Authored by Laurie E. Ohall, B.C.S.
January is always the time of year where we come up with New Year’s Resolutions – whether it is about improving ourselves or maybe improving our relationships with others. The new year is a chance for us to begin again and, as Oprah Winfrey has said, “…another chance for us to get it right.”
January is always the time of year where we come up with New Year’s Resolutions. This gives us a chance to prepare a list of the changes we want to see in ourselves, or perhaps how we want to handle our relationships with others.
When it comes to estate planning, many people are hesitant to meet with an estate planning attorney because they do not know what to expect, or because they do not want to think about their own mortality. In fact, you may wonder what is the point of planning ahead? As human beings, it is natural for us to not want to think about getting older or something bad happening and, therefore, people often avoid talking about estate planning until they’ve actually have to deal with it or until it is too late to properly plan. Here are five reasons why adding estate planning to your New Year’s resolutions is important.
1. You may not have a large estate, and therefore, may not think that having a Will or trust is important. However, estate planning is more than that – it’s planning for incapacity, as well. What if something happens and you cannot make legal or financial decisions? Have you appointed someone to do that for you? What if you are in a second marriage – will your new spouse and your children from the prior marriage fight over who manages your affairs and make decisions on your behalf if you become incapacitated? Have you named someone to be your healthcare surrogate to make medical decisions for you? Do you have a living will that specifies whether you wish to be kept alive by artificial means? A durable power of attorney, living will and health care surrogate designation are important for people of any age from the time someone becomes an adult.
2. If you have even a modest estate, you may want to avoid your assets having to go through probate court at your death. A Will cannot help you to avoid probate – it tells the Court who you want to administer your estate, and who you want to have your assets. A Will also becomes public record. A revocable living trust, on the other hand, is private and can help you avoid probate. Not everyone needs to have a revocable living trust and there may be easier ways to avoid probate. Other ways to avoid probate include having beneficiary designations on assets (such as life insurance and retirement accounts), making bank accounts payable on death (POD), or even owning assets jointly with another. There are important considerations one must understand when naming a beneficiary on any asset. An estate planning attorney should be consulted to help you understand the options available to avoiding probate and ramifications related to designating beneficiaries on assets.
3. Has it been five or ten years since you last had your estate planning reviewed? Just like you go to a doctor to have annual check-ups, you should also review your accounts and estate planning documents to make sure they reflect your current intentions. It is advisable to have review your estate planning documents every 3 to 5 years or more often, especially when you have a major life change (marriage, baby, divorce, death) or someone you have named as a beneficiary has had such a life changing event For example, consider the client who did not have any children and wanted to leave all her assets to her niece. All of her estate planning documents listed her niece as the beneficiary, her agent under her durable power of attorney and her healthcare surrogate. When she had a falling out with her niece, she called her attorney to discuss removing her niece from her estate planning documents completely. The client was also concerned because she was having health issues and did not want to wait too long to make the changes. In that instance one should not delay and seek advice from an estate planning attorney to address those updates. There is a process that should be followed to properly revoke or change estate planning document.
4. If you have a minor child or a beneficiary of your estate who is a minor planning ahead is especially important. It is not uncommon for divorced parents to have life insurance policies which list their minor children as beneficiaries. In Florida, if a minor child inherits more than $15,000, a guardianship must be established over the property of the child. This means court involvement, attorney’s fees and costs, and the child receiving the money when he or she turns 18 years old. However, if the parent plans ahead, the headaches of guardianship court can be avoided and the parent can control “from the grave” how the money is spent, even after the child turns 18.
5. By the same token, if you have a child with a disability, planning is important for two reasons. First, your own estate plan should be drafted so that if something happens to you, a special needs trust for that disabled child is part of that plan. Special needs trusts are designed r to name a trustee who can manage the money set aside for the benefit of your disabled child. Properly drafted special needs trusts ensure a disabled child who is receiving government benefits does not lose those benefits. Second, when your disabled child turns 18, you lose the ability to make all decisions for them (financial, educational, health care). If the disabled child has legal capacity upon turning 18, you should have the disabled child create a Durable Power of Attorney and Health Care Surrogate Designation naming you or whoever the disabled child desires to help make decisions if they become legally incapacitated If the disabled child does not have capacity Florida law allows a parent or other trusted adult to be named a guardian advocate in certain circumstances. The alternative is the courts naming a guardian of the person and property.
These are just a couple of the reasons why you should add “estate planning” to your New Year’s resolution list. It is so important to plan before it is too late, and to also review your plan a minimum of every 3 to 5 years and every time there is a birth or death in the family or of a beneficiary or agent you have named in those documents If you do not have an estate plan, why not make 2017 the year to accomplish this personal planning goal?