I’m Thankful for…Estate Planning?
November 23, 2011During Thanksgiving, many households (including mine) have a tradition of having each person at the table tell everyone what they are thankful for. It’s in the spirit of this tradition that I’d like to share with you why I’m thankful for estate planning.
On a cold, damp Friday evening in December, 1972, a young man tucks his six- and four-year-old sons into bed. He kisses his four-month-old baby goodnight, and says goodbye to his wife as he prepares to make his annual trip into the Pennsylvania mountains for the long awaited hunting season. Several hours later the young mother is awoken by a knock on the door, and she is greeted by two Pennsylvania State Troopers who must inform her that her husband has been struck and killed by a drunk driver. Often we assume that estate planning is something you worry about when you are wealthy, or old, but my father was neither of these when he passed away that night.
The circumstances surrounding my father’s death may sound tragic, but it is what he did prior to his death that I am truly thankful for. Before dad died, he set up a will stating that should something happen to him, money should be set aside for my older brothers and I so that when we turned 18 we would have money to use for college. In doing so, dad created a legacy that is being fulfilled in his sons today.
In its simplest terms, estate planning is about maintaining control over assets and decisions, if and when something happens to you. As you gather around the turkey with family, it is the perfect opportunity to discuss the benefits of a simple estate plan. Here are some important things to talk about as you pass the stuffing:
What if something happens to me? Who will get my stuff? Who will take care of my family?
These and other similar questions can be addressed in a simple will. A will is nothing more than a document that tells people how you want your probated assets to be distributed when you are gone. It also allows you to name an executor/executrix, and if you have minor children, a will allows you to name a guardian should the kids ever become orphans.
Who will take care of me when I am unable to take care of myself?
Your parents may assume you will take care of them if they ever become unable to care for themselves. For some this would not be a problem, but for others the financial burden of caring for loved ones may be too much to handle. The chances are good that you or I will need some form of care at some point in our lives, and with the cost of care increasing each year, long-term care insurance may be an appropriate way to preserve our estate for loved ones.
Some folks plan to give away their stuff before they need care so that Medicaid will foot the bill, but remember Medicaid will look back five years, and anything you have given away within that five-year “look back” period will reduce your eligibility for Medicaid.
Who will make financial decisions on my behalf if I become incapacitated?
A durable financial power of attorney allows you to name an agent to act on your behalf regarding financial decisions. A springing durable power of attorney grants your agent this authority, but only after you lose the capacity to make financial decisions on your own.
Under what conditions am I willing to be kept alive by artificial means? Who will make these and other medical decisions for me if I become incapacitated?
A health care directive (a.k.a. living will) is an outline of the type of care you are willing to receive in the event you are ill or unable to communicate. Part of a health care directive includes naming a person as a health care power of attorney (a.k.a. health care proxy) who can make medical decision on your behalf.
I know what you’re thinking: “Boy, Thanksgiving in the Ward house must be a blast!” Okay, the reality is that we don’t usually discuss such morbid topics, but failure to discuss these things now means you may end up having to discuss them later, and in some cases later may be too late. I’ve heard from many of you that talking about these kinds of things with your family is out of the question, and that may be true, but think about it from your perspective. Maybe just letting others in your family know what you are doing (or have done) and why it may make them think twice about their decisions. You can’t necessarily control what they do, but you can control what you do.
Websites such as www.nolo.com and www.legalzoom.com make it easy to create basic estate planning documents, such as the ones discussed above. You should also check with your employer to see if they offer any legal or estate planning benefits at work.
Estate planning is about peace of mind. I’m sure my dad wasn’t thinking about it at the time, but I met my wife Susan at college. Now we have four beautiful children of our own, and although dad is not around for the holidays, his spirit and legacy lives on. May your loved ones say the same about you.