Estate Planning Insights From a Webinar

 

I recently attended a webinar about estate planning that was sponsored by Fidelity Investments. Below are nine key takeaways:

Define Your Goals- Think about your values, the legacy you want to leave for your family or society, and the needs of your heirs. Estate planning is about creating a legacy and making end-of-life health and financial decisions easy for loved ones.

 

Prepare Four Key Documents- Confirm that you have a will, power of attorney, health care proxy, and living will. Everyone has an estate plan because, if you don’t make decisions, you state may make them for you (e.g., dying intestate without a will).

 

Identify Surrogates- Key people named in legal documents are the executor and a guardian for minor children in a will, a power of attorney to make financial decisions on your behalf, a health care proxy to make health care decisions on your behalf, and a trustee, if applicable. Also name back-up (Plan B) contingent surrogates.

 

Avoid Conflicting Documents- Make sure that legal documents are in synch with documents that name beneficiaries or survivors. Beneficiary designations and joint tenancy with right of survivorship will override what is stated in a will.

 

Don’t Tamper with Legal Documents- A speaker noted that even something like un-stapling the pages in a will could be taken as an indication that it was tempered with and slow down the process of settling an estate.

 

Decide What Is Fair- There is no law requiring that assets be divided equally among adult children. People who make wills should consider income disparities and beneficiaries’ use of public funds (e.g., SSI), so as not to disqualify them from receiving benefits.

 

Consider Personal Characteristics- Factors to consider in the selection of surrogates are their age, where they live, how responsible they are, their financial knowledge, and their skill set (e.g., using Excel spreadsheets). Also name “Plan B” contingent surrogates for key roles.

 

Communicate With Surrogates- Discuss your feelings about issues such as end-of-life care. A lot of people never have these discussions. An example was given of someone who does not want feeding tubes while their surrogate was thinking “I’ll leave you on feeding tubes forever.”

 

Learn About Probate- Serving as an executor is a job! Key duties are filing court papers, paying taxes, paying debts, and distributing remaining assets via the terms of a will. The average time that probate takes for an estate between $1million and $5 million is 15.9 months.

 

Review Your Documents- Review estate planning documents every 3-5 years or more frequently as a result of life events (e.g., divorce and widowhood), major tax law changes, moving to a new state, or receiving a large sum of money.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Basics of Advance Directives

Advance directives are written instructions for actions to be taken in the future in case people become incapable of making decisions. They designate specific people (typically referred to as “agents” or “proxies”) to step in for the creator of an advance directive to make decisions that the creator wishes and to take the burden of decision-making off family members or other caregivers.

Benefits of advance directives include: reducing disagreement about health or financial decisions among family members and, for health-related documents, avoiding unnecessary suffering by a patient. Many people think advance directives are just for “old people,” but they are important for all adults. One auto accident or severe illness can result in anyone needing advance directives.

 

There are three common advance directive documents that authorize someone to legally act on someone’s behalf until the creator revokes them or dies:

 

Living Will- Specifies desired medical treatment in “end of life” situations including a terminal condition and a persistent vegetative state. For example, the use of feeding tubes, breathing machines (ventilators), and “Do Not Resuscitate” (DNR) orders.

 

Health Care Proxy- Also known as a durable power of attorney for health care, this document designates someone, often called a surrogate, to make health care decisions.

 

Durable Power of Attorney (PoA)- Designates someone, often called an agent, to make financial transactions (e.g., paying bills, making deposits, applying for benefits, preparing tax returns, and signing checks). The agent’s power ceases at the time of the durable PoA creator’s death.

 

Below is some general information for the use of advance directives:

 

Communicate With Your Agent- Never “surprise” people by listing them in advance directive documents without obtaining their permission. Instead, formally request their assistance and have a discussion about your preferences for health care and the location of key financial documents.

 

Make Documents Accessible- Store advance directive documents in an accessible location that trusted family members or other individuals know about. Avoid using a locked strong box or desk drawer (unless the agent has a key) or a safe deposit box at a bank.

 

Review and Revise- Update advance directive documents every time there is a life change that affects people named in key documents. For example, a now ex-spouse who is named as a health care proxy or a durable power of attorney agent who pre-deceases you.

 

Share Health-Related Documents- Bring a copy of health care advance directives to a hospital where you are being treated (e.g., surgery) so they are available if needed and more likely to be noted in your patient chart and “noticed” by treating doctors. 

 

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.