What happens to those you love if something happens to you?

What happens to those you love if something happens to you?

             I believe it is human nature to put off planning for our own death.  Regardless of age or health, most everyone believes deep down that it will never happen to them.  As unrealistic as this may be, many people never take the time to plan for their eventual passing.

             The result of this procrastination can be a real disaster for your family, and, in the end, can result in much more harm than good.  Regardless of your age, health, and assets, appropriate estate planning can make a big difference to those you leave behind.  In Washington State, if you die without a valid will, the division of your estate will be controlled by the intestacy statute.  Under this law, someone will likely have to be appointed the administrator of your estate, and, after all just debts are paid, the remainder will be paid out according to a scheme adopted by the legislature many years ago.  Your wishes will be ignored (the thinking is that if you didn’t care enough to make a will, you get what you get).

             There are a number of issues that need to be addressed when creating a will.  Do you have young people who may receive assets under your will?  Have you ensured that all significant assets are included in your estate?  Will the right people get what you want them to receive?  Are the right people in position to make important decisions, and to ensure that your last wishes are carried out?  Have you considered the tax implications to your estate?

             I have seen multi-million dollar estates with no will.  The tax hit was scary, and largely avoidable had he done a little advance planning.  I have seen young adults receive significant amounts of money, with no strings attached, and then seen their lives fall apart.  I have seen loved ones excluded from any share of an estate, simply because there was no prior planning.  You can easily ensure that your friends, family, and loved ones are taken care of by making sure that you do just a little advance planning.

             It is never fun to contemplate your death, but by showing some responsibility now you can save your loved ones from even more heartbreak later.  The process is really very simple – any estate planning attorney can walk you though the process.  You can usually find an attorney that will provide you with a free or low cost consultation, and, at a minimum, you will leave the meeting with a much better understanding of what you need to do to set your estate in order.

             Take an hour and do the right thing for those you will leave behind.  It’s simple, low stress, and you will feel better after it is done.

Planning for Incapacity

Planning for Incapacity

             The truth is, as people live longer it is more likely that there will come a time when many people are unable to make their own life decisions.  Whether it is an accident, surgery, or major illness, you may be put in a position where important decisions about your health care or finances need to be made, and you are unable to make those decisions.   The length of your incapacity may be short or long term, but important decisions will need to be made.

             If you roll the dice and hope that this never happens, you run the risk that these decisions will not be made the way you would want them made.  If you become incapacitated for any reason, someone will likely step up and take on the responsibility – just not necessarily the person you would pick.  In all likelihood a friend or family member would be forced to hire an attorney and seek to be appointed your guardian.  This can be an expensive and lengthy process, and in the end you get the person the court appoints for the job.

             I have seen many cases where friends and family, often with the best of intentions, get into very ugly legal disputes over who should be appointed guardian for an incapacitated person.  This can be very expensive, and the end result is often a divided and angry family.

             Even if you are married, your spouse may not have the authority, in the event you are incapacitated, to make all the decisions needed to manage the family finances and your health care.  As an example, if it was necessary to mortgage property, and both your names are on the title, your spouse would not likely be able to obtain funds without your consent.  In the end, even your spouse might be forced to seek a guardianship.

             Before any of this happens, it is simple enough to grant a power of attorney to the person or persons you choose to have this authority in the event that you become incapacitated.  You can pick the person, give the direction you want, and better ensure that the decisions made are consistent with your desires.  You can control who makes the decisions and how the decisions are made, if you act now.

            You can determine under what circumstances the power of attorney becomes active, and you can always take the power of attorney away.  This can be done for a small fraction of the cost of a guardianship, and you have all the control.  Planning ahead is a prudent and cost effective way to ensure that the person you select has the authority to immediately step in and help you in your time of need.

Estate Planning: The long and short view

Estate Planning:  The long and short view 

            We have talked about estate planning before, but I thought it might be helpful to take some time and cover several topics over the next month.  For today, I’d like to talk about some general issues and ideas.

            Regardless of the size of your estate and your family, taking the steps necessary to ensure that if you are incapacitated or if you die your wishes regarding your medical care, financial management, and the disposition of your estate need to be appropriately planned.  The best approach is to get some quality legal and financial advice before you take concrete action.  Tax planning can be a big part of making sure that your estate is managed in accord with your goals.  The right kind of tax planning can legally minimize taxes to you, your estate, and your heirs.  There are many ways to approach realizing your goals, but the first step needs to begin with good solid advice.

            An estate planning attorney can give you a good idea on how to achieve your goals.  Coupled with sound tax planning, the end result will be a plan that maximizes your assets and assures that your heirs get what you intend for them in the manner you want them to receive your gifts.  As with most things in life, prior planning will best ensure an appropriate outcome.

             Talk to any CPA or attorney and you will hear horror stories of people that either ignored their estate planning or relied on the internet for advice.  Last wishes not honored, sizable shares of the estate going to legal fees and taxes, and lives ruined due to a lack of guidance in making and receiving a bequest.  Regardless of your goals, the first step is to get quality advice.  The estate planning the flows from this advice will ensure that your goals are met in the least expensive and most effective manner possible.

- Next time, we will talk about planning in the event you are incapacitated or otherwise unable to make your own medical and financial decisions.