When you begin to face the inevitable fact that you eventually may become incapacitated, or even die, you start to want to put your affairs in order. When this realization occurs, you will enter into a phase of your life known by the broad term “estate planning”. I say broad term because it is more than just a last will and testament. It means that you may need to create documents known as powers of attorney and medical directives.
It is always amazing to people that I did not have any estate planning documents until I was 57 years old. People would give me a stunned look and say “But you’re a lawyer! How can you not have a will?” I have heard over the years that many people avoid estate planning because they are freaked out by the possibility of considering their own death. (A friend just shook her head and said: The shoemaker's children always go barefoot, meaning that my heirs would not benefit from my expertise. I know this is an old saying but didn't know why it applied to me. I had great shoes for my loved ones to inherit!!!!!)
I don’t think that was my problem. I knew that at some point I would die. But I was so healthy that it just seemed I had a lot of time. I also knew that if I died without a will, the statute of intestacy would end up giving my assets to my mother if she was alive at the time of my death. If my mother predeceased me, my assets would go to my siblings in equal shares. And I was way too healthy and maybe too confident to even ponder the need for powers of attorney and medical directives in the case that I should be incapacitated.
Then I entered the period that I now refer to as the descent into the abyss. This period started in late 2012. I suddenly knew very clearly what it was like to be a mere mortal. I knew what it was like to catch a glimpse of becoming incapacitated, and needing someone to help me with making financial and medical decisions. It was not a pleasant thought and I realized that I needed someone I could trust in that capacity. I also began to understand that I wanted to be able to control who my assets went to with a lot of detail – not only the primary beneficiaries but the contingent beneficiaries. The statutes of intestacy are just so cut and dried and simple. I wanted to provide for a number of alternatives. So I engaged a lawyer and I now have a folder of estate documents plus designations of beneficiaries.
Let’s talk about incapacitation first. You probably have heard the term “power of attorney”. What does a power of attorney do? In simplistic terms, it gives someone the ability to act for you. There are different types of powers of attorney. The ones that I am familiar with are a durable power of attorney and a durable springing power of attorney.
You should consult with your attorney to determine that you have the type of power attorney that fits your circumstances. A very simple explanation as I understand it, is that a durable power of attorney is in effect when you are cognizant as well as when you are incapacitated. Why would you want to have a power of attorney when you are still cognizant? You may just be too preoccupied by your health issues, and need a friend or relative to take care of your finances because they have a talent for financial execution and planning.
A springing power of attorney differs because it only takes effect after you’re incapacitated. As you can probably figure out on your own, you need to have a very trusted relative or friend hold your power of attorney, someone you can trust. If you have a springing power of attorney, you need to make sure that the document spells out how to establish that you are incapacitated.
Why do you need to go to all this trouble? Well, if you become incapacitated, there will be a lot of work in court to make sure there is someone appointed to take care of your affairs. Not that you should not trust the courts, but it is a time consuming process. Plus, you won’t have a say at that point as to who the person is who has your financial interests in hand because you are incapacitated. So do yourself a favor and make this decision while you have the legal capacity to do so.
You also need to have a medical directive (which I believe I have also heard referred to as a living will). Basically this is a document that allows someone to make medical decisions for you when you are incapacitated, to include whether or not the doctors should put you on life support if you are terminally ill. Again, you need to make sure that the person who is granted powers by way of your medical directive is someone you can trust, and you need to make sure the document defines how to establish that you are incapacitated.
If you have children or are planning to have children, you need to make sure to plan for who will take care of them if and your spouse should die. You can either do this in your will, or you can have a separate document with guardianship designations. Regardless of which mechanism you choose, you need to give careful thought to the choice of guardian. It should be someone who shares your views on raising children, is good with financial matters, and probably the most important, is willing to raise your child or children. It is a good idea to have some contingent guardians in the event that the person you choose predeceases you.
Then there is the last will and testament, the highlight of the estate planning process. This document establishes who gets all your assets that you leave behind, because as a movie title once said: “You Can’t Take It With You”. (Nor do you need to take it with you. Heaven, unlike Mar-a-Lago, does not require an entrance fee.) The will drafting process actually makes you think through all the property you have, and you also have a great inventory of your assets for budget planning purposes.
If like me, your many of your primary beneficiaries are your peers, and they might actually predecease you. Rather than having to write a new will should that happen, you can designate one or more contingent beneficiaries for each primary beneficiary. For example, if you give property to a sibling, then if he or she dies, you can use Per Stirpes language in your will to make sure that sibling’s share goes to his off-spring. If a sibling dies without off-spring, you can designate other people or institutions (church, schools, charities, etc.) for his or her share to go to. Your will can also include guidance about your burial.
I am not an estate planning attorney, but I know there are a lot of options depending on how you want to distribute your estate, to include setting up trusts. I would recommend finding an attorney who specializes in estate planning if you are in the market for a will and for the other directives/designations previously discussed.
You can also leave behind a letter of intent. This letter discusses particular items of personal property that might have a sentimental value or other significance to a friend or relative. Your letter will specify the disposition of each special piece of property.
Finally, do not just assume that if you have a will, the banking institutions, financial institutions and other institutions who hold your assets will follow the provisions of your will. In some instances, the institution may follow the statue of intestacy in your state. In fact, some of those statues may even include your estate in the order of intestacy, but it is usually not at the top of the list. So you need to investigate the policy of each institution and determine if you need to file a designation of beneficiary.
Also, I learned the hard way that some institutions do not accept some legal terms that are standard in wills. For example, the Federal Thrift Savings Plan found my designation to be invalid because I used the term “Per Stirpes” in conjunction with one of my beneficiaries. (For some reason, it took the TSP three years to tell me this!) I was stunned to learn that this was not acceptable for the TSP, and nowhere on their website could I find an instruction not to use this term. But I had an official notice from them, so I had no choice. I changed the form to have my assets go to my estate. At the same time, I found that the Federal Employee Group Life Insurance had the same policy, so I ended up updating my designation for this institution as well.
A warning on designating your estate as a beneficiary. I had one institution that would not allow me to do a form designating my estate as a beneficiary. So work with your attorney and the institution to find out what is acceptable for that particular institution. (It seems to me that there should be some standard practices among financial institutions regarding designations, but I guess that would make it too easy).
The bottom line is that you want to have a say in your affairs before the unthinkable happens. You can make that happen with a little forethought and care. Trust me, potential heirs who survive you will appreciate not having to figure out what Mom, Dad, Aunt Jan or Cousin Marvin might want. I mean seriously, wouldn’t you rather have your survivors with teary-eyed smiles telling stories about what a great woman Aunt Velma was? Or would you rather have them swearing under their breath because they don’t have a freaking clue who should get the collection of tarnished teaspoons from all 50 States Puerto Rico and Guam?
Melanie discovered that she had heart failure in 2013. She spent the next 7 years learning how to live with the condition, and how to achieve balance and personal growth. Then in October 2020, she received a heart transplant. This blog is about her journey of the heart.