Barbservations From a Death Cafe

As I have noted previously, I volunteer as a room host for the same non-profit educational foundation that I am a paid instructor for. As a result, I get to learn a lot of interesting things for free. I recently attended a Death Café class as a volunteer (and observer). Below are my key take-aways:

Death Café Definition- A Death Café is a welcoming, group-directed conversation where people gather to discuss death, dying, and end-of-life experiences in a safe, respectful environment. It is NOT a grief support group or counseling session but, rather, an opportunity to share thoughts, ask questions, and engage in meaningful dialogue. A local hospice agency facilitated the group.

 

Death Café Movement- This program was definitely not unique to the Florida city where I live. The Death Café movement began in Switzerland in 2004 and later expanded internationally, encouraging open conversations about mortality and helping people make the most of their lives. People enjoy free refreshments as they talk about death and dying in a relaxed environment.

 

Range of Emotions- After an initial full group conversation, the16 attendees were divided into two smaller groups of eight. Over the course of 90 minutes, I observed both hearty laughter and heavy sobbing (men and women alike!) as people shared stories about themselves, their loved ones, and their greatest joys and fears. There were no lectures but, instead, totally authentic sharing among people who were strangers. The biggest financial fear that I heard expressed was running out of money during their remaining lifetime, which echoes findings from many older adult surveys.

 

Thought-Provoking Questions- The initial full group conversation started out with three questions: How old do you want to be when you die? How far are you from that age? and What are you planning to do in between? (i.e., what is on your “bucket list?”).  I was amazed that a handful of  people said things like “ I don’t have a bucket list,” “I’ve done everything I want to do,” and I’m OK if it (death) happens tonight.” I erroneously assumed that everyone has some unfinished business on a “to do” list but apparently not so. Instead, I noticed a sense of calm about facing the end of life.

 

More Pointed Questions- In the small groups, people were given large index cards with questions like “Who is your support system?” and “When you die, do you want to be alone or with others?” and “You have one week to live: what concerns do you have?” and “Who was the first person who you saw die and how did you feel?” and “How much end-of life medical treatment do you want?

 

Wide Range of Topics- As a volunteer, I was seated close enough to the two groups to follow their conversations. Among the topics that came up were probating a will, dying without a will, finding an attorney, regrets about not being able to go back to talk with ancestors, several “I wish I’s…”, estranged relationships, fear of an extended need for long-term care, suicide and assisted suicide, and the difficulty of holding end-of-life conversations with loved ones.

 

To summarize, the experience of watching an in-person Death Café in action was enlightening and provided lots of insights to write this post and to prepare future personal finance classes. There are also virtual Death Cafes that are held on Zoom and hosted by various facilitators worldwide.

 

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.

 

 

Four Common Estate Planning Errors

Four common estate-planning errors can cause you and/or your heirs considerable stress and aggravation, family arguments, and unnecessary taxes and legal expenses.  Below is a description of each error and strategies recommended by experts to handle each situation.

Not Planning For the Disposition of Untitled Personal Property

 

Untitled personal property is items people own where the owner is not identified with a written document (i.e., their “stuff”). Examples include tools, furniture, photos, books, dishes, jewelry, collections (e.g., coins), artwork, and more.  Talking about untitled property is “sensitive” because of emotions involved, sentimental meanings attached to various pieces of property, and differing perceptions of what is “fair” in the distribution process. Also, there is often only one of an untitled property item so it is impossible to divide everything equally. 

 

Experts recommend that property donors determine their goals first.  For example, is it important to give more to less affluent children or according to a child’s age, gender, marital status, or birth order? There are several ways that untitled personal property can be distributed including memorandums attached to a will (i.e., a “separate writing”), lists given to a person’s executor or family members, gifts made during a donor’s lifetime, drawing names out of a hat, verbal promises, and labeling items. 

 

Not Writing a Will

 

Many Americans die intestate (without a will) and, by doing so, default to the “one size fits all” will provided by their state of residence.  This state-determined property distribution formula may or may not be appropriate for their family’s situation but there is no choice in the matter.  Estate-planning costs are also increased because a court-appointed administrator must be appointed, and generally bonded, which increases an estate’s administrative expenses.  Some people procrastinate on drafting a will because they do not know who to name to key positions, such as executor and guardian, so they do nothing. 

 

There may also be a mistaken impression that only family members can be named, which is untrue.  It is not unusual for people to name a professional fiduciary, such as a bank trust department, to serve as executor or to name a close friend, rather than a family member, as guardian.  Another reason to have a will is to make gifts to charitable organizations upon your death.  State formulas do not allow for this.  According to the book You’re 50-Now What? by Charles Schwab, less than 6% of Americans leave money to charitable organizations upon their death, most notably because so many die intestate. Expert tip: prepare a will and update it regularly.

 

Conflicts in the Titling of Assets

 

This error is seen especially in remarried households.  People want an asset to go to one person (e.g., a child from their first marriage) and put this in their will, yet they own the asset with rights of survivorship with someone else (e.g., a second spouse).  In cases where provisions in a deceased person’s will conflict with the titling of assets, the title almost always determines the asset’s subsequent owner.  Persons with complex estates and/or family relationships should seek legal counsel to avoid making this error. Expert  tip: check for will-title conflicts.

 

Incorrect Beneficiary Designations

 

Errors in beneficiary designations can lead to the disinheritance of heirs, delays in providing for the financial needs of loved ones, and unnecessary expenses and tax payments.  Three common errors made when naming a beneficiary are: failing to regularly update beneficiary designations, naming an estate as beneficiary, and failing to name a contingent beneficiary. Expert tip: periodically review the beneficiary designations on IRAs, tax-deferred employer plans like 401(k)s, and life insurance policies to make sure they are current, especially if you’ve experienced a major life event such as the death of a spouse, divorce, marriage, remarriage, or the birth of a child.

 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.

 

 

 

 

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.

Crucial Steps to Take When Retiring

I recently attended a webinar about preparation for retirement. The speaker was nationally renowned retirement planning expert Dr. Wade Pfau, author of Retirement Planning Guidebook. Below are six of my key take-aways from his presentation:

Know Your Style- Your retirement income style describes your retirement income preferences. According to Dr. Pfau’s RISA® tool, Probability-Based vs. Safety-First indicates whether someone is more comfortable relying on market growth potential or on contractual guarantees (e.g., pension, annuity). Optionality vs. Commitment indicates whether someone values flexibility to adjust their plan or prefers to commit to a structured, potentially irrevocable, retirement income strategy.

 

Inventory Your Assets- To see where you stand, create a master inventory of assets and debts, including account numbers, account values, ownership details (e.g., individual or joint tenancy with right of survivorship), beneficiary designations, and probate status. Calculate net worth by subtracting the value of debts from assets and update it annually. Request in-force illustrations of the cash value of whole life insurance policies.

 

Establish Decision-Making Authority- An advance directive is a legal document outlining your healthcare wishes if you cannot speak for yourself. A living Will is a written statement detailing which medical treatments you consent to or refuse (such as ventilation, artificial nutrition, or CPR) in end-of-life scenarios. A financial durable power of attorney is a legal document that allows you to appoint a trusted person or organization to manage your financial affairs.

 

Create an Estate Plan- Write and periodically review and/or update a will that designates to whom your assets will go. Be sure that there are no conflicts between provisions in your will and asset ownership titles, which have priority. The four essential estate planning documents are generally considered to be a last will and testament (will), a durable power of attorney (for finances), a healthcare power of attorney (or proxy), and a living will. Some people also use trusts.

 

Study Social Security Claiming Options- Higher earners in a couple may consider delaying Social Security benefits up to age 70 for a higher future benefit for both themselves and their lower-earning spouse (survivor benefits). Delayed retirement credits of 8% a year are available between full retirement age and age 70. It is smart to verify your Social Security covered earnings annually by setting up an account at https://www.ssa.gov/myaccount/.

 

Plan Ahead for Spending Shocks- Some of the most common spending shocks that older adults face are sequence of returns risk, inflation, long-term care expenses, death of a spouse, family responsibilities, frailty in later life, cognitive decline, and forced early retirement. About half of retirees do not pick their retirement date- it is forced upon them.

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.

 

The webinar ended by describing 4 Ls of retirement: Longevity, Lifestyle, Legacy, and Liquidity.

Serving as a Personal Representative: What You Need to Know

I recently taught a class with the same title as this article. It was inspired by what I learned and experienced personally as the personal representative (PR) of my late brother’s estate.

Below are some key take-aways:

PR Definition- A personal representative (PR) is a person or financial institution legally appointed to settle a deceased person’s estate via probate. PRs can be named in a will or appointed by the court. Some states (FL) use the PR term and others (NY) use the words executor (with a will) and administrator (without a will). The role and tasks performed are the same.

PR Importance- A PR is granted legal authority and fiduciary responsibility to act in the estate’s best interest. There can be legal and financial consequences if duties are mishandled. A PR’s actions can directly impact the lives of estate beneficiaries for many years.

The Probate Process- Probate is the court-supervised process of managing a deceased person’s estate (i.e., assets and debts). It involves validating the will (if one exists), gathering and valuing assets, paying debts and taxes, and distributing remaining assets to heirs.

Probate Avoidance Strategies- To avoid having assets subject to probate, people can use trusts, payable on death (PoD) designations on bank accounts, transfer on death (ToD) designations on brokerage accounts, beneficiary designations on life insurance and retirement savings accounts, and assets with joint tenancy with right of survivorship (JTWROS).

Legal Assistance- When serving as a PR, it is always best to consult an attorney in the relevant jurisdiction (i.e., where the deceased person lived). An attorney can answer a PR’s questions and handle court-related process steps and other tasks (e.g., obtaining an ETIN for the estate bank account and notifying creditors).

Small Estates- Most states have a simplified probate process for small estates. The definition of a small estate varies per state (e.g. $75,000 in FL and $50,000 in NY). Qualification for small estate procedures generally depends on the total value of probate assets rather than the deceased’s overall wealth. Wealthy people could use one or more of the probate avoidance strategies listed above to keep their probate assets below their state small estate cap.

PR Appointment Letter- An appointment letter (a.k.a., Letter Testamentary) is a formal document issued by a probate court, confirming the appointment of an individual (or entity) as the PR of a deceased person's estate. This letter serves as proof of the representative's authority to act on behalf of the estate (e.g., set up an estate bank account, pay debts, and distribute property).

Gap Time- It takes time for a PR to be issued an appointment letter. In the meantime, someone needs to pay up quickly for a funeral or cremation and then get reimbursed by the estate. Ditto for necessary expenses to maintain property such as electricity, water, property tax, and lawn care.

Tax Implications- PRs are entitled to compensation in most states, generally a percentage of the estate’s value as defined by state law. PR compensation is taxable as ordinary income on IRS Form 1040, Schedule 1. When PRs are also a beneficiary of the deceased’s estate, many waive their PR compensation and inherit nontaxable assets as a beneficiary instead.

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.

   

Estate Planning for Pets

In my book, Flipping a Switch, I have a chapter titled “Green Bananas, ROLE Calculations, and Lasts.” A key take-away is, as people age, their time orientation changes. 

Sometime in her mid-70s, my Mom started using the phrase “People my age don’t buy green bananas anymore.” While the green bananas analogy is an extreme example, people do start performing return on life expectancy (ROLE) calculations as they age. In other words, “mental math” comparing how long things might last in relation to their age and life expectancy.

                                   

There is, perhaps, no better example of ROLE calculations than the decision to get a pet in your 60s and beyond. Unlike young adults, who fully expect to outlive one or more pets, older adults often stop to ask “what if the pet outlives me? What happens then?” Without advance  planning, when pet owners pass away, their pets often end up in an animal shelter and, unfortunately, many healthy pets who are not adopted are euthanized. 

What to do? I recently attended a class, Estate Planning for Pets, where I learned that pets are considered property and have no legal rights. Thus, it is up to pet owners to plan for their four-legged friends’ future. Below are five key take-aways:

Learn About Pet Life Expectancies- Average life expectancy for dogs and cats is 10-12 years and 10-14 years, respectively, but there are caveats. Larger dogs live for a shorter period of time than smaller dogs and spaying and neutering a puppy can increase lifespan. Indoor-only cats live longer than those who spend significant unsupervised time outdoors.

Consider Adopting an Older Pet- Older adults who want a pet often take a big gamble when they get a puppy. An alternative strategy is to visit a local animal shelter or pet rescue agency and adopt a dog or cat that is, say, 3 to 5 years old. This way, the pet’s remaining life expectancy will be more in synch with its owner’s.

Designate a Pet Guardian- Talk with friends/family about concerns for your pet’s future and identify someone to care for your pet if something happens to you (e.g., injury, death). Also designate a “Plan B” pet caretaker in case the primary pet guardian is unable to step up. Make a list of your pet’s favorite foods, medical issues, vaccination records, and exercise routines.

Create a Pet Care Fund - Set aside money for surrogates to care for your pet. Consider creating a pet trust fund based on pets’ actuarial life expectancy. The trust will include funding for pet caregivers to use for pet food, vet bills, etc. and also include a residual beneficiary to receive remaining funds, if any, after all pets named as trust beneficiaries pass away.

Don’t Assume- Some people do not make any contingency plans for their pet. Instead, they just assume “my family will take care of my pet.” Sometimes, however, family members cannot. If you assume someone will care for a pet, it is a hope- not a plan. That said, it is not uncommon for family or neighbors to temporarily take care of pets until a permanent solution is put into place including transferring a pet to a prepaid pet lifetime care facility.

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.

 

Strategies to Achieve Financial Peace of Mind

I recently attended an estate planning class called “How to Achieve Financial Peace of Mind.” Below are ten key take-aways that stood out to me from this presentation:

Plan For the Future- Prepare legal documents that specify how your estate (i.e., property, savings and investments, and other assets) will be managed when you die and how your health care and financial decisions will be made if you are incapacitated. Documents to prepare with assistance from an attorney include a will, durable power of attorney for finances, and a living will. Be sure to share copies of these documents with the people named as your personal representatives.

Create a “When I Die File”- Assemble in one place documents that someone (e.g., spouse, family, executor, attorney) would need in the event of your death or incapacity. These documents can be in digital and/or paper form. Items to include are a current net worth statement, list of people to contact, list of who gets your untitled property, list of automatic bill payments, and a draft obituary.

Fund Your Trusts- Retitle personal assets held in your name (e.g., bank accounts and securities) into the name of your trust if you decide to create one. It is critical that trusts be funded to be of value and it is a common error when they are not. Expect that doing this will take some time and paperwork. 

Reconsider Trusts- Consider other ways to distribute property to others and avoid probate without using a trust. Interestingly, the program speaker noted that “trusts are oversold” and recommended using payable on death (POD) designations for bank products (e.g., savings accounts and certificates of deposit) and transfer on death (TOD) designations for investment accounts to transfer property.

Lend Money Carefully- Prepare a promissory note if you lend money to others. It should be signed and dated by both you and the borrower with specifics about the loan agreement including the amount borrowed, the loan timeline (e.g., two years), and penalties for late payments.

Leave a Paper Trail- Tell trusted loved ones about your “When I Die File” and where it is located as well as the location of other important papers (e.g., in a desk, dresser drawer, or file cabinet) and the original and copies of the legal documents described above. For added security, consider a waterproof and fireproof safe (be sure to tell trusted loved ones the combination).

Talk With loved Ones- Communicate with loved ones about the content of your advance directive documents. For example, your desire to not have your life prolonged via a feeding tube or other artificial means. By understanding your wishes, they will be able to be better spokespeople for you if and when the time comes that they need to advocate for your wishes.

Prepare a Digital Assets Inventory- Make a list of the username and password for digital accounts including access to your cell phone and laptop and online accounts. Like the “When I Die File,” be sure to share this list with trusted loved ones. 

Make Your Own Final Arrangements- Prepare a letter of last instruction that includes your wishes for burial or cremation, a funeral or memorial service, special prayers and songs, charitable bequests in your name, and other important (to you) details. Place it in your “When I Die File.”

Review and Revise- Review your estate plans annually or when any major life event occurs such as the death of a personal representative or beneficiary. 

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.

When There’s a Will, There’s a Way

 

The phrase “when there’s a will, there’s a way” is generally used to describe a personal trait that some people call “willpower” or “grit.” People with grit have a strong determination to do something, often against great odds. They keep on going and “push through” against obstacles big and small and, in the case of personal finance, temptations to spend money.

 

“When there’s a will, there’s a way” also makes a great title for a post about wills. Below are five important things to know about preparing a will and what happens when people lack one:

Purpose of a Will- A will is a written document that sets forth directions for the disposition of property when someone dies. This includes the naming of a personal representative (executor) to manage the estate distribution process and a guardian to provide care for minor children. The laws of each state specify requirements for a legal will (e.g., number of witnesses and notarization and who qualifies to serve as an executor). For example, in Florida, executors must be a state resident over age 18 or a blood (or adopted) relative. A friend living in New Jersey would not qualify.

 

Dying Without a Will- When people die without a will, state intestacy laws determine to whom their assets pass and when they pass. Without a will, an estate can be tied up in probate court, possibly for years, and there will likely be higher estate administrative costs (e.g., bonding for an appointed personal representative). Probate is the court-supervised process of gathering data about a deceased person’s assets, paying off creditors, and distributing assets to named beneficiaries.

 

Ambulatory Document- A will is ambulatory, i.e., it can be changed throughout the creator’s lifetime. It only becomes final when the creator dies. There are three essential sections: who the creator is, what assets the creator has, and who the creator’s assets will go to (e.g., family, friends, charity). Even if not required by state law, wills should be notarized so they are “self-proving” and heirs don’t have to scramble to locate the witnesses, often decades after a will is signed.

 

Excluded Assets- A will does not distribute assets that have named beneficiaries. This includes beneficiary designations on life insurance policies, annuities, and retirement savings accounts such as 401(k)s and IRAs as well as payable on death (PoD) designations on bank accounts, transfer on death (ToD) designations on investments, and assets with a joint tenancy with right of survivorship (JTWROS) title. When a will and title conflict, the title to an asset takes precedence.

 

Personal Representative- A named personal representative (i.e., an executor in a will) can be an individual (e.g., family member or friend) or legal or financial services industry fiduciary (e.g., attorney or bank trust department), if qualified under state law. When there is no will, or a named executor is unwilling or unable to serve, a known or unknown (to the deceased) personal representative will be named. As noted above, this can increase the cost and time frame for estate settlement. An upside, however, is that there may be greater court supervision. This can be a plus for people who have “nobody left” or nobody they can trust to manage their assets.

Serving as a Personal Representative: The Good, The Bad, and the Ugly

 

Earlier this year, my brother passed away. Recently, I was appointed by the Surrogate’s Court of Suffolk County, New York as his estate’s personal representative and provided Certificates of Appointment indicating my authority to collect, manage, and distribute assets of the estate.

 

Under New York law, estates with assets under $50,000 are considered “small.” My brother’s estate, with just an $11,363 bank account and about $90,000 of unsecured debts is virtually “micro”… and insolvent (i.e., estate assets are insufficient to pay debts, let alone make any bequests to heirs).

This is the situation that I have been tasked with administering and, needless to say, it has been a huge learning experience. Below are five things I have learned along the way that may be useful if you are ever asked to serve as the executor or administrator (when someone dies intestate without a will) of someone’s estate:

 

Forensic Accounting is Difficult- My brother left little information about his finances and never discussed money with me or his partner of 16 years. Drawing on my CFP® training, there was only one way to begin: a thorough examination of his assets and debts. It took me days to construct a pro forma net worth statement using data from bank and billing statements, a checkbook register, and tax records. Needless to say, his partner and I were both shocked when I finished doing the math.

 

Legal Advice is Necessary- A Long Island lawyer charged the estate a $1,500 fee for small estate legal services. It is well worth the cost to have a legal professional process required court paperwork and advise on process steps and state laws (e.g., the order in which debts are paid and the fact that creditors in New York cases have seven months from my appointment as personal representative to submit claims).

 

Handling an Out-of-State Estate is Manageable- A personal representative has a legal duty to administer an estate according to state law. One of my fiduciary duties was establishing an estate bank account. Living 1,200 miles away from my late brother's New York home, I was worried this would be costly (read: require expensive travel expenses) and/or problematic. Instead it was “easy peasy.” A big gratitude shout out to Bank of America's estate planning division which seamlessly transferred the $11,363 from my brother’s New York bank to the Florida based estate account.

 

Vultures Are Out There- My brother co-owned a house with his partner through a legal titling arrangement known as joint tenancy with right of survivorship. When he passed, the house automatically passed to her as the surviving co-owner. This has not stopped over a dozen vulture realtors and house flippers (to date) from contacting both of us  by mail and phone with offers to buy the house for “quick cash.” Apparently, these vultures scour probate court filings to get data about a deceased person's home address and contact information for their personal representative. Some of the vultures have been exceptionally cruel including one that sent a fake check made out to my deceased brother.

 

Spreadsheets are Your Friend- I created an Excel spreadsheet to manage the distribution of limited estate assets to creditors after the seven-month waiting period (for creditors to submit claims) is over in February. There is now $8,174 left in the estate account after paying the lawyer and reimbursing funeral expenses (the top two priority claims) and a check printing fee. There are also already tens of thousands of dollars of formal debt claims. Since the estate is insolvent, each unsecured creditor will receive pennies on the dollar based on the percentage of their debt claim to the overall debt total. My spreadsheet makes this math very easy and will also serve as a final accounting document to submit to the New York court system when the estate is closed.

There were other learning lessons as well, but I choose not to share them in a public forum. Suffice to say, things that I learned about how estate planning is supposed to take place in an ideal world may not happen with an insolvent estate in the real world. 

Bottom line: If you are asked to serve as the personal representative of someone's estate, know what you are getting into and get assistance from an attorney who specializes in estate planning. Also, you have the right to say "no" by filing formal declination documents. In this case, the surrogate's court will find someone else.

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.

How to Speak to an Attorney

 

Many people live decades of adult life before they ever see an attorney. Perhaps they procrastinate on estate planning, never get divorced or adopt a child, never serve as someone’s executor, never start a business, never face criminal charges, and never suffer a personal injury. Also, in many states, people use title companies, instead of lawyers, to conduct real estate closing transactions.

Then there comes a time in life when people need an attorney. Often, it is when they are older, and-perhaps-wealthier and start thinking about transferring assets. What to do? This post describes tips for speaking to an attorney from a seminar that I attended that was taught by two attorneys.

 

Go Prepared- Have a clearly defined purpose for meeting with an attorney (e.g., serving as an executor or drafting a will) and try to anticipate questions that will be asked about pertinent facts related to your case. In addition, make a list of specific questions that you need answers to.

 

Gather Documents- Bring materials related to a case when seeing with an attorney. For meetings related to serving as executor, this includes: a deceased person’s will, bank statements, car/house titles, death certificates, funeral/cremation bills, and a net worth (assets – debts) calculation.

 

Prepare to Discuss “Sensitive” Topics- Consider two common examples: treating children equally in wealth transfers and wanting to keep assets solely in the family blood line by excluding any transfers to a child’s spouse. The attorneys noted that family bequests do not have to be equal.

 

Be Open About Heirs With Issues- Let an attorney know about children in prison or with a substance abuse issue as this information is germane to proper estate planning. Be open and honest about family disfunction issues and know that an attorney is there to help you, not to judge you.

 

Consult Your Spouse First- Talk with your spouse about the issues that you are consulting an attorney about. Otherwise, you might just hear the words “I didn’t know you felt that way” in discussions with an attorney and that can be awkward for everyone involved.

 

Be Open About Marital Status- Tell your lawyer if you are separated (and therefore technically married) and living apart, but not divorced. This situation has implications for taxes and asset transfers. For example, the sale of a jointly held home without a separated spouse’s consent.

 

Consider Attorney Fees- Remember that, while attorneys can serve in designated roles in legal documents (e.g., executor), it can be expensive, especially for them to act as a durable power of attorney agent. If you do name an attorney, provide them with detailed information about your finances so they have the background information that they need and don’t have to hunt it down.

 

Review and Revise- See an attorney every 3 to 5 years after estate planning documents are prepared or sooner if there are major lifestyle changes (e.g., death of an heir, executor, or spouse). The purpose of the review is to make sure that documents still do what you want them to do.

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.

 

The End of Your Life: Will it Be Good or Bad?

 

A frequently used quote is that “nothing is certain in life except death and taxes.” One of the topics that I wrote about in my book, Flipping a Switch: Your Guide to Happiness and Financial Security in Later Life, is having a “good ending” to your life. 

But what exactly does that mean?

For many people, a “good ending” means dying in peace, preferably at home with loved ones nearby. In addition, most people want a “Niagara Falls” death versus a long period of decline. In other words, to live well for as long as possible and then “go over the edge” and die quickly.

Other hallmarks of a “good ending” to life include the following:

    Organized Financial Records- Prepare a “financial center” (e.g., desk drawers) for documents like insurance policies; recent income tax returns; bank, investment, and credit card statements; and copies of a will, living will, etc. Make sure trusted parties have access, if needed.

 

   Personalized Financial Statements- Provide trusted parties with a current net worth (assets minus debts) and cash flow (income minus expenses) statement, contact information for financial advisors (e.g., lawyer, insurance agent, etc.), and login information for digital assets.

   Advance Directives- Contact an attorney to prepare a living will and health care power of attorney. Doing this will avoid “hospital hallway huddles” by stressed out relatives and ensure that your personal wishes regarding end-of-life care are respected.

 

   Buried Hatchets- Reach out to estranged family and friends with words like “thank you,” “I love you,” “please forgive me,” and “I forgive you” before it is too late. Apologize to those you love if you hurt them and tell friends and family how much they mean to you.

 

   Post-Death Instructions- Leave instructions for a memorial service agenda and charitable tribute contributions and select and prepay funeral and burial services. Another way people can take charge of their personal “ending” is by writing their own obituary.

 

Recently, I witnessed and personally experienced four features of a bad (financial) ending:

 

   Financial Infidelity- Don’t lie or withhold financial information. Doing this erodes trust and makes it very difficult for family, heirs, and fiduciaries (e.g., executor) to move forward.

 

   No Financial Statements- Don’t force your loved ones to be “forensic accountants” and have to reconstruct your finances from statements and a checkbook register. It is not easy to do!

 

   No Funeral Plans- Don’t force a family member to have to unexpectedly put a 4- or 5-figure cremation or funeral bill on a credit card because no plan or set-aside funding was available.

 

   No Digital Assets Inventory- Leave a list of logins for digital devices and online accounts. Don’t force your survivors to try to track this data down or permanently have to live without it.

Bottom line: 

    Make the time, while you are able, to take actions that increase the liklihood of having a good ending to your life. It is a gift to yourself and your family.