Have You Prepared Your Family for Your Death?

Napoleon Bonaparte said that most battles are won or lost in the preparation stage, long before the first shot is fired.

MarketWatch’s recent article, “Breaking the taboo: How to prepare your heirs for your death” says that when it comes to retirement, 60s are the new 50s!

This is a critical lesson, when planning for your own death and the related issue of transitioning assets to your family. The majority of estates lose assets—as well as peace within the family—after a transition. That’s because the heirs were unprepared, they didn’t trust each other and communications fell apart.

This preparation should involve making heirs aware of the location of all important estate planning documents and financial assets. They should also have the contact info of your financial professionals and attorney. They should understand how the parents want to deal with end of life and incapacity issues. These are some important questions that will help you see, if your heirs are prepared:

  • Do your children (and their spouses, if any) know your estate plan?
  • Is there a plan to provide certain information sooner and other information at a later time?
  • Has your family read your will and other estate planning documents?
  • Does your family know the family’s net worth?
  • Are your heirs in communication with your attorney, accountant, insurance advisers and investment advisor?

Family battles can easily happen when members don’t believe they’ve been given their fair share and weren’t part of the process. Although it’s important to treat family wealth as a private matter, it should not be private within the family. Good communication between parents and heirs can prevent many issues.

Attaining the optimal degree of knowledge-sharing and family involvement requires its own planning. Family values, as well as current and future goals, should be a part of the entire financial planning process. When done well, financial planning is about much more than investment management. The success of a family wealth transition plan depends on preparing the family for the transition of the family’s wealth and its values.

Reference: MarketWatch (March 7, 2019) “Breaking the taboo: How to prepare your heirs for your death”

 

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As a New Parent, Have You Updated (or Created) Your Estate Plan?

You just had a baby. Now you’re sleep-deprived, overwhelmed, and frazzled. Having a child dramatically changes one’s legacy plan and makes having a plan all the more necessary, says ThinkAdvisor’s recent article, “5 Legacy Planning Basics for New Parents.”

Take time to talk through two high-priority items. Create a staggered checklist—starting with today—and set attainable dates to complete the rest of the tasks. Here are five things to put on that list:

  1. Will. This gives the probate court your instructions on who will care for your children, if something happens to both you and your spouse. A will also should name a guardian to be responsible for the children. Parents also should think about how they want to share their personal belongings and financial assets. Without a will, the state decides what goes to whom. Lastly, a will must name an executor.
  2. Beneficiaries. Review your beneficiary designations when you create your will, because you don’t want your will and designations (on life insurance policies and investments) telling two different stories. If there’s an issue, the beneficiary designation overrides the will. All accounts with a beneficiary listed automatically avoid probate court.
  3. Trust. Created by an experienced estate planning attorney, a trust has some excellent benefits, particularly if you have young children. Everything in a trust is shielded from probate court, including property. This avoids court fees and hassle. A trust also provides some flexibility and customization to your plan. You can instruct that your children get a sum of money at 18, 25 or 30, and you can say that the money is for school, among other conditions. The trustee will distribute funds, according to your instructions.
  4. Power of Attorney and Health Care Proxy. These are two separate documents, but they’re both used in the event of incapacitation. Their power of attorney and health care proxy designees can make important financial and medical decisions, when you’re incapable of doing so.
  5. Life Insurance. Most people don’t think about purchasing life insurance, until they have children. Therefore, if you haven’t thought about it, you’re not alone. If you are among the few who bought a policy pre-child, consider increasing the amount so your child is covered, if something should happen.

Reference: ThinkAdvisor (March 7, 2019) “5 Legacy Planning Basics for New Parents”

 

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Does Your Estate Plan Include Furry or Feathered Family Members?

Here’s a sad fact: The Humane Society of the United States estimates that as many as 100,000 to 500,000 pets end up in shelters, after their owners die or become incapacitated. So, while we spend upwards of $60 billion on food, supplies and veterinary care, says The National Law Review in “Estate Planning For Your Pets,” we also allow many beloved pets to end their lives in shelters.

The answer is to include your pet’s care in estate planning, just as we do for our family members. The first major consideration is to name who you would want to be responsible for your pet, if you should become incapacitated. Make sure that person is willing to take on the role of caretaker and that they have sufficient room in their homes (and their hearts) for your pets.

If they agree, then start by preparing a sheet with this basic information:

  • What does your pet eat? Do you give him/her treats, and if so, what kind?
  • Medical records for your pet: vaccinations, surgery, special medications.
  • The name of the veterinarian and any specialists.
  • What does your pet do, when she/he is nervous or anxious? What calms them down?
  • What other information would you want someone to know, in your absence?

Speak with your estate planning attorney to see if they have a “Pet Care Authorization” form. This is a form that is similar to something you would use for a child staying with a relative who might need care. The form would designate the agent to act on your behalf for a variety of situations, including medical care.

For planning for your pets after you die, you can designate a caretaker. This may be the same person who agreed to care for your pet, if you became incapacitated. You can do this in a last will and testament or a revocable living trust. You’ll also need to provide funding for the care of your pet.

You can use a trust as an alternative to an outright distribution of funds to the caretaker. The pet trust would be overseen by a named trustee, who would be responsible to ensure that funds are used to benefit your pet(s). Make sure to allot a reasonable amount of money to cover the cost of veterinary care, grooming, feeding, training and any additional expenses.

You don’t have to be a wealthy person to have this arrangement in place. It is simply a practical matter to ensure that your furry family members are taken care of, after you pass away. Another factor to consider: what is the average age expectancy of your pet? A parrot could easily live 60 to 80 years, and a horse could live for four decades. The care and feeding of a horse will be considerably higher, than for a golden retriever or house cat.

Speak with an estate planning attorney to learn how pet care can be built into your estate plan, so next time your pet welcomes you home you will know you’ve planned for their future.

Reference: The National Law Review (Feb. 18, 2019) “Estate Planning For Your Pets”

Suggested Key Terms: Pet Trusts, Beneficiaries, Trustees, Agent, Estate Planning Attorney

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