Let’s face it. No one really wants to think about what would happen to their families if they were not around. We love our families and can’t stand the thought of us not being there to take care of them. We hear about others dying or becoming incapacitated, and although we understand the reality of the situation, we just don’t want to think about that happening to us. But we also know that unfortunately, things do happen.
Many people do not realize the serious emotional and financial consequences their death or incapacity can have on their families and loved ones. First and foremost, trying to figure out what a loved one would have wanted in the face of a difficult situation is upsetting enough. It could be a child who has to determine if a parent would have wanted to be kept alive on life support. It could be a sister, sorting through her brother’s belongings trying to find out what he owned, and where it should go. Or it could be a single man, with no one able to access his finances to pay the mortgage or hospital bills after an accident. It could be a little girl whose parents forgot to name a guardian for her.
Second, we’ve all heard about people fighting over estates. We know that where money and assets are involved, some people are willing to throw their family members to the wind and behave badly to get what they want. This can cause deep divides between family members, and make existing family tension, like sibling rivalries, even worse. But this doesn’t just happen after someone passes away, it happens while people are alive too. Most people have heard stories about someone taking over a sick or elderly person’s assets, only to loot everything with little to nothing left for the person or their heirs. Or, there are the stories of people fighting over what a loved one would have wanted in an emergency medical situation, as was the case with Terri Schiavo who made national headlines.
Third, trying to sort out each issue I’ve listed above costs money. Maybe just a few thousand dollars, but the more people disagree, the more expensive it gets. And it can get very, very expensive.
So how do you stop it? How do you make sure this doesn’t happen to you and your family? Thankfully, it’s easy to do. You just have to plan ahead.
When asked about estate planning, many people say that estate planning is all about protecting your assets. While there is some truth to that statement, it’s probably not what you think. What is your most valuable asset? Did you think of your home, your business, your stock portfolio or your retirement account? While those are all valuable assets, your most valuable asset is your family and loved ones. You protect your other assets like your home or business by buying insurance. You protect your investment assets by diversifying and choosing an investment company you can trust. But what about your family and loved ones? This is where estate planning comes in.
An estate plan will save your family from having to make heartbreaking end-of-life decisions, because you already made them yourself. It will state what property you have and where you want it to go, which can go a long way to preventing family fights. An estate plan will ensure that someone is able to handle your finances if you are not able to handle them yourself. It will appoint the best possible guardian for your minor children – someone YOU choose. Most importantly, an estate plan will protect your family when you are unable to do so yourself.
Don’t leave your family unprotected if something were to happen to you. Below are eight ways that planning ahead today will protect your family tomorrow.
8. PLAN HOW FINANCES AND PROPERTY WILL BE CONTROLLED DURING INCAPACITY
Whether it’s writing a check for your mortgage, paying your electrical bill or buying groceries for your family, managing your finances is something you probably do on daily basis. But what if you’re not able to manage your finances yourself? What will happen to the mortgage, the electrical bill or the groceries that feed your family? Even if you are not able to do so yourself, those bills and expenses must somehow be paid. If you fail to plan for how your finances will be handled during incapacity, the only option for your family is to go to court and get a court order appointing someone as your conservator who will be able to handle your finances. Your family can expect to spend between $3,000 – $5,000 just to get the court order. In addition, it could take months to get the court order, all while your bills are piling up. You do not want your family to have to go through the expensive, time consuming and emotionally difficult process of a conservatorship.
The better route is to plan for how your finances and property will be controlled during incapacity by creating a Financial Power of Attorney. A Financial Power of Attorney allows you to name an agent who can handle your finances while you are incapacitated. An agent under a Financial Power of Attorney can pay your mortgage, pay your electrical bill, and even pay for the groceries your family needs. Your family won’t have to spend time or money trying to get a court order because there is already an agent that you picked (not the court) who has the power to handle your finances.
7. CONTROL ATTORNEYS’ FEES AND MINIMIZE POTENTIAL PROBATE PROBLEMS
Many people don’t realize that failing to adopt an estate plan can result in your family having to spend thousands of dollars and hours in court to sort out your estate. Typically, when a person dies, a probate proceeding is initiated to handle the deceased’s estate. An informal probate of an uncontested estate may cost around $2,000 – $2,500 and last six to eight months. An informal probate is typically used when the deceased left a Will and no one contests the validity of the Will. An informal probate may also be used if the deceased did not leave a Will, but all of the heirs agree on how the property should be distributed and who should be the personal representative. A formal probate is required when there is a contested estate, meaning either the deceased left a Will but there are challenges to the validity of the Will, or when the deceased left no Will at all and the heirs disagree over how the property should be distributed. A formal probate can cost tens if not hundreds of thousands of dollars, since formal probate is litigation which can include hearings, depositions, motions, discovery and a trial, just like any other Superior Court litigation. Formal probate usually takes much longer than informal probate. If trial is necessary, a formal probate could last one to two years or more.
The best way to control attorneys’ fees and minimize potential probate problems is to create an estate plan. Failing to plan will likely increase the amount of money your family has to spend on attorneys’ fees, especially if family members disagree about how your estate is to be divided. Since a valid Will typically triggers an informal probate, the amount of money your loved ones will have to spend to sort out your estate will be significantly reduced. In addition, your loved ones will likely complete the probate process in much less time than a formal probate would take. Moreover, having an estate plan will help maintain family harmony and reduce family infighting by making your wishes clear at the outset.
6. GET ORGANIZED TODAY TO PREVENT A MESS TOMORROW
Another important step to protecting your family is to locate all of your assets and keep a written list in a safe place. You should list all of your bank accounts, the name of the bank and the account number. Include all insurance policies and retirement accounts. Also, if you own any real estate you should write down the address of each piece of real estate or keep a copy of the deed with your list of assets. You don’t want your family trying to figure out if you had an insurance policy or a bank account and where to find them. If your family doesn’t know what you have and where to find it, there is no guarantee that your loved ones will ever find all of your assets. Get organized today to save your family from unnecessary stress and expense during a difficult time.
In addition, having an estate plan is great, but some people tend to be very secretive about it. This is a bad idea. If a person has an estate plan but doesn’t tell anyone about it or where the documents are located, how can they expect their wishes to be followed? We often get phone calls from people who recently lost a loved one and have no idea whether their loved one had an estate plan or where to even start looking for one. If the person had an estate plan, maybe their family will find it, maybe they won’t. The only guarantee in that situation is that the family will have to spend time and money during a difficult time sorting out the estate. An estate plan is not like a deed and does not have to be recorded. As such, there is no central database for estate plans. The only way you can be sure that your family knows of your estate plan and knows where to find it is if you tell them! Plan to keep all your estate planning documents in one location, like a binder. You should also consider giving your loved ones copies of your estate planning documents. When we prepare your estate plan, we can create CDs with copies of your estate planning documents to give to your loved ones.
5. ADDRESS HEALTHCARE DECISIONS
A big step to protecting your family is thinking about who you would want to make healthcare decisions for you if you are unable to make those decisions yourself. You should also think about what kind of medical actions should be taken. Failure to do so may result in the same situation Terri Schaivo’s family found themselves in a few years ago. Terri Schaivo was a 26 year old woman who suddenly went into cardiac arrest and collapsed at her home. The doctors said that Terri was in a persistent vegetative state and would not recover. Terri’s husband was appointed as her guardian and consequently was able to make decisions about Terri’s medical care. Terri’s husband’s decision to let Terri go by removing her feeding tube sparked a massive court fight with Terri’s parents that brought national publicity. Terri’s parents wanted to keep her alive in a vegetative state, where Terri’s husband wanted to remove the feeding tube and let Terri pass away. Terri’s parent’s argued that Terri was Roman Catholic and did not believe in euthanasia. Terri’s husband argued that Terri would not have wanted to be kept alive on a machine when her chance for recovery was miniscule. For years Terri’s husband and parents fought in court over what they thought Terri would have wanted. The judge ultimately sided with Terri’s husband and allowed the feeding tube to be removed.
Terri’s situation could have easily been avoided with a Healthcare Power of Attorney and Living Will. If Terri had a Healthcare Power of Attorney, her husband and parents would not have fought over who should be making Terri’s medical decisions. Instead, Terri herself would have named the agent she wanted to make those decisions. Without a Healthcare Power of Attorney, it was left to the court to appoint someone to make Terri’s healthcare decisions. Similarly, had Terri made a Living Will, her husband and parents would not have fought over what they believed Terri’s wishes would have been regarding the end of her life. Without a Living Will, no one really knew what Terri would have wanted. Instead, it was left up to a judge to decide.
When you plan for healthcare decision making, it is critical that you create a Healthcare Power of Attorney and Living Will to ensure that your healthcare wishes are known and followed. Without them, your family could spend significant time and money arguing over life prolonging procedures and who should make your medical decisions. They may end up in court, requiring a court to order who can make your medical decisions. Your family can expect to spend between $3,000 – $5,000 just to get the court order. While they are arguing, the hospital bills will continue to pile up. There is no need for expensive and time consuming court battles when your Healthcare Power of Attorney and Living Will can speak for you when you are unable to do so yourself.
4. UPDATE BENEFICIARY DESIGNATIONS
When you purchased life insurance or filled out the enrollment form for your retirement account, you were asked to designate a beneficiary who would receive the funds upon your death. Assets like life insurance and retirement accounts are not typically governed by your estate plan. Instead, these types of assets will pass according to the beneficiary designation on the policy or account. Both life insurance and retirement accounts are contractual relationships between the policy or account owner, the named beneficiaries, and the insurance company or account custodian. So, when the owner dies, the funds must be paid according to the contract, regardless of what the owner’s will or trust says.
Failing to update your beneficiary designations can have significant negative consequences for your family. Often, people name their spouse as the beneficiary. This can turn into a big problem if you get a divorce and forget to update your beneficiary designation. While you might have wanted the proceeds from your life insurance to go to your children, if you fail to update your beneficiary designation those proceeds will end up going to your ex-spouse, not your children. As a result, it’s always a good idea to regularly review your beneficiary designations so you can make updates when appropriate.
3. PLAN FOR MINOR CHILDREN
If you have minor children, the primary goal for your estate plan is probably to protect your minor children and ensure that they are well taken care of if you are not able to do so yourself. Estate planning for people with minor children is absolutely critical as a Will is the only place where you can name a guardian for your minor children. A guardian is responsible for raising and caring for your minor child. A guardian usually has the same powers and responsibilities of a parent with regards to the minor child’s education, support and care. A guardian may also make healthcare decisions for the child. In your Will you can also appoint a conservator to manage the finances of a minor child. The conservator can be the same person you chose to be guardian, or it can be someone different. The conservator is responsible for collecting and managing the assets belonging to the minor child and using the assets for the child’s education, support and care. By planning now for your minor children’s care you will have the peace of mind knowing that your children will be well taken care of, even if you are unable to do so yourself.
2. PLAN TO MAINTAIN FAMILY HARMONY
A critical part of protecting your family is taking steps to preserve family harmony. You don’t want your family to argue over your assets and possessions after you’re gone. Family infighting about who gets what can be the cause of major family rifts, and make existing tensions even worse. This can happen to families that had previously gotten along, and can certainly be an issue for families that have existing intra-family disputes. Fighting over your estate will end up costing everyone money, including those people who you wanted to receive your assets.
Creating an estate plan can go a long way to preserving family harmony. However, before making your estate plan, give some thought about how your choices will affect your family members after you’re gone. For example, you will appoint a personal representative in your Will who is responsible for administering your estate and distributing your assets. If you appoint one sibling as personal representative in your Will, will it anger your other sibling? Or, will one child be upset if you leave a specific item of jewelry to another child? Could your plan for dividing up your assets cause problems between your children? A well thought out estate plan should strive to maintain family harmony, not cause family conflict.
To maintain family harmony, the first step is to create an estate plan. The second is to talk to your loved ones about the choices you’ve made. It is far better for your loved ones to hear this information from you, not your estate planning documents after you’re gone. Having these discussions now can not only ensure that you name people who are willing serve in the positions you’ve chosen (personal representative, guardian, healthcare agent, etc.), but will also give you the opportunity to discuss and explain your choices to your loved ones, hopefully preventing any issues in the future.
1. STOP PROCRASTINATING AND PROTECT YOUR FAMILY NOW
Estate planning is an unselfish act – it’s not about you. Rather, it’s about how you can ensure that your family is well taken care of when you are no longer able to do so yourself. However, many people know they need an estate plan but never get around to doing it. For example, nearly 2/3 of Americans don’t have a Will. Less than 1/3 of Americans have a Living Will, stating their views on end-of-life medical procedures. Less than 1/3 of Americans have a Power of Attorney for financial or healthcare decisions. Having these documents today is critical to protecting your family tomorrow.
Procrastination is probably the number one reason people don’t have an estate plan. Unfortunately, many of the procrastinators will continue to procrastinate until ultimately they die or become incapacitated without protecting their family. That’s ok if you don’t care about the problems and expense your family will suffer if you die or become incapacitated without an estate plan. However, since you’re reading this article, you know that you need to take steps now to protect your family.
Why You Should Hire Wills & Trusts Attorneys Richard Keyt & Richard C. Keyt to Prepare Your Estate Plan
You know you need an estate plan and are probably wondering how you’re going to get it done. When considering different options for preparing an estate plan, the two main things most people look for are cost and competence. If these things are important to you, you’re in the right place. At KEYTLaw we are Arizona licensed attorneys committed to providing low cost estate plans designed to protect your family.
We know that while cost is important to you, competent and quality service is too. Fortunately, we are attorneys committed to helping people protect their families. Unlike the unlicensed and uninsured document preparers you see all over the internet, we are Arizona licensed and insured attorneys with significant estate planning experience. Don’t be fooled by the fancy advertisements you see for the document preparers. Read the fine print. Information on document preparer sites is typically “not guaranteed to be correct, complete or up-to date.” Even worse, every document preparer has a disclaimer that their services are “not a substitute for the advice of an attorney” – probably for good reason since in many instances they don’t even know the law! We’ve know of countless horror stories about people buying estate planning documents from online document preparers that end up disinheriting children, giving assets to an ex-spouse, or giving an agent under a Power of Attorney considerably more authority than anticipated (how about giving unlimited access to someone’s medical records for life with a Financial Power of Attorney!). Further demonstrating their ignorance of the law, many of the estate plan services offered by document preparers boast a “Fill-In-The-Blank Will Good In All 50 States”. If you see this, run the other way! Since the laws of all 50 states are different when it comes to estate planning, there is no way a single form will can be legally valid in all 50 states. Remember, you won’t find out how your online document preparer documents work. Your surviving family will learn your documents don’t work to their detriment.
Our Two Estate Plans
Our two estate plans described in detail below give you the option to pick the plan that is best for you. Our estate plans are:
- Silver Estate Plan: $1,997 for a single person and $2,497 for a couple. This plan does not include a revocable living trust. To purchase the Silver estate plan complete our Silver Estate Plan questionnaire.
- Gold Estate Plan: $2,997 for a single person and $3,497 for a couple. This plan includes a revocable living trust that provides that the assets in your trust pass automatically on your death (or on the death of both spouses if you are married) to an irrevocable beneficiary controlled asset protected trust created for each of your heirs and their descendants. Your heirs inherited assets in their trusts will be protected for life from their creditors, ex-spouses and bankruptcy courts. Each heir's trust is also a "dynasty trust" that creates a trust for your heirs children on the heir's death. See "A Smart Option for Transferring Wealth Through Generations: The Dynasty Trust." If you bought our Gold LLC you get a $500 discount off the price of this estate plan. To purchase the Gold estate plan complete our Gold Estate Plan questionnaire.