Maybe you experienced this on at least one occasion during the past few snowy weeks: The kids are in the car, the bags are packed, and everyone’s skis, boots and poles are accounted for. You have even decided to pack a helmet for yourself this year because safety and precaution have actually become fashionable in the last decade.
But, speaking of precautions, you still have not done your family’s Estate Planning yet, have you? It is another one of those things that is just too easy to delay indefinitely into the future.
The most commonly made New Year’s resolutions are getting in shape, losing weight, quitting smoking, saving more money and travelling. According to Time Magazine, however, the most commonly broken New Year’s resolutions are… getting in shape, losing weight, quitting smoking, etc. This resolution is a no-brainer: Drafting an estate plan is easy, quick, and relatively inexpensive.
Before you travel again, just plan to get it done. It is not just about signing Wills – most people understand the basic concept of a Will, the document which you leave behind that sets forth your intentions of what should happen to your property after you die. It is about executing other documents which give urgent decision-making powers to others in the case that you do not die. (You did pack your helmet, didn’t you?)
WHERE THERE IS A WILL, THERE IS A WAY.
A resident of Massachusetts has a choice: he can take the time to have his wishes expressed in a legally binding document, or he can do nothing and instead let the Commonwealth of Massachusetts decide how his estate is disposed of, and who will be in charge. Understand that if you leave this decision to the State, the rules will not necessarily reflect your wishes (and might be in direct conflict to those wishes). A Will can take care of the following important issues.
1. Planning your Estate: The major purpose of a Will is to determine who will get your assets upon your death, and how much. You get to control exactly how much each person or charity will inherit. You can divide your estate into equal shares, provide for specific amounts of money, or make specific gifts of items. You also have the right to designate your Personal Representative – the person who will be in charge of all of this after you die (formerly called “Executor”).
2. Selling the House: Under the comprehensive probate law changes that went into effect in 2012, the transfer of real estate upon death has become costly and confusing for families who are not prepared. If the owner did not have a Will which authorizes the Personal Representative to immediately sell the house, if that ever becomes necessary, it will take several months to get special court permission to do so. Those months can seem like years.
3. Care for a Minor or Incompetent: Your Will can be the foundation for two other important tools: trusts and guardianships. A trust provides a mechanism for holding money and property on behalf of another person. This could be someone who has not yet reached a certain age, someone with serious mental disability, or someone with an addiction. You can designate who will hold onto that beneficiary’s money, for how long, and under what circumstances. A guardianship is used to provide actual care or custody of your children or other dependents. This is especially important for young families.
4. Funeral Arrangements: You can direct your Personal Representative how your funeral arrangements should be made. This can be tricky, however, as many Wills aren’t even read until after the funeral. Make sure that your loved ones know your desired funeral arrangements ahead of time.
5. Tax Planning: It has been said that the only two sureties in life are death and taxes. Inheritances can have important tax implications—a good reason why it is important to consult with a professional. Some of the taxes affected are the beneficiaries’ personal income taxes, capital gains taxes, and the dreaded estate tax.
6. Peace of Mind: Sometimes, this can be the biggest advantage!
STAYIN’ ALIVE!
The less familiar – but more commonly needed – estate planning tools are those which assist persons who are still alive, but temporarily disabled. There are many, but the two vitally important ones are the Health Care Proxy and Durable Power of Attorney.
A Health Care Proxy authorizes someone to make health care decisions for you, should you be unable to do so yourself. This could be because you are unconscious, unable to communicate, or even at your final stage of life. It includes the authorization to make the one decision that no family member ever wants to make, if the treating doctor agrees that there is no medically reasonable likelihood of your coming off life support.
A Durable Power of Attorney authorizes a trusted person to act as your signatory on bank accounts and other important documents. Should you become seriously hurt and unable to write a check, cancel a membership or subscription, or communicate with your banks, your assets are essentially frozen. Without a properly drafted power of attorney, your family’s only alternative is to go into court and have a guardian appointed over you.
A FINAL WORD – DO IT RIGHT.
Do not be pennywise and pound-foolish. Hire an attorney to ensure that you have your estate plan drafted correctly – someone who has a legal responsibility to you and your family to do it right. These documents can be changed, amended, revoked and re-written as many times as you choose, as laws, plans, and people tend to change direction. And do not be afraid of the cost. Although an attorney’s services are probably more expensive than a software program you purchase online, you will not pay thousands of dollars, and you will never get a disclaimer that says you are out of luck if the documents are not enforceable!
Completing your estate plan is a tangible sign of responsibility, commitment and care. Your family will have enough to deal with after a tragedy. Make it as easy for them as you can!
And pack your helmet!
Other reading:
Get Ahead of your Estate Planning:
Top 10 Commonly Broken New Year’s Resolutions:
Lucas Law Group, LLC:
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