Articles Posted in Estate Planning

When it comes to the part of your financial plan related to health, things such as insurance premiums and copays might be what come to mind.

These expenses are important. However, according to certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida, your health should influence many other parts of your financial plan.

“It’s way more than that,” McClanahan says. “A healthy person needs a totally different [financial] plan from someone who has health issues.”

As a parent with young children, you’ve put a lot of thought into the best way to raise your kids, including things such as the school they attend and the beliefs and values they are taught. But have you considered what would happen if you (and your spouse, if you are married) pass away suddenly? You can help ensure the best care for your children with some advance estate planning.

With a will, there’s a way

The biggest step you can take to make sure your intentions are known and followed is to name a guardian in your will. If you haven’t named a specific guardian in your will already, you can add a clause or, if necessary, draft a new will to do this.

The time and money you spend creating estate planning documents might all be in vain if your loved ones cannot find your documents or assets after you pass away. Although you want to be careful when it comes to sharing information about your will and assets to avoid exposing yourself to risks, you also want to ensure they will be able to be located.

Here are a few tips to help make sure your loved ones are not left searching for your estate planning documents when they need them:

1. Keep your will and other estate planning documents in a safe place where it can be found after you pass away. If you tape your will under a desk drawer or hide it in a secret compartment, it’s likely that no one will find it unless you have told them where to look and how to get to it. Make sure your executor knows where your will is located, and consider keeping it in a safe or safe deposit box if you are worried that someone will try to sneak a peek at it in advance.

Your will provides for the disposition of your assets upon your death and is designed to tie up loose ends in your estate. You may wish to include specific bequests to beneficiaries in your will, such as collectibles, jewelry, or art that you may wish to leave for your child.

However, it is important to be careful about making bequests that could lead to outcomes you do not intend. One of the more common ways this can happen is if you no longer own a specific asset when you pass away. Someone may want to leave for their child 100 shares of stock worth thousands of dollars at the time the will is drafted. However, if this person later sells the stock without updating the will, the child could be left with less than their parent intended.

Similarly, say someone bequeaths real estate to their son and life insurance proceeds to their daughter. However, in the years between creating the will and passing away, this person sells the home, invests the money from the sale of the home, and allows the life insurance policy to lapse.

Young adults who may just be starting a family often feel they have plenty of time to focus on building a financially secure future and before needing to create a comprehensive estate plan. However, estate planning, even for young adults, is crucial to ensure that children and other loved ones will be cared for if something unexpected happens. Although planning for when you are gone can be uncomfortable or scary, it’s important to do this planning so that property is passed on to your chosen beneficiaries and so that loved ones are taken care of according to your wishes.

A basic estate plan for a young family should at least include the following:

  • a last will and testament

During the holiday season, we often take time together with family and reflect on the year as it comes to a close. As we have all gotten a year older, this can also be a time to talk with older parents and other family members about the management of assets going into the future. Especially for those who are founders of a family-owned business, this can be an opportune time to start talking about the what and how of asset management and estate planning.

People resist change, so these conversations can be particularly challenging. There are different levels of resistance, including the problem level of resistance (“There is no problem,” “There is a problem, but it isn’t the one you see,” or “The problem is outside of my control,” etc.), the solution level of resistance (“We agree on the problem but disagree on the direction or details of the solution,” “The solution has too many negative consequences to be doable,” etc.), and the implementation level of resistance (“There is no good way to implement the solution,” “The solution is too risky,” etc.). Additionally, there may also be resistance on a social or psychological level, spoken as “We don’t do it that way here” or “I don’t think so”.

For each level, there are different sets of questions you can ask to help overcome that resistance. Here are some questions that can help you start this conversation:

Whether you prefer storing records “the old-fashioned way” with physical documents kept in cabinets and folders or storing records “on the cloud” or in some way digitally, most people today have at least some digital documents and assets. It is important to plan for who would access your digital assets should you become incapacitated and how digital assets would be distributed after you pass away.

Here are some basics to know when it comes to estate planning for digital assets:

1. What is a Digital Asset?

In last week’s post, I shared a few ways to provide support with estate planning to a family member or loved one with mental health challenges. Here are 3 more ways you may be able to support them, depending on their specific situation:

• Consider a guardianship. If this family member or loved one does not have the necessary capacity to sign legal documents, a guardianship for this person may be needed. There are two types of guardianships. Guardianship over someone’s assets, often called a conservatorship, involves someone making decisions over things such as their accounts and real estate. Guardianship can also be over the person themself, and a guardian may make decisions about where the individual lives as well as decisions about doctors and medications.

• Find the right type of guardianship for the situation. Guardianships (and conservatorships) can be limited in nature. Your family member may need help with some things, such as finding housing or caregivers, but be able to take care of most other things in their day-to-day life on their own. In this type of case, a limited guardianship may be recommended. A conservator might also oversee a large brokerage account or something along those lines, but the individual may have a small account and debit card that they use for daily expenses.

Estate planning for a family member with mental health issues can be challenging. It can be hard to figure out what this person is able to handle on their own and what they may need assistance with, especially as this may change either gradually or quickly with time.

In many cases, this family member is someone who has been getting by on their own or with some help from a parent or sibling. However, if that parent or sibling passes away, more distant family members may sense that this person needs assistance but be uncertain of what to do. These family members may feel that they don’t have any legal obligation to do anything, or they may let the fear of doing the wrong thing keep them from doing anything at all.

People may also not understand their family member’s mental illness itself, especially if the person has not received a diagnosis. It is common for people to exhibit signs of mental illness but not be diagnosed or receive treatment, and family members are often left guessing about the diagnosis and how they can help.

The third week of October has been designated by the United States House of Representatives as National Estate Planning Awareness Week since 2008. The intention behind this is to help the public learn more about estate planning and the impact it has on overall financial wellness.

Estate planning is often thought of as just making a will when one may be close to death. Though estate planning documents do determine what happens to property after someone passes away, a complete estate plan also helps with managing property during one’s lifetime. This is especially important for those with a family-owned business. In addition to this, health care proxies, powers of attorney, and other documents are used to ensure that someone’s financial and health care wishes are honored while they are living. It’s best to do this planning before the documents are necessary and while one is healthy and able take the time to make the best decisions regarding their finances and health.

Being proactive in your estate and financial planning allows you to: