The end of the year is just around the corner! That means most of us are focused on spending the holiday season with friends and family and looking forward to what the New Year may hold.
If you’re planning on celebrating the holiday season with friends and family, you may notice some changes. Your parents might seem older and more fragile. Maybe there are new spouses, in-laws, children, or grandchildren. And, sadly, some beloved family members may not be with you anymore. These changes can be a reminder that your estate plan should also change to keep up with your life and family. While the topic of estate planning may not typically at the top of our list of talking points during this time, the holidays are actually a great time to start the conversation with your family.
The holidays can provide an opportunity to start conversations with your relatives about the need to plan for the future. All too often we have clients come to our office who did not take advantage of the opportunity to have these discussions and were subsequently damaged severely financially and emotionally for their lack of planning. Damage that could have been easily avoided with a little bit of proper preparation. Please consider starting the estate planning conversation now with those you love to avoid the pitfalls that could otherwise occur. We are here to help!
Here are three important questions you can ask yourself or your loved ones to get the conversation rolling:
- What happens if you cannot take care of yourself or your personal business and finances?
Powers of Attorney are a crucial estate planning document and are a critical step in planning for incapacity. A power of attorney allows a person you appoint the written authorization and power to act on your behalf in business, legal, financial, and medical matters. This is usually a trusted family member. If the right power of attorney is put in place, then once incapacitated, the agent (person appointed under the power of attorney) can step in and take care of the principal’s legal and financial affairs. Without the right power of attorney – or any at all – the incapacitated individual’s family would need to go through the justice system to have a guardian or conservator appointed to represent them.
Living Wills and advanced directives are another critical estate planning document and are designed to outline a person’s wishes and preferences with regards to medical treatments and interventions. These instruments can outline treatment preferences and designate a surrogate decision-maker in the event that a person should become unable to make an informed medical decision on their own behalf. By having previously documented personal wishes and preferences, the family’s and physicians’ immense decision-making burden is lightened. At the same time, patient autonomy and dignity are preserved by tailoring medical care based on one’s own choices regardless of mental or physical capacity.
Advance directives aren’t just for older adults. Unexpected end-of-life situations can happen at any age, so it’s important for all adults to prepare these documents. By planning ahead, you can get the medical care you want, avoid unnecessary suffering and relieve caregivers of decision-making burdens during moments of crisis or grief. You also help reduce confusion or disagreement about the choices you would want people to make on your behalf.
- Do you have a will or need to update it?
One of the most frequent things I hear from potential clients is “I don’t have much so I don’t need a will.” If you do not have substantial assets, then you may be wondering if this is true. Of course, the answer is unique to you and your family situation. In some cases, where someone qualifies as a small estate and is survived by a spouse or children, then a will is only necessary if you want to change where your assets go under the default law. But in cases where a full probate is required, unintended consequences may arise where Kentucky statutes dictate how your assets are divided and distributed, not your own wishes via a will.
One of the most common misconceptions about Kentucky law is how your property is distributed after your death. Many people assume that your surviving spouse will inherit everything. But while a logical assumption, it is simply not the case in Kentucky – or many states actually. Your surviving spouse is only entitled to half of your assets; the other half go to your heirs-at-law according to Kentucky’s intestate statutes. To determine your heirs-at-law, we follow your family tree – first your children, then grandchildren, then up to your parents, then siblings, and so on. In situations where your spouse is your children’s’ other parent, then not creating a will may not result in a terrible situation for them. Your surviving spouse and children will still split your estate legally, but they’re likely to do so amicably and in a way that won’t burden their surviving parent.
But what about second marriages with children from the first marriage? In the past few months, I’ve administered several probates with the following scenario: the deceased had children from a prior marriage, was remarried at his death, the deceased solely owned the home he and his wife lived in, and the deceased did not leave a will. Now, according to Kentucky law, the surviving spouse and the deceased’s children from a prior marriage co-own the home. In one case, we were able to negotiate with the children to buy out their interest; but in others, the children have not been willing to sell to the surviving spouse. Had the deceased left a will, this situation could have been avoided and the surviving spouse better protected.
If you already have a will, look for changes such as a divorce, remarriage, birth or adoption of children, to determine if you need to update your will.
- Who are the beneficiaries on your accounts and life insurance policies?
IRS, 401(k), life insurance policies, and even some bank accounts pass directly to the beneficiaries you have named and not through your will. Find out who your current beneficiaries are and update them if you need to. As with your will, look for changes such as a divorce, remarriage, birth or adoption of children, to determine if these need to be updated. Keep in mind that a divorce will not affect your beneficiary designations, and if you keep a former spouse listed, that account will pass to them on your death.
These are just a handful of scenarios that show how vital a well thought out and written estate plan can be. Take the time to talk to your family. A good estate plan, plus good, ongoing communication with your family, helps things go as smoothly as possible during difficult times. ELPO Law is committed to help you protect your wishes and family in developing a plan that works best for you. Contact me to get started with the process.