Summer is fast approaching and most of us have already made plans for our vacations, whether it be a trip home to see family, a trip to an exotic country, or camping in our own home state.
Understandably, most of us put more time into planning our adventures then we do in our estate planning. Its a lot more fun! I can’t tell you how many times clients have reached out just before they take off for a big trip with what I now call the “estate planning itch." Their bags are almost packed, house sitter on board, etc., then the phone call:
“We are leaving next week and are wondering about an estate plan – can you help us quickly get this done.”
Estate planning is a daunting topic to think about. What if something were to happen and one of your family members were to get seriously injured on the trip? What if catastrophe struck? It’s natural to shelve these thoughts and also natural to have them “itch” a little bit. Why not be proactive and address this now. Estate planning itself, is actually not that daunting and can be an important tool in not only getting your affairs in order but also in understanding where you are right now in terms of your life planning. In just a few conversations I can help you sort out and complete your estate planning and almost always clients inform me that it was much easier than they had imagined with great relief.
Here are seven estate planning tasks that you might want to take care of before you go anywhere this summer. That way wherever you go you won’t have to worry about the inevitable estate planning itch.
1. Make a Will
Have you been putting off making a will? Perhaps you don’t think you need one-you do. Or perhaps you don’t think you have enough assets to require one-you still do. These are a few of the many common excuses that could cause turmoil and uncertainty for your family and loved ones were something unforeseen happen to you or a loved one.
Another misunderstanding is that a will is not necessary because the state makes a will for you. True, (these “wills” are actually called intestacy statutes), leaving your final wishes up to the state is fool hardy. The state decides based on order of relation and not on individual and personal circumstances.
I’m not even going to try to touch the tip of the iceberg with reasons for why you need a will. The point is, making a will before you go on your summer holiday will let you rest easier while you’re on vacation knowing your life plan is in place.
2. Check Beneficiary Designations
Almost always, a will is not enough to distribute your assets. Some of your largest assets, such as your IRAs, 401(k) plans or life insurance will be distributed outside of your estate to your named contractual beneficiaries.
Each major financial account lets you designate a beneficiary. Usually you’ll designate the beneficiary on the spot and in a rush while setting up your account. Sometimes your snap decision will be the right one but other times, you might be making your assets more available to certain people than you’d like. For example, do you want your 18-year-old child to have access to your entire retirement savings? Are you certain s/he will spend that large sum of money in the way you’d like him/her to?
It’s worth revisiting who your beneficiaries are in case something happens to you before you travel. This can be achieved via a simple phone call to your agent or representative.
3. If You Have Children, Please Name a Guardian or Guardians
Regardless of whether or not you make a will, you should always name a guardian (or guardians) for your children.
It’s devastating to think about something happening to you before your children grow up, but it’s important to name the friends or relatives who can take care of your children according to your values and beliefs. In Colorado, you can name a guardian to take care of the children and a guardian to take care of the finances if that is appropriate. If you do not name a guardian it will be up to the Court and relatives to decide who will care for your children.
You can also create a Pet Trust to care for any animals that you have, providing funds for their care.
4. Complete your Medical Power of Attorney/Living Will
Sometimes, catastrophe doesn’t mean death. Sometimes, a person is left incapacitated and unable to make decisions about his/her healthcare (being in a coma or otherwise unable to communicate). Who would make the decisions for you if you were incapacitated? If you don't name an agent your loved ones will have to resort to the Court in order to speak to medical personnel on your behalf.
Signing a medical power of attorney and living will also allows you to specify what type of medical treatment you want and don’t want if you are unable to communicate your wishes.
Why is this necessary? Because without this, your family will have to resort to the the court, who will then appoint a guardian to make those decisions for you. That’s costly both in terms of finances and emotional trauma to your loved ones; and you risk that your wishes won’t be adhered to.
5. Make a General Power of Attorney
Your health care power of attorney allows other people to help make medical decisions for you if you’re incapacitated, in conjunction with the wishes you can specify in a living will. A durable general power of attorney is equally important. This person makes decisions about what happens with your assets and other interests when you are unable to manage them yourself. Again, if you don't name an agent your loved one's will have to petition the court to appoint a conservator for you.
6. If your estate plan is complete
Review your fiduciary and beneficiary designations and update them if needed. Are your choices still appropriate? If not make the changes now.
7. If you have children over 18
Once your minor child turns 18, you need to be named as their agent in powers of attorney in order to speak to medical personnel and/or banking and financial institutions, etc. Whether your child is going off to college or you are just simply trying to schedule a vaccine for travel, it’s important to have these documents in place so that you can be there for them if needed.
Your Summer Vacation Awaits You….
Think about how good it would feel to have these legal documents completed. Although chances are good that nothing will happen to you or your loved ones, you don’t want to take the risk that your life plan will be decided by someone other than yourself.