Should You Talk with Loved Ones about Your Estate Plan?

We think of family time as gatherings for holidays and celebrating joyful occasions. However, there are times when the business side of life needs to be addressed. The best time to share your estate plan information with the family is when you are well, mentally and physically, says the article “Financial Focus: Consider family meeting to discuss estate plans” from Vail Daily.

What should your conversation include?

What are your wishes for your estate plan? Do you hope to leave an inheritance for family members, support a family member in need, or create a legacy with a charitable organization? The family meeting is the time to clarify your thoughts with loved ones, especially if there are concerns within the family, such as a special needs member or economic disparities between siblings.

Be prepared for surprises. Your millennial children may be more concerned about you having a secure retirement than an inheritance.

If you have your estate planning documents in order, this is a time to discuss them. If you do not, make an appointment to meet with an experienced estate planning attorney to create a comprehensive plan. Your documents may include a will, a trust, financial power of attorney, health care power of attorney and end-of-life documents. Give your family members a general idea of your wishes, especially for end-of-life matters. This relieves them from having to guess what you would have wanted in times of incapacity or upon your death.

Talk about the roles you wish them to play. You will need to name an executor to administer your estate. They should be asked to take on this role before the time comes. You will also need a trustee and a successor trustee for any trusts. Choosing the right person for these roles involves acknowledging who is more capable—just because one sibling is older does not mean they are the best candidate to serve as executor.

For some families, the best setting for a family meeting is their estate planning attorney’s office. It is a neutral setting and people are less likely to fall into old behavior patterns (including spats) when they are in a professional office.

Let the family know this is not the final discussion about your estate plan. Encourage questions and, if necessary, offer to meet again. If the initial groundwork is set, you will have begun establishing a legacy for yourself and your family.

Reference: Vail Daily (Jan. 25, 2024) “Financial Focus: Consider family meeting to discuss estate plans”

What are Five Keys to Estate Planning?

If your family has to sort out your affairs while also dealing with the emotional fallout from losing you, they will soon realize the importance of having an estate plan, whether you are wealthy or not. They’ll also feel the pain of your failing to create one for them.

CNBC’s recent article entitled “5 key things to know when you create a will and make other end-of-life plans” explains that your estate plan spells out whom you want to make decisions and who will inherit what you own. “Estate” refers to possessions and other assets. With that in mind, here are five key things to know if you start thinking about how you’d craft an estate plan.

A will may not cover all your bases. A will is a core component of an estate plan. A will states whom you want to have your assets and whom you want as a guardian for minor children. Without a will in place when you die, a judge will decide who gets what or who is appointed guardian.
Use care when naming an executor. When you create a will, you name an executor to carry out your wishes and handle your estate. This includes liquidating or closing accounts, ensuring your assets go to the proper beneficiaries and paying any liabilities. An estate plan should also include other end-of-life documents, like a living will that details the health care you want and don’t want if you become unable to communicate those desires yourself. You also can sign a power of attorney to an agent to make decisions on your behalf if you become incapacitated.
Some assets get a step-up in basis. If you have assets, such as the family home, and are thinking about giving them to your children while you’re alive, it might make more sense to wait. When these assets are sold, any increase from the so-called cost basis (the value when the asset was acquired), and the sale price is subject to capital gains taxes. However, at your death, your heirs who inherit receive a “step-up in basis.” This means that the market value of the asset at your death becomes the cost basis for the heir. As a result, any appreciation prior to that is untaxed. Therefore, when the heir sells the asset, any gains (or losses) are based on the new cost basis. In comparison, if you were to gift such appreciated assets to heirs before your death, they’d assume your original cost basis — which could translate into a large tax bill when the assets are sold.
You may want to consider a trust. If you want your children to receive money but don’t want to give a young adult or one with poor money management total access to a sudden windfall, consider creating a trust to be the beneficiary of a particular asset. A trust holds assets on behalf of your beneficiary. The assets are left to the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents. Ask an experienced estate planning attorney to help you with this.
You’ll need to review your estate plan. When you have a major life change, like the birth of a child or divorce, you need to review your estate plan. If you move to a new state, check to see if you need to update any part of your plan, so it follows that state’s laws.

Reference: CNBC (March 19, 2023) “5 key things to know when you create a will and make other end-of-life plans”

Can a Dementia Patient Sign Legal Documents?

Once a diagnosis of dementia has been received, families need to immediately begin advance care planning, as explained in a recent article titled “Can Someone With Dementia Sign Legal Documents” from Health News. Depending on their medical condition, some patients with dementia, particularly in early stages, may be capable of making their own decisions regarding legal decisions. However, discussions must begin early, so the person can be involved and understand the planning process.

When family members don’t know the wishes of their loved ones, they are more likely to experience distress and difficulties in making decisions. Families report feelings of guilt, self-doubt and stress while making advance care decisions with no input from their loved ones.

Laws concerning advance care vary from state to state. An elder law attorney can help older adults interpret state laws, plan how their wishes will be carried out and understand financial options.

Advance care planning focuses on both long-term care and planning for funeral arrangements. These documents typically include a durable power of attorney for healthcare, a living will and Do-Not Resuscitate orders, often called a DNR. Depending on state law, there may also be a MOLST document, short for Medical Orders for Life-Sustaining Treatment.

The durable power of attorney for healthcare names another person who can serve as a proxy for the person with dementia, if and when the person is not able to make informed healthcare decisions for themselves.

A living will states a person’s wishes for end-of-life treatment. This documents their views about specific medical procedures including but not limited to dialysis, tube feeding or blood transfusions. If the person should become unconscious, then families may make treatment decisions based on what their loved one wanted.

A Do-Not-Resuscitate order is placed in a patient’s medical chart if the person does not want to receive CPR (cardiopulmonary resuscitation) if their heart stops or breathing ceases. This must be signed by a doctor before it is placed in the chart.

Planning for a funeral is a difficult task. However, it will alleviate stress and possible guilt in the future. People with dementia can tell their loved ones in advance what they want regarding a funeral or memorial service, burial, or cremation. If any arrangements are already in place, such as the purchase of a burial plot, providing details to family members will make it easier to manage.

Advance care planning can be a sensitive topic but seeking legal advice early on is useful so the family can focus on making sure their loved one has the care they want. Involving the person with dementia in the process is respectful. An elder lawyer attorney will be able to guide the family to ensure planning is done properly.

Reference: Health News (Jan. 11, 2023) “Can Someone With Dementia Sign Legal Documents”

Estate Planning Basics You Need to Know

The key reason for estate planning is to create a plan directing where your assets will go after you die. The ultimate goal is for wealth and real property to be given to the people or organizations you wish, while minimizing taxes, so beneficiaries can keep more of your wealth. However, good estate planning also reduces family arguments, protects minor children and provides a roadmap for end-of-life decisions, says the article “What is estate planning?” from Bankrate.

Whenever you’ve opened a checking and savings account, retirement account or purchased life insurance, you’ve been asked to provide the name of a beneficiary for the account. This person (or persons) will receive these assets directly upon your passing. You can have multiple beneficiaries, but you should always have contingent beneficiaries, in case something happens to your primary beneficiaries. Named beneficiaries always supersede any declarations in your will, so you want to make sure any account that permits a beneficiary has at least one and update them as you go through the inevitable changes of life.

A last will and testament is a key document in your estate plan. It directs the distribution of assets that are not distributed through otherwise designated beneficiaries. Property you own jointly, typically but not always with a spouse, passes to the surviving owner(s). An executor you name in your will is appointed by the court to take care of carrying out your instructions in the will. Choose the executor carefully—he or she will have a lot to take care of, including the probate of your will.

Probate is the process of having a court review your estate plan and approve it. It can be challenging and depending upon where you live and how complicated your estate is, could take six months to two years to complete. It can also be expensive, with court fees determined by the size of the estate.

Many people use trusts to minimize how much of their estate goes through probate and to minimize estate taxes. Assets that are distributed through trusts are also private, unlike probate documents, which become public documents and can be seen by anyone from nosy relatives to salespeople to thieves and scammers.

Trusts can be complex, but they don’t have to be. Trusts can also offer a much greater level of control over how assets are distributed. For instance, a spendthrift trust is used when an heir is not good with handling money. A trustee distributes assets, and a timeframe or specific requirements can be set before any funds are distributed.

Living wills are also part of an estate plan. These are documents used to give another person the ability to make decisions on your behalf, if you become incapacitated or if decisions need to be made concerning end-of-life care.

An estate plan can help prevent family fights over who gets what. Arguments over sentimental items, or someone wanting to make a grab for cash can create fractures that last for generations. A properly prepared estate plan makes your wishes clear, lessening the reasons for squabbles during a difficult period.

Protecting minor children and heirs is another important reason to have a well thought out estate plan. Your last will and testament is used to nominate a guardian for minor children and can also be used to direct who will be in charge of any assets left for the children’s care.

Reference: Bankrate (Aug. 3, 2020) “What is estate planning?”

Estate Planning Blog Articles

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Should You Talk with Loved Ones about Your Estate Plan?

What are Five Keys to Estate Planning?

Can a Dementia Patient Sign Legal Documents?

Estate Planning Basics You Need to Know

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