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You Just Never Know!

Someone that I know died last week. She wasn’t a friend, but was someone I have known for a long time, and most shocking, she was my age. Death is the one thing just about guaranteed to rock our worlds even if it is peripheral to our day-to-day lives. She has a daughter the same age as my son and my heart breaks for the family to lose someone from their immediate family. It is a hole that can never be filled and my prayers are with them especially today for her funeral.

That brings me to the awful topic of being prepared for such an event. With my clients, this is always a topic of conversation as we get new clients integrated so I want to share some of the important things that we discuss with them. You just never when “your day” might be and it is so much easier on those you leave behind if you take a few unpleasant steps to be ready. It is especially important if you are married to make sure your spouse has done these things as well. Death is hard enough without having to wrangle with legal things that could have been handled and were not.

So, the list:

  • Do you have current wills, properly executed in your current state of residence?
  • If so, do you know what they say?
    • Who is the executor, trustee and guardian for minor children?
    • Do you still want those people in those roles and are they still capable of fulfilling them?
    • If you have children in their late teens, even 18 or 19, is the plan specified in the will going to work? Moving them to your sister’s in Iowa may have seemed fine when they were 2 and 3, but now at 17 and 18, it just may not work.
      • My son just turned 18 and is still in high school. He may be legally of age but yikes, I would not want him on his own if something happened to both my husband and me!
    • Does the will still refer to a “credit shelter trust?” If so, you may want to consider updating it because the estate tax exclusion is much larger now than it was prior to 2010. This doesn’t mean your will isn’t valid, it just means that you need to understand what assets may end up in such a trust.
  • Do you have a Health Care Directive, valid in your current state of residence, and has it been updated within the last couple of years? This isn’t something you need if you die, but it is important if you are in an accident or have a catastrophic event. You can update these without an attorney if you so choose. Go to caringinfo.org for the form and good information about completing it. Again, it needs to conform to your state’s requirements so be sure to pick your state of residence. If you are updating your will, attorneys typically update both powers of attorney as part of the package.
    • Are the people you have named in your directive still the appropriate people?
  • Do you have a Durable Financial Power of Attorney? Again, this is not helpful if you die but is critical if you are in an accident or are otherwise incapacitated. If you have divorced, you may want to update both powers of attorney if you have not already.
  • Do you know who the beneficiaries are on your insurance policy (both the policy through your employer and any individual policies that you have) and your retirement accounts? This includes IRAs, Roth IRAs, and employer-provided plans. Again, if you have divorced, you should update as those plans typically name the spouse.
    • Consider if your children are over 18 if it is appropriate to have them as contingent beneficiaries (or primary if you are not married). There are many considerations here so talk to a financial advisor or an estate attorney to fully understand your options and the impact. There are a lot of tax considerations as you look at retirement and other tax-deferred plans so be sure you are clear on that aspect as well.
  • Passwords: Does your spouse or your executor know where all of your passwords are? There are certainly workarounds, especially if you are married, but do you want your grieving spouse to be fumbling around trying to get access to your computer in order to pay the mortgage right after you died? This is a biggie as more and more of our lives are lived in the virtual world.
    • I believe that Facebook now has an authorization form that you can process online so that you can leave them access in the event of your death.
  • Letters to your children or other family members: Have you left anything for your kids that they can hold onto in the event of your death? When my dad died suddenly at my age 12, I would have given anything to have a note from him. I left letters with my will so that my kids will know what hopes and dreams I have for them. They were not so easy to write, and I hope they don’t get to read them for a long time, but it is important to me that they have something from me to them to hold onto when the time comes.
  • What is important to you? There may be specific things that you want specific people to have now that you are older. Your china, jewelry, scrapbooks and photo albums are all important items. If it is important to you that certain people get them (or don’t!) then you need a provision in your will to recognize that or at least to refer to such a list that you may prepare. Talk to your attorney about these things.
  • Special circumstances: As our kids grow, marry, divorce, have kids, get sick, get rich or poor, or have troubles, we may find that the plan we made when they were kids is not appropriate any longer. Step back and think about who will be your beneficiaries, how much money they will ultimately receive and how old they are. Are they mature and responsible or likely to blow through money quickly? There are a lot of estate planning tools available to address just about any situation so if you have some concerns about how your death will impact your heirs, talk to an estate planning attorney so that you can have a plan you feel good about.

We all hope that we will die in our sleep at a ripe old age, in perfect health but that is not the case for most. For some, death appears too quickly at the door. It is not fun to think about or talk about but being prepared today is the greatest gift that you can leave your family.

To your financial success (and your family’s)!