Do You Need a Will?

November 09, 2016

One of the five components of a complete financial plan is estate planning, the foundation of which is a last will & testament. Most people don’t really start thinking about a will until they have kids, but really, everyone should have one, even if it’s simply written on a napkin. Here’s what you need to know:

What is a will? Your will is a legal document that directs what happens to your stuff, names your executor (the person who will be in charge of making sure your stuff gets to whom you direct), and also names your preferred guardian for any minor children you leave behind.

Where can I get a will? First, check to see if your employer offers any type of legal benefit. Even small employers sometimes give you access to an online portal where you can complete a questionnaire and have a basic will created, which is how my husband and I did our first drafts just to get something on paper. Other employers offer the ability to pay a small payroll deduction for access to discount programs. Depending on the cost, it may make sense to join for one benefit year and then have your key estate planning documents drafted to get the full value.

You can also draft and print a will online through a couple of different services like Nolo or Legal Zoom. My first will was done this way and while an attorney reviews your document to ensure it complies with your state’s laws, it’s easy to mess up. I had just moved and put the wrong county of residence on mine, an error I didn’t know I’d made until it was too late to change it. I’m lucky that I don’t know if it would have made a difference, but that’s the big pitfall of the DIY will. A lawyer checks that it complies with legal standards, but would not be able to verify its correctness.

For people who own businesses, have blended families or even just a notable amount of wealth amassed, hiring an estate planning attorney is usually worth the additional cost to make sure the nuances that come along with more complex lives are properly addressed according to your wishes. My husband and I recently signed new wills with an attorney. She not only made sure our plan coordinated with our various savings and distribution wishes, but pointed out provisions we hadn’t thought of such as including money for our future children’s potential guardian to expand her home if needed to accommodate the added family members or allocating money for our future kids to travel to visit other family members like their aunts and uncles. Most lawyers charge a flat fee for this service, ranging from hundreds to thousands of dollars, depending on where you live and what other documents you also need drafted.

What makes a will valid? Each state has laws that dictate the rules. Yes, you can write your wishes on a cocktail napkin, but you have to sign it and many states require you to have two non-named witnesses also sign that you were the person that signed it.

This was actually a bit of a comical complicating factor in the signing of our wills. My husband and I had trouble finding a time when we were both available at the same time as our attorney when we could also have two non-named witnesses present. We finally met our attorney at my local health club where we asked other gym members to witness as we signed! A bit goofy, but it got the job done. A more common place to find witnesses is your local bank.

Me actually signing my will

What happens if I don’t have a will when I die? Dying without a will is called dying “intestate,” and your estate is distributed according to your state’s laws. If you’re married, at least part of your estate will go to your spouse in all states. But if you’re not or heaven forbid, you both die at the same time, then the laws vary from state to state. In Illinois where I live, a person who is not married with no children would have their estate split equally between surviving parents and siblings.

I had a college friend whose live-in boyfriend died tragically in his 20’s. His parents weren’t fans of their living arrangement, so she was completely cut out of the funeral arrangements and of course, left high and dry when it came to his stuff. He owned the house they lived in, so she was suddenly homeless too. No one likes to think about dying too young, but a will would have at least made sure she could keep some physical mementos of his.

Can I change it? Yes, and that is an important point to remember. You want to draft your will for how your life is today. Then as life happens, you can always update your will for your new circumstances. Key events that should cause you to make an update would include marriage or divorce, birth or death of a named beneficiary or even a falling out with one of the administrators of your estate like your executor or guardian.

The bottom line is that life can get complicated very quickly, and dying without a will leaves the settlement of your estate to the county probate court where you live. You probably don’t want them making critical decisions for your loved ones. Do your family a favor and put your wishes in writing just to be sure.

The Parents’ Guide to Making a Will

October 31, 2016

Are you raising one of America’s 73.6 million children? If yes, do you have a will? If you don’t have one, you urgently need one. Don’t wait. A will, with a provision which names the person who should be the guardian of your children if you die, is the most important step in making sure your kids are raised by the people you would want to raise them.

What happens if you don’t have a will?

It’s not fun for any of us to think about what would happen if we died unexpectedly. That probably won’t happen, so you might be tempted to put it off thinking it’s silly to prepare for a worst case scenario. The problem is, if you die without a will which names a guardian for your children and specifies what funds are available to care for them, you have zero control over who raises your kids and how much money remains for their support. Your state’s courts, with government social services, is going to decide what happens to your kids, who raises them and how your money is divided up.

You need a will even if your spouse remains to take care of your children. If you die without a valid will, the courts will decide what happens to your assets according to a preset formula (e.g., some to the surviving spouse, some to the kids). Your spouse may not have full access or control over the money allocated to the children.

Don’t feel sheepish about not putting one together yet. According to a Caring.com survey, nearly half of American parents don’t have a will or living trust. Here’s how not to be one of them.

Make three decisions

Once you’ve decided you are going to make a will, it’s relatively straightforward to get started. You’ll need to make three critical decisions before you write anything up:

Name a guardian. Who is the best person to take care of your children until they are adults in the unlikely event that you are no longer living? Does that person share your values? Do they share your beliefs about parenting? Do they love your children?

FYI, in most cases where parents are divorced or unmarried, the default would be for the children to stay with the surviving biological parent, so if you have an objection to that, you’ll need to put that in writing. Choose your first and second choices for a personal guardian to include in your will. You’ll want to name a legal adult who has the time, energy and willingness to raise your children if needed. Before naming a personal guardian, make sure you’ve asked that person and they have agreed to accept the responsibility if needed.

Decide what happens to your money and stuff. Any assets that do not automatically pass according to their title or beneficiary (called “beneficiary of law,” such as property held as joint tenants with right of survivorship, retirement accounts or life insurance) are included in this category. Make sure you fully designate what happens to your property, bank accounts and investments.

Minor children won’t be able to manage that money for themselves, and you may not want them to have full access to it until they are well established adults. Who will control the checkbook? Decide if that’s an individual – it could be a different person than the guardian if you prefer – or a trust company.

Name an executor. An executor is a person named in your will (or appointed by the court if you die without a will) whose job is to carry out the instructions in your will. The executor takes care of your last financial business such as paying taxes/bills and re-titling property according to your will. Don’t forget to include a digital executor to control your online and social media accounts, who may or may not be the same as your financial executor. As with a guardian, make sure your executor is someone who is willing and capable to take on that kind of big responsibility.

Prepare your will

Once you’ve made the big three decisions, you’re ready to write your will. Here are some options for preparing a valid one:

Use an attorney. The biggest advantage to using an attorney to prepare a will is that — if you pick a qualified estate planning attorney – you can be more confident that it conforms to the laws of your state. The downside is that it’s more expensive. Check your employee benefits. You may have access to a prepaid legal program as a voluntary benefit or access to lower cost resources through your employee assistance program (EAP). The American Bar Association also offers an online state by state guide to wills and estates.

Use an online legal resource. If you need a basic will without a lot of personalization, an online resource may be a fit for your situation. Check with your EAP to see if you have access to any free or low cost will preparation services. There are also online will preparation sites such as Nolo.com and Legalzoom.com where you can make a will for a reasonable price.

Communicate your plans

Finally, a will won’t help if no one knows you have one. Let a few trusted people, such as a sibling, parent or close friend, know that you’ve prepared a will, and where they can find it if it’s needed. Make sure your executor knows how to access your will and has contact information where needed.

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can follow me on the blog by signing up here, and on Twitter @cynthiameyer_FF.

A Basic Estate Plan in 7 Simple Steps

July 15, 2016

What does your current estate plan look like today? If you said you don’t have an estate plan, you’re not alone. LexisNexis says that 55% of adults in the U.S. don’t have a will in place, but you’re also probably wrong. Here’s why: the state you call home has a plan for your estate if you die without a will, trust, or other legal documents.

If your line of thinking about your estate is “What estate??? I don’t have anything left after my bills are paid” or “I’m single with no kids” or “I’m young and just getting started in my career,” understand that everyone has an estate (regardless of wealth) and should have an estate plan to make sure your individual, family, and financial goals are met. There are a few simple steps that can help you maintain control and protect the people (and organizations) that matter most to you. Here is a simple estate planning “to do” list to get you started:

Step 1: Set goals that matter to you. What do you want your estate plan to accomplish? Are you concerned about choosing a guardian for your children or protecting your kids’ inheritance from your spouse’s next spouse (remarriage happens!) after you’re gone? Is charitable giving in your future plans? Give your estate plan more purpose and meaning by asking yourself these questions and writing down a list of the things that are most important to you!

Step 2: Evaluate your financial situation. Start by completing a net worth statement that includes a list of your assets and liabilities. Once you’ve compiled a list of your financial resources, you are in a better position to determine who should receive your assets after you pass away. This step also involves reviewing your life insurance to cover your family’s needs for income, education costs and estate expenses. Reviewing disability insurance is just as important because it provides income protection for you and your family during your lifetime. For more information on life and disability insurance coverage, including needs calculators, visit LifeHappens.org.

Step 3: Have basic documents created. Here is a list of important documents that should be part of almost every estate plan:

Will
Advanced healthcare directive (living wills)
Medical power of attorney
Durable power of attorney

This is where your estate plan gets really personal. These important documents help you state your wishes for how to distribute assets when you die, name guardians for your children, and nominate someone to speak on your behalf if you can’t in a medical emergency. Get them done before you need them because by then, it will be too late.

Step 4: Update your beneficiary designations and title assets appropriately. Many people think that once a will has been created their estate planning work is done. That’s far from the truth, especially considering the fact that your will controls ONLY the distribution of assets that are subject to probate (the formal process of paying off debts and distributing property through the courts).

Not everything transfers through probate though. Any account with beneficiary designations such as insurance policies, retirement plans, IRAs, and annuities won’t go through probate. Any jointly owned property or accounts bypass probate as well as accounts designated as payable on death (POD) or transfer on death (TOD).

Step 5: Get organized. Have you ever been late for something and spent time frantically searching your house for your keys, only to find them in your hand? Not fun! Imagine searching for a family member’s bank account information, investment and retirement account statements, will, or key to a safe deposit box without any instructions or guidance during a time of grief.

It always makes sense to get your financial affairs organized. It’s also important to keep a list of online account passwords and digital assets in a convenient location for loved ones to access just in case something happens to you. I have a red folder in my desk labeled “When I’m Gone” with that list, and my kids and a few friends know where it is. Here’s a quick resource for what to consider about your online presence as it relates to your estate plan.

Step 6: Communicate your plans to those involved in it. Discussing your intentions in advance can help avoid family conflicts and also minimize the potential for any confusion or questions regarding your true intentions. If you have a plan in place but nobody is aware of it, then your wishes may be ignored. If your plan is in place but no one knows about it, is it really a plan?

Step 7: Review your plan regularly and as major life events occur. Life will undoubtedly throw a curve ball or two our way so it’s essential to review and adapt your plans periodically. Some situations that may require updates to your estate plan include marriage, the birth of a child (or grandchild), disability, the loss of a loved one, divorce, a financial windfall, or the creation or dissolution of a family business. If any of those life events occur, be sure to break out your documents, give them a quick read and highlight areas where a change is needed.

Let’s be honest. Estate planning isn’t always the most exciting topic (it’s quite morbid actually), but it is an important aspect of every personal financial plan. Be sure to personalize your goals and take action NOW so that you have a basic plan, at a minimum, to protect your family and people you care about the most. Some of these other steps are just good solid financial behaviors (not just for estate planning) to allow you to take control of your financial life.

Why I Left My Estate Planning to a Professional

July 08, 2016

Just a few days ago, we celebrated Independence Day by doing the traditional American thing – ate, drank and watched fireworks. Fireworks are fun to watch and the 4^th of July is always a great holiday as far as I’m concerned. Most years, I get to either be on a boat or near a marina and we watch fireworks over the water. There are usually two or three displays going on within minutes of each other, so the whole sky is lighting up, and it’s awesome to have some patriotic music playing from the speakers while enjoying the night sky lighting up. Family, friends, food, fireworks – a lot of good F words on the Fourth.

But all is not perfect even in the midst of celebrations. Last year, there were two NFL players who suffered significant injuries related to fireworks on the 4^th. Jason Pierre Paul of the New York Giants lost a portion of his hand in a grizzly accident and CJ Wilson of the Tampa Bay Buccaneers lost two fingers in a similar incident. Too many people are getting injured in at-home fireworks displays.

Not only are they getting hurt physically, financially, it’s a very expensive holiday! Americans will spend $800 million dollars this year. This is up almost $50 million from last year.

So let me wrap my head around this. Fireworks are expensive to shoot off at home (not to mention annoying to the neighbors who aren’t doing the same thing) and carry the risk of injury. Yep, sounds like a great plan! Maybe fireworks aren’t the best idea at home. Maybe it’s time to leave it to the professionals!

Another thing that I’m a fan of letting professionals handle is your estate plan. At one time, just about the only way to get your estate plan prepared was to visit your local attorney’s office. Today, there are a lot of low-priced software packages available at office supply stores, there are countless free estate planning documents available on the Internet, and there are online companies like LegalZoom that can help you prepare estate planning documents.

Each of these alternatives can be a viable solution if you have very simple needs. But if your situation has more than a couple “moving parts” (kids, second marriage, second houses, owning a business, etc.) an attorney might still be the best option. Here are some basic documents and why I had a professional prepare them for me.

Will – This document lets the world know where you want “your stuff” to go after you die. My will was prepared by an attorney because my kids are still young (20, 17, 14) and if I die, there would be some money on the table from life insurance and retirement accounts. If they have my DNA, they may not become fiscally responsible until they are well out of their 20’s so my will creates a trust that doles out their inheritance at ages 25, 35 and 45 – with 25 being just a small (10 or 20%) dose, age 35 being a bigger slice of the pie and the balance paid out at 45. If they blow the age 25 payout, they will have a decade to live with that regret and the ability to make better decisions at later ages. Add in a divorce and not wanting my ex to get any assets after I die (she got plenty in the divorce), and you can see why working with an attorney was the right choice for me.

Living Will/Healthcare Power of Attorney – These documents nominate someone to talk to your medical team in the event you can’t and detail what life saving measures you want and don’t want taken in the event that you are in a grave condition. The reason that I had an attorney work with me on these documents is…Grey’s Anatomy! When a patient gets rolled into Seattle Grace (early seasons, Grey-Sloan later) on a gurney, the ONLY thing the doctors are paying attention to is saving that patient’s life. Without getting into too much detail, my wishes aren’t to stick around if I can’t recognize my kids and friends so preserving life at all costs isn’t my plan. THAT is why it made sense for me to work with an attorney.

When it’s time for you to have your documents either prepared (NOW would be the right time if you don’t have them currently) or updated (if your life situation has changed or you have aged by more than a decade), consider the “moving parts” in your life. The greater the level of complexity in your life, the more likely it is that an attorney would be useful in drafting your estate plan. I’m not one who usually defends attorneys. I’m far more likely to make jokes about them, but when it comes to estate planning, let me be the first in line to say that they offer a service that is well worth the fee.

Making the Most of Family Gatherings

January 20, 2015

Family gatherings are a great time to catch up on the latest happenings of family. I love seeing how much taller my nieces and nephews have grown. I especially love watching the new parents, with a look that is a combination of wonder and terror mixed with love as they look at their newborn babies. Continue reading “Making the Most of Family Gatherings”

Lessons From a Five-Hour Flight

January 14, 2015

On a recent flight from Charlotte to Los Angeles, I sat next to a gentleman who has had quite a rough year. Without going into a lot of detail, he spoke with me about the recent passing of his father. For many, the thought of losing a parent would be rather hard, but for my traveling companion, he spoke of his father’s passing as somewhat of a relief. You see, his father began to suffer from cognitive impairment earlier in the year so much that he was eventually confined to a nursing home. His health deteriorated quite rapidly, and he was only in the nursing home for about three months when he passed. Continue reading “Lessons From a Five-Hour Flight”

Lessons From a Tragedy

August 28, 2014

If you’re like me, you were shocked and horrified when you found out about Robin Williams’ death. I can’t tell you how many interviews I listened to and movie clips I watched of him in the days after the horrible news. Buried in all that media coverage, I also saw this article pointing out that unlike so many other celebrities with untimely ends, at least Williams spared his family additional stress and grief by taking care of his estate planning with a revocable trust. Continue reading “Lessons From a Tragedy”

A Financial Yardstick for Everyone

March 27, 2013

One thing I’ve come to learn after being on the financial helpline for 6.5 years is that some employees simply want to know how they are doing relative to everyone else. No matter how I try to encourage them to consider themselves and their circumstances unique, human nature drives us to want to know if we are ahead, behind, or in line with our peers. We crave some type of yardstick to know if we are measuring up. Continue reading “A Financial Yardstick for Everyone”

Five Step Check List for Your Estate Plan

October 08, 2012

What did Heath Ledger and former Supreme Court Justice Warren Burger have in common? Their career choices couldn’t have been more different but in their estate planning, they made similar mistakes — ones that could have been easily avoided. Heath Ledger made the mistake of not updating his will when his daughter was born and even though Warren Burger was a Supreme Court Justice, well versed in the law, he made the mistake of doing it himself and ended up leaving out some key provisions. In both cases, the family paid the price. If a Supreme Court Justice can make a mistake, anyone can. Continue reading “Five Step Check List for Your Estate Plan”

What are the Minimum Documents I Need for a Basic Estate Plan?

April 21, 2011

The other day I was spending some quality time with a very good friend of mine, enjoying the nice spring weather and having a great time talking about various topics, when as often happens the cell phone rings. After seeing who it was, my friend decided to answer it, gesturing that it would be a short call. Prescient she wasn’t as it turned out to be not only a long call but emotional as well. Now I’m not one to engage in the art of eavesdropping but in this call I did not have to. Continue reading “What are the Minimum Documents I Need for a Basic Estate Plan?”