When I ask my clients what they are wanting to accomplish, most of them tell me they want to have peace of mind, and they want their kids to be happy. They do not want to create stress for their loved ones. With this in mind, since it is the beginning of a new year, I thought I would share some tips with you to help motivate you to do some estate planning, if you have not already done so.
I will rush to add that Estate Planning can be complicated, so please always consult with our firm or another estate planning firm. Don’t think you can do it on your own because you will likely make costly mistakes. The information we are sharing is more to guide and help you to start 2024 well.
The 12 tips for Estate Planning are as follows:
#1 – If you don’t have an estate plan, you need one!
So often people come to us and they haven’t thought about doing estate planning at all. They don’t know who they want their decision makers to be in the event of incapacity. They also don’t know who in their family will receive an inheritance when they pass away, or who the executor will be.
I appreciate that people don’t do estate plans because they don’t want to think about dying. However, by doing planning, it mitigates the challenges one may be faced with, if one gets sick before passing away. We don’t know what the future holds, and while some seniors believe they won’t need long term care, they still need to make provision for needing it, to avoid going broke.
#2 – Families Fail to Plan for Control
What I mean by this is that I’m in control of my life, my household and most aspects of my life. Anything could happen tomorrow, and I could have an accident and lose control. Who would be in control if I am in a coma?
We see this situation often when we get calls from adult children telling us their dad is in the hospital and has been for a while. The adult child is asking us to do a Power of Attorney, which is possible in some instances. However, if dad does not understand what’s going on around him, it is too late to do a Power of Attorney. The Power of Attorney is a document you do in the beginning. It’s the same as putting on the seatbelt before driving. Putting the seatbelt on after an accident is futile.
#3 – Do Not Rely Too Heavily on Joint Accounts
We see families make this mistake all the time. A senior may believe that putting her daughter’s name on the account is a good idea, so that the daughter can write checks. However, if mom sells her house, because she needs to go to an independent living facility or personal care home, her bank account will have the home sale proceeds. If it’s a joint account with the child, they will also have access to the money. If mom has three children, and she wants equal shares to go the 3 kids when she passes away, this may not happen. This often causes fights in families.
If it is not a joint account, all three kids would receive an inheritance. This is why we do a properly drafted Power of Attorney document, where the daughter can write checks from mom’s account, while not interfering with the estate plan.
#4 – Beneficiary Designations
We all have assets, life insurance and investment accounts that have beneficiaries on them. What happens when I pass away, is that whoever my beneficiary is, will get the money from that account. Beneficiary designations only answer one question of “Who gets my stuff when I pass away?” While it’s an important question, there are other important questions we should answer. For example, “What happens if the person dies before me? What happens if somebody is underage, or is disabled?” If any of those concerns becomes a reality, we want to know that these things have been planned for.
If you put beneficiary designations on all the accounts, you will supersede the Will. This means the Will you paid for, with all these provisions, does not apply. The disabled person ends up with money which could result in them losing their disability benefits.
Look out for our next blog article tomorrow, with 4 more tips for doing effective Estate Planning.
