranging this type of care and planning for a family member can be both intimidating as well as emotionally and financially taxing. Molly Howell shared about her experience as a client of NC Planning, an estate planning firm based in Raleigh, North Carolina:

“My senior planning experience happened a couple of years ago when I was forced to deal with my mother’s Medicaid eligibility and residency planning. While I was there, I knew I needed to redo my estate plan. Our lives are complicated. There are other people involved, and you need a law firm or an attorney who really specializes in estate planning since that can include a number of different legal situations and documents. You really need someone that can help create the full picture, because there are multiple pieces to your life. When I did my own estate planning, my attorney covered a multitude of different scenarios and documents that might come into play.”

One key part of creating your estate plan that deserves thoughtful consideration is choosing who will carry out the wishes in your will and who will make decisions on your behalf if you become incapacitated.

“These designations are important and should be considered very carefully, no matter the size of the estate,” says Samantha Weyrauch Davis, an estate planning attorney and director with Hall Estill, a law firm in Tulsa, Oklahoma.

Here are a few tips for choosing who to serve as executor of your estate, trustee, and those with powers of attorney:

With an account set up to “transfer on death,” the assets go directly to beneficiaries upon the account owner’s passing. Creating an account this way is beneficial in avoiding the costly and time-consuming process of probate, but it’s important to make sure that the account titling fits with the rest of the estate plan in place.

Titling an account “Transfer on Death” and adding one or two beneficiaries may seem simple and straightforward. Most investment accounts make this easy to set up, and assets can then be transferred rather quickly to a beneficiary. Beneficiaries can also be changed more easily than amending a trust.

However, mistakes or omissions can be made with “transfer on death” account titling as with any beneficiary designations. Here are a few main issues to be aware of when using a Transfer on Death (TOD) account titling.

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