It’s graduation and wedding season, which means a lot of us (okay, maybe just me) are thinking about life, where we came from and where we’re headed. These events are part of life’s journey. Estate planning is part of that too.
So, when I hear people say, “It’s just not the right time for me,” I wonder why we’re taught to think estate planning only matters at certain points in life. The truth is, estate planning is something everyone is entitled to, and just like adulthood has different stages, estate planning has its own stages too.
Of course, there’s a giant caveat that everyone’s different, everyone’s assets are different, and everyone’s needs are different. So, remember – there’s no one-size-fits-all approach (which is why a private consult is a good idea to make sure you’re doing what’s best for YOU!)
But for the basics: Here are the most common Estate Plan Stages today’s modern families will face.
Someone Turns 18
You’ve probably heard me say this before: as soon as someone turns 18 and becomes a legal adult, they should get their first Durable Power of Attorney, Health Care Proxy, and HIPAA Release. Why? Because once you’re an adult, no one, not even your parents, has the right to make decisions for you if you’re unable to speak for yourself.
A Durable Power of Attorney names someone to make all other personal decisions. These are generally financial in nature (banking, IRAs and such) but it includes so much more.
This person may be resonsible for:
- Filing your income tax returns
- Submitting postal forwarding orders
- Caring for pets
- Managing memberships
- Handling spiritual, recreational and travel needs
A Health Care Proxy names the person you want to make medical decisions for you. Think of these as decisions about your physical being, and those decisions only. This person determines your surgeries, Do Not Resuscitate orders, and can even refuse medical treatment.
A HIPPA Release waives the doctor-patient confidentiality for a list of people you chose, typically your Attorney in Fact and Health Care Agent. If these people are trying to help manage medical care or need to understand the situation in order to make financial decisions, they can get that information.
That’s the most basic type of estate plan, and honestly, a pretty great 18th birthday gift if you ask me.
Additional Assets and/or a Life Partner
Once our young whipper-snapper couples up or accumulates some assets, then it’s time to add a Will to the mix. Your Will tells the Probate Court who should receive your personal belongings after your family goes through the probate process.
Probate is the court process that officially passes ownership from someone who has passed away to whomever is supposed to inherit it, when the asset itself doesn’t tell us. For example, life insurance policies usually require you to name a beneficiary. Thanks to that beneficiary designation, I know exactly who is supposed to inherit the life insurance proceeds.
On the other hand, a bank account titled to a single individual tells me nothing. I have no idea who is supposed to inherit that account when the account owner dies. In that circumstance, I have to bring all similarly-titled stuff to the Probate Court and go through the process of having a new owner declared. A Will merely tells the Court what to do. It does not avoid the Probate process. If you don’t have a Will, the state has a default one in our laws; but a word of caution, you might not like it!
So, if you want to make sure you have control over where your financial assets and personal belongings are going – it’s time to draw up a Will.
A Baby!
A newborn brings on a whole set of concerns for new parent(s). And some of those are legal concerns: Who’s going to take care of the baby if something happens to you? Time to update that Will and add a Nomination of Guardian and a Temporary Agent for Minor Children.
Most people are aware that they can name a permanent guardian for minor children in their Will. The Nomination of Guardian is your chance to have a say over who should raise your tiny human to adulthood if you’re unable to do it yourself.
Think your stuffy sister will try to make a play for guardianship? Maybe adding Confidential Exclusions of Guardianship is in order. This is the opposite of nominating a guardian, so you’ll have a say in who you DON’T want taking care of your children.
Here’s something most people don’t think about: what if you’re very much alive, but unable to take care of your child? That’s where the Temporary Agent for Minor Children comes in. This is a chance to appoint someone to take care of your child temporarily until you’re back in the saddle again. This document is so important and often overlooked. This is what keeps little Timmy from landing in foster care while you’re laid up in the hospital after a bad car accident, or something similar.
A House, a Car, Retirement Savings and More
My hope for everyone is, as we age, we’re able to start growing savings and acquire some assets. Maybe it’s a house. Maybe some stocks, mutual funds or other investments. Do you really want your family to have to deal with the Probate Court if something happens to you?
Probate takes time, costs anywhere from a few hundred to a few thousand dollars, and is entirely public. That means that anyone can ‘pull your Probate’ and see who stands to inherit how much and when. It’s prime territory for predators. Time to add a Trust to the estate plan.
Think of a Trust as a bucket. In this case, you’re in charge of the bucket. You decide what goes in it, and who gets to access it. If we have all your assets in the bucket, or automatically flowing into the bucket, then we know exactly where those assets are supposed to go if something happens to you.
In this way, a Trust is going to help you avoid the probate process entirely. Your family will have privacy in their time of grief. And there are some other bells and whistles we can add to a trust:
- preserve what children inherit until financial maturity
- protect beneficiaries from lawsuits and divorces
- and minimize estate taxes (which add up quicker than you might think)
Estate Planning and Entering the Golden Years
You’ve worked hard for years, and now it might be time to think about slowing down a bit – retiring, becoming a snowbird, or just finally taking a breath. Along with that, it’s a good time to revisit your estate plan.
If your babies now have babies of their own, you probably don’t need that old Nomination of Guardian anymore. And since your grandkids likely weren’t around the last time you updated things, you might want to think about including them in your plan, maybe even leaving them a little something.
Also, it’s a good time to take a look at your Power of Attorney and Health Care Proxy. Life changes, relationships shift, and people move. You want to make sure the people you’ve chosen to step in for you are still the right fit being someone you trust and who’ll be around when you need them.
And let’s not forget long-term care. Nursing home costs can be expensive, and you’ve worked too hard to see your savings disappear in a blink of an eye. An irrevocable trust might be worth considering. Think of it like a bucket with a lid and a padlock. You’re not in charge of the bucket, which is a daunting thing to consider. But putting assets in that “locked bucket” can help make sure they go to your loved ones instead of being eaten up by care costs.
That being said, everyone’s situation is different, which is why it’s worth exploring your options. (And if you haven’t already, check out our Nuts & Bolts Guide to MassHealth for more info!)
Why Estate Planning Is a Lifelong Journey for Today’s Modern Families
That’s all, folks!
For most of #TodaysModernFamilies, these are the only tools you’ll ever need in your estate plan. But as I’ve said, one-size does not fit all. And it’s never ‘one and done’. An estate plan needs regular maintenance to keep up with you and your life as it goes through its stages.
Book a Discovery Session today to learn what can be achieved through estate planning. We’ll support you every step of the way.
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