Your Time Is Valuable. Let’s Get a Jump Start on the Estate Planning Process
Time seems to be the one thing we can’t get enough of. This is especially true if you are one of our nurses or frontline healthcare workers. You work tirelessly caring for others and may not have much free time to work on your estate planning. If you can answer the following questions or at least think them through, you can get a jump start on the estate planning process today.
Who do you want to handle your financial affairs?
One major issue that needs to be addressed during estate planning is handling your money and property. This includes what will happen while you are alive and at your death. The person(s) you choose to put in charge of your money and property should be trustworthy, detail-oriented, savvy with their money, and good at record keeping. To assist you with your financial affairs, you may appoint someone as your agent under a financial power of attorney and/or a successor trustee of your revocable living trust.
The agent is responsible for carrying out the financial transactions listed in the financial power of attorney on your behalf while you are alive. The document can be tailored to meet your needs, granting your agent as much or as little authority as necessary or desired. You could grant your agent the authority to do everything you could (a general durable power of attorney). Alternatively, the agent could be instructed only to open a bank account to deposit a specific check (a limited power of attorney). You also can specify when your agent is allowed to act on your behalf. With a springing power of attorney, the agent can act only if you become incapacitated. The method used to determine whether you are incapacitated is stated in the power of attorney. Alternatively, an immediately effective power of attorney allows your agent to act when you sign the document, even though you can still conduct your financial affairs. However, this document does not limit your ability to carry out your transactions: It merely gives you another person who can do so instead.
Another way a trusted individual can assist you is by serving as a successor trustee of your revocable living trust. When the trust is first created, and you transfer money and property to the trust, you will likely serve as the initial trustee and be in full control of the money and property, just as you were before. In addition to being the trustee, you will also be the current beneficiary, allowing you to continue to enjoy the money and property even though it is now technically owned by the trust. For the foreseeable future, this situation will work well. However, the true benefit of the trust comes into play when you can no longer fulfill the role of trustee. At that point, the trusted individual you have appointed as your successor trustee will step in and manage the money and property for you without court involvement. Even if your successor trustee is stepping up at your death, this will occur without court involvement. Regardless of when the successor trustee takes over, i.e., when you cannot manage your affairs or upon your death, they are required to follow the instructions laid out in the trust instrument. This means that the money and property will continue to be used for your benefit during your lifetime and for the benefit of those you have chosen at your death.
Who will communicate your medical decisions to the appropriate medical personnel?
If you cannot communicate your medical wishes, your agent under a medical power of attorney is the person who can make the life or death decisions on your behalf. It is essential that they are level-headed, can act under pressure, and, most importantly, will communicate your wishes regardless of their own. If family members disagree with your choices, you may want to think twice before giving them the authority to make medical decisions on your behalf. You must also consider the individual’s availability to act for you. Medical emergencies can happen without warning. It is important that whomever you choose as your agent is available in the necessary capacity to make those decisions for you. If the person you want to choose is across the country, do they have the time and finances to travel? If your first choice is a demanding job or home life, can they be reached reasonably if a decision can be made over the phone?
Medical decisions are very personal. Even if you have the most capable person appointed as your agent under a medical power of attorney, providing them with your wishes in writing is helpful. A living will or an advance directive can be a valuable tool for your agent. The living will allow you to state your wishes regarding your end-of-life care: Do you want medication to help manage any pain? Do you want to be put on a ventilator if needed, etc.? While these decisions may take some soul searching, this information may be crucial in allowing your agent to make the best decisions on your behalf.
Who will look after your minor children, even if it is just temporary?
If you have a minor child, you know they require some supervision regardless of age. If you cannot take care of your minor child and the other custodial parent is unavailable, you need to appoint someone to step in and take care of your child, even if it is just for a short period. This person must be able to take on the mental, emotional, and possibly financial day-to-day responsibilities of raising your child. Because it is impossible to know in advance the amount of time your child would need to spend with them, you will also need to consider whether the person is geographically desirable or if your child would be required to move, even temporarily.
Who will look after your beloved pets?
Some people think their pets are like their children and require the same consideration and planning. If you find yourself in the hospital for an extended period, your pet will need care. Who would you choose to be responsible for them in this situation? Does this person have pets of their own? Will those pets get along with yours? Can the person you would like to choose as a caretaker afford to take care of your pets, or do you need to make financial arrangements upfront or arrange reimbursement to the selected person afterward?
How do you want your money and property divided at your death?
When dividing your money and property, consider what is in each person's best interests. You do not have to give the money and property to your loved ones outright; you have options.
If you are concerned about giving a chosen beneficiary access to 100% of the money and property they will inherit, you could decide to stagger distributions over a period of time. For example, the beneficiary could receive 25% at age 25, 50% at age 40, and 25% at age 60. By staggering the distributions in this fashion, your younger beneficiary may be able to use the last portion as a nest egg for retirement.
If you want to incentivize certain behaviors, you can set aside money or property to be distributed when a beneficiary accomplishes certain milestones (i.e., graduates college, stays sober for 180 days, gets their first full-time job). This can be helpful if you are concerned that the inheritance might derail a beneficiary from a productive path. By making the distributions contingent on specific behaviors, you can help ensure they are kept on the right track even after your death.
For some beneficiaries, it may be more appropriate for any distribution to be left within the complete discretion of the named successor trustee. Although this may sound harsh, many types of beneficiaries can be safely provided for using this strategy. If your chosen beneficiary has creditor issues, their creditors can only take the money or property that has been given to the beneficiary. So long as the funds and property remain in the trust, and the trustee is not required to make distributions to the beneficiary, the money can stay out of the hands of the creditors. Additionally, a properly structured trust can prevent the beneficiary’s former spouse from taking the inheritance due to the limited control your beneficiary has over the money. This is not to say that your beneficiary will never receive any benefit from the trust: It just means that the trustee can make sure distributions that are genuinely in the beneficiary's best interest, at the best time, and in the right amount.
We Are Here to Help
We understand that this is a lot to think about, and you may have questions. We are here to help you navigate through the estate planning process. Time is precious, but so is protecting your loved ones. We are here to work with you so that there are as few barriers as possible to planning for your future and so we can help move the process along as steadily as possible.
Treetown Law is here to help you every step of the way. Please contact us today to get started!
