Why Gen Z Needs to Pay Attention to Estate Planning

Gen Zers may still be young, ages 17–27. However, this doesn’t mean some don’t have ownership and assets to protect with estate planning. Medical emergencies and car accidents happen to people of all ages. An estate plan protects the person as much as their property. The sooner you have a plan in place, says a recent article from yahoo! finance, “Why Gen Z Should Be Thinking About Estate Planning,” the better.

For many young adults, estate planning is like buying rental insurance. You don’t expect to deal with a fire or have your home broken into. However, having insurance means if such events happen, your possessions will be insured, and you’ll be made whole.

Gen Zers who are signed up for employee benefits like 401(k)s or retirement plans already have assets to be passed to another person if they should die young. These accounts typically feature beneficiary designations, so they should be sure to have those completed properly. Many Gen Zers name their parents or siblings as their beneficiaries at this point in their lives. The future may bring new relationships, marriage and children, so they must update these beneficiaries throughout life.

While practically everyone using a cell phone or computer has digital assets, Gen Zers are likely to have more digital currency and crypto in digital wallets. They may have intellectual property on platforms, including TikTok or YouTube. These assets need to be protected in a digital estate plan. The information required to access these accounts should not be in a last will and testament. However, they should be documented so the assets are not lost.

Other digital assets don’t have any value. Users don’t have the right to transfer the assets, like social media accounts or music files. Having a conversation with a digitally savvy person about these assets and providing them with login and account information is an integral part of an estate plan.

Gen Zers do need a will. Without a will, the estate will get tangled up in probate, a court process where the laws of your state determine who inherits any possessions. This takes time and court fees can add up quickly.

Having a will created with an experienced estate planning attorney encourages a review of assets, providing a perspective of finances that one might not otherwise have early in their career.

Estate planning also includes planning who will make medical and financial decisions in case of incapacity. These documents, including a Power of Attorney, Healthcare Proxy, Living Will and other documents, are state-specific. Once someone becomes a legal adult, neither parents nor siblings can be involved with medical care or handle finances, unless these documents are created and executed. Trusted friends can also take on these roles.

A young adult should make an appointment with a local estate planning attorney. They’ll provide guidance through the process. Regardless of age and stage, having a plan creates peace of mind for young adults and their family members.

Reference: yahoo! finance (Sept. 17, 2024) “Why Gen Z Should Be Thinking About Estate Planning”

Your College Student Needs a Power of Attorney for Finance and Healthcare

Once a child reaches the age of legal majority, they are considered an adult with privacy rights. This means that parents lose access to private information. This can have dire consequences if the student is involved in an accident or gets seriously ill, explains the article “Navigating The Transition To Adulthood: A Legal Guide For Parents” from mondaq. With proactive steps, parents can address these situations before they occur.

Whether or not your insurance covers your child’s healthcare doesn’t matter. Without a Healthcare POA, parents cannot make medical decisions, speak with healthcare providers, or talk with the health insurance company. Parents are strongly urged to have their college-bound student complete a Healthcare Power of Attorney.

If there is no POA and the child is incapacitated, parents will have to go to court to be able to make medical decisions for their child. Hospitals and healthcare providers are extremely strict about following these rules to avoid litigation and fines. No matter how bad the situation is, don’t expect any rules to be bent.

Your adult child should also have a Living Will. This is a document controlling decisions about end-of-life. It only becomes effective when a person is in a state of permanent unconsciousness, like a coma, or if they are terminally ill. The student uses this document to express their wishes concerning care: do they want to be artificially fed, hydrated, or kept alive by extraordinary means? Do they want to become an organ donor? This document conveys their wishes and can save the family an unimaginable amount of added stress during a trying time.

A Durable Power of Attorney is used to name a person, known as an “agent” or “attorney in fact,” to act on their behalf. The agent can take care of legal and financial matters. This is needed in case of incapacity so the parent or trusted person may deal with financial institutions, colleges, courts and any other company or organization on behalf of the student. Without it, parents cannot access account information or act on the student’s behalf.

Does your student need a will? The estate planning attorney who helps create the documents listed above can help you answer this question. Depending on their situation, if the student owns a car, has a bank account, an inheritance, or sizable cryptocurrency accounts, they may need a will.

The documents mentioned above should also be in place for parents. If parents don’t have a will, Power of Attorney, Healthcare Power of Attorney, Living Will and trusts, if appropriate, their newly minted adult will have a lot to deal with if they should both die unexpectedly. A visit to the estate planning attorney for all generations is a good idea.

Reference: mondaq (June 24, 2024) “Navigating The Transition To Adulthood: A Legal Guide For Parents”

What are the Important Steps in the Estate Planning Process?

Estate planning is about taking charge of your legacy and your life. Despite all good intentions, only one in three Americans has an estate plan, according to a recent article from Kiplinger, “10 Things You Should Know About Estate Planning.”

An estate plan does not prevent death or illness. However, it does protect the family from stress and grief. By creating an estate plan, you provide your loved ones with clarity about what you want to happen to your property upon your death.

Equally importantly, the estate plan explains your wishes if you have a serious medical condition and can’t make decisions or communicate yourself. A financial Power of attorney (POA) names someone to oversee your finances and do tasks like paying bills if you are alive but incapacitated. A healthcare POA names someone to make healthcare decisions on your behalf. A healthcare directive explains your wishes for medical treatment in different situations.

What happens if you don’t have an estate plan? Each state has its own laws for what to do when someone dies or if they become incapacitated. Having an estate plan means you are making those decisions yourself. The court may assign someone to make healthcare and/or financial decisions for you. However, they may not be the person you would have selected or make the decisions you would have chosen.

Beneficiary designations supersede your will. Any account with beneficiary designations will go to the person named on the document, regardless of what your will may say.

Trust funds provide control of assets during life and after death. A trust is a legal entity holding property for someone else’s benefit. The trust can be set up to control exactly how you want your money and property distributed after death.

When you die, the court reviews your will to ensure that it’s been properly prepared and gives your executor the power to perform their tasks. This is called probate and can take time. A good estate plan can take much or all your assets out of your probate estate, speeding up the process of distributing assets faster.

Estate planning includes tax planning. In 2024, the federal exemption is $13.61 million, but 17 states and the District of Columbia levy a state estate tax. Some states also have inheritance taxes. Your estate planning attorney will help you incorporate tax planning into your estate plan.

Don’t neglect your pets. You can express your wishes in an estate plan. However, a pet trust is better. It is enforceable and provides specific information about how you want the pet to be cared for and who you want to care for it.

Digital assets need to be addressed to protect assets and prevent theft. Create an inventory of your accounts, usernames, passwords and name a person who will be your digital executor.

Review your plan every three to five years with an experienced estate planning attorney.

Reference: Kiplinger (Feb. 1, 2024) “10 Things You Should Know About Estate Planning”

Make Power of Attorney Part of Your Estate Plan

At some point, it becomes necessary for aging people to hand over control of their finances. One aspect of estate planning is naming an agent or fiduciary who can take control of finances if you become incapacitated or experience significant cognitive decline, explains the article “Don’t Forget to Build This Into Your Retirement and Estate Plans” from yahoo! finance.

A financial agent makes financial decisions with you or on your behalf. The exact nature depends upon your preference. However, most agents act as co-signatories or solely control your financial accounts. A co-signatory means you and the agent must jointly authorize a financial transaction. In contrast, a sole controller means only the agent can authorize financial transactions to and from your accounts.

This is a type of Power of Attorney in which you authorize another person to act on your behalf in a legal capacity. The purpose is to protect your finances against cognitive decline often accompanying aging. When it’s unnoticed, the individual can continue making financial decisions, and they may not always be correct. Cognitive decline is why seniors are so vulnerable to financial exploitation and fraud.

A study from the University of Southern California found that cognitive decline significantly reduces wealth among households whose financial decision-makers experience these declines.

Putting a Power of Attorney in place before it is needed can prevent many issues. Children or another trusted family member are usually selected to serve as agents. The issue of timing is another concern—the agent should be appointed before irreversible mistakes are made. If control of finances is handed over too early, the elderly parent can be forced to live as a competent adult who needs permission to make routine decisions. However, waiting too long exposes them to financial mistakes.

How should you manage the timing? First, have regular medical checkups with a doctor who can track your mental status over time. Select your agent before issues begin as part of your estate planning. Consider a Springing Power of Attorney, allowing your agent to take charge if a doctor or court declares you unfit. Medical incompetence is a high bar, and financial mistakes can be made long before you meet a doctor’s standard for incapacity.

Another option is speaking with your agent regularly. Ask for their advice and follow it. If you trust them, you can have your estate planning attorney prepare a Power of Attorney form to suit your individual needs. Do you want your agent to manage every aspect of your financial life or focus on day-to-day bill paying? Does your situation require one person to pay bills and another to manage investments?

Cognitive decline impacts many older adults and can expose them to serious financial risk. You can protect yourself from this risk by appointing a trusted agent in a timely manner to manage your legal and financial lives.

Reference: yahoo! finance (July 28, 2023) “Don’t Forget to Build This Into Your Retirement and Estate Plans”

What Does “Power of Attorney” Mean?

A power of attorney is a legal document giving one person—the “agent”—the legal power to make legal, financial, or medical decisions for another person. According to a recent article from Nerd Wallet, “What is a Power of Attorney (POA)? Types, How, When to Use,” the POA lets someone act on your behalf if you are traveling, too sick to act on your own behalf or can’t be present to sign legal documents.

You may name any adult, including your spouse, adult child, sibling, or a trusted friend, to act as your agent under power of attorney. It can be granted to anyone who is a legal adult and of sound mind. Ordinary power of attorney designations dissolve if you become incapacitated. However, durable power of attorney designations remain intact, even upon incapacity.

You can give one person power of attorney or divide the responsibilities among multiple people.

Most people don’t know that power of authority authorizations can be very specific or general, depending on your needs. When having an experienced estate planning attorney draft a power of attorney, review the desired scope of your agent’s authority, when it should take effect and the desired duration.

If you don’t have a power of attorney and become incapacitated, a court can appoint someone to act on your behalf. However, court intervention turns a private matter into a public proceeding, and you cannot know if the appointed conservator will follow your wishes.

There are several types of power of attorney. The durable power of attorney remains intact, even when you are incapacitated. The ordinary power of attorney becomes moot once you are incapacitated. A dual power of attorney gives power to two people and requires both individuals to sign off on any decisions.

A dual power of attorney may be useful if you have two children, for instance, and you’d like them to make joint decisions for you. Regardless of how many powers of attorney you appoint, you should always name successor agents for each power of attorney, in case the primary person is unable or unwilling to serve when needed.

A medical power of attorney, also called a health care proxy, is a type of advance directive giving another person to make all health care decisions for you in accordance with your wishes when you are unable to do so. Health care proxy decisions generally cover any type of medical treatment or procedure to diagnose and treat your health. Make sure the person you grant medical power of attorney to is familiar with your wishes and knows what decisions you would want in treatment or for life—supporting measures.

Reference: Nerd Wallet (May 10, 2023) “What is a Power of Attorney (POA)? Types, How, When to Use”

Can a Power of Attorney Withdraw Money from Bank Account?

A power of attorney, or POA, is a legal document giving another person the legal authority to make financial and legal decisions on your behalf. Known as an agent or attorney-in-fact, you should only name someone to be your POA, if you trust them implicitly and believe they will always manage your affairs with your best interest in mind, according to the recent article titled “Can A Power Of Attorney Transfer Money To Themselves?” from Washington Independent.

There are different types of power of attorney and ethical and legal considerations surrounding the transfer of money. The two main types of POA are general POA and durable POA. A general POA gives the agent broad authority to handle financial and other matters on your behalf, and the power ends if you become incapacitated. A durable POA remains in effect, if you become incapacitated and continues until your death or until it is revoked.

The powers given to an agent vary widely depending on the state laws governing the document, and also vary depending on the specific document. In general, an agent can use the POA to handle a wide range of financial matters, including paying bills, managing investments, buying and selling real property and signing legal documents.

Using non-state specific blank forms downloaded from the web leads almost always leads to complicated (read: costly and time-consuming) problems for an agent. The specific powers granted to the agent need to be spelled out in the document. For example, you may wish for your POA to manage paying household bills, but not to sell the house.

There are also ethical considerations. While the POA gives the agent the authority to transfer money on your behalf, they are fiduciaries and are held to a higher standard of ethics. They must act in your best interest at all times.

Transferring money from your account to the agent’s account for their benefit would be a clear violation and could result in legal consequences, including criminal charges. The transfer could be challenged in court and the agent could be held accountable for any damages.

If you are concerned about a person abusing this role, there are steps to take to minimize the risk.

Chose a trustworthy and reliable person to serve as your agent.
Limit the powers granted by having a customized Power of Attorney drafted by an experienced estate planning attorney. The document could specify that the agent is not permitted to transfer money to themselves or use your funds for their personal benefit.
Monitoring the action of the agent. If you are incapacitated, name a person to monitor the agent and provide them with contact information for your estate planning attorney if there are any questions.

Reference: Washington Independent (Feb. 7, 2023) “Can A Power Of Attorney Transfer Money To Themselves?”

Can We Prevent the Elderly from Being Scammed?

Just as parents guide their children through adulthood and teach them about finances and how to manage their money, adult children of aging parents need to be alert for their parents before they fall victim to those preying on the elderly. It’s become all too common, according to the article “The Best Way to Protect a Parent from Scammers” from Kiplinger.

There are a few common scams seen across the country. One is to call an elderly person and tell them their beloved grandchild has been arrested and cash needs to be sent immediately to get them out of jail. The grandparents are told the child has told the police not to call the parents, so the call is secret. No police department calls grandparents with a demand for cash, but in the stress of the moment, flustered people often comply.

Another is a thief posing as an IRS agent and telling a surviving spouse that their deceased spouse owed thousands in back taxes and penalties. The senior is told to make a payment or risk being arrested. There is also the scammer claiming to be from the DEA and warning the person their Social Security number and credit card were used to rent a car found abandoned near the Mexican border with suitcases stuffed with drugs. The person is told they need to verify their information to clear their record, or they’ll be arrested for drug trafficking. The voice is always very convincing.

Elderly victims are vulnerable for several reasons. One, the generation preceding the boomers was taught to trust others, especially people in positions of authority. As people age, their ability to think clearly when a dramatic and unexpected piece of bad news is easily shaken. Someone who would otherwise never have given out their personal information or sent cash or purchased gift cards becomes overwhelmed and complies with the scammer.

Taking control of a parent’s financial life is a hard step for both the aging parents and the adult children. No one wants to lose their independence and freedom, nor do adult children want to see their parents becoming vulnerable to thieves. However, at a certain point, adult children need to become involved to protect their parents.

A General Durable Power of Attorney (POA) is a legal document giving another person, typically an adult child, the power to act on behalf of another person immediately, once the document has been signed. It may not be effective in stopping a parent from giving money to a scammer, since the parents still have control of their money. fI transactions are done online, the bank may not have an alert set up for questionable transactions.

That said, having a POA in place and alerting the bank to its use will give the financial institution more freedom to be in touch with an adult child about their parent’s accounts, if fraud is suspected.

Guardianship or conservator is another way to address this issue, although it is far more invasive and brings the court system into the life of the person who becomes a “ward” and requires regular reporting. Guardianship is usually sought when the aging parent is incapacitated.

While we often think of trusts as a means of passing wealth to the next generation, they are also useful for protecting people in general and seniors in particular from scammers. When an adult child or other trusted person becomes the trustee, they gain complete control of the assets in the trust. If the aging parent is a trustee, they have control but someone else can step in if necessary. The co-trustee can see any changes in spending habits or unusual activity and take immediate action, without the delay that applying for guardianship would create.

Speak with your estate planning attorney about your unique situation to learn which of these solutions would be appropriate for your loved ones.

Reference: Kiplinger (July 25, 2022) “The Best Way to Protect a Parent from Scammers”

No Will? What Happens Now Can Be a Horror Show

Families who have lived through settling an estate without an estate plan will agree that the title of this article, “Preventing the Horrors of Dying Without a Will,” from Next Avenue, is no exaggeration. When the family is grieving is no time to be fighting, yet the absence of a will and an estate plan leads to this exact situation.

Why do people procrastinate having their wills and estate plans done?

Limited understanding about wealth transfers. People may think they do not have enough assets to require an estate plan. Their home, retirement funds or savings account may not be in the mega-millions, but this is actually more of a reason to have an estate plan.

Fear of mortality. We do not like to talk or think about death. However, talking about what will happen when you die or what may happen if you become incapacitated is very important. Planning so your children or other trusted family member or friends will be able to make decisions on your behalf or care for you alleviates what could otherwise turn into an expensive and emotionally disastrous time.

Perceived lack of benefits. Working with an experienced estate planning attorney who will put your interests first means you will have one less thing to worry about while you are living and towards the end of your life.

Estate planning documents contain the wishes and directives for your legacy and finances after you pass. They answer questions like:

Who should look after your minor children, if both primary caregivers die before the children reach adulthood?
If you become incapacitated, who should handle your financial affairs, who should be in charge of your healthcare and what kind of end-of-life care do you want?
What do you want to happen to your assets after you die? Your estate refers to your financial accounts, personal possessions, retirement funds, pensions and real estate.

Your estate plan includes a will, trusts (if appropriate), a durable financial power of attorney, a health care power of attorney or advanced directive and a living will. The will distributes your property and also names an executor, who is in charge of making sure the directions in the will are carried out.

If you become incapacitated by illness or injury, the POA gives agency to someone else to carry out your wishes while you are living. The living will provides an opportunity to express your wishes regarding end-of-life care.

There are many different reasons to put off having an estate plan, but they all end up in the same place: the potential to create family disruption, unnecessary expenses and stress. Show your family how much you love them, by overcoming your fears and preparing for the next generation. Meet with an estate planning attorney and prepare for the future.

Reference: Next Avenue (March 21, 2022) “Preventing the Horrors of Dying Without a Will”

Who Is the Best Choice for Power of Attorney?

Picking a person to serve as your Power of Attorney is an extremely important part of your estate plan, although it is often treated like an afterthought once the will and trust documents are completed. Naming a POA needs to be given the same serious consideration as creating a will, as discussed in this recent article “Avoid powers of attorney mistakes” from Medical Economics.

Choosing the wrong person to act on your behalf as your Power of Attorney (POA) could lead to a host of unintended consequences, leading to financial disaster. If the same person has been named your POA for healthcare, you and your family could be looking at a double-disaster. What’s more, if the same person is also a beneficiary, the potential for conflict and self-dealing gets even worse.

The Power of Attorney is a fiduciary, meaning they are required to put your interests and the interest of the estate ahead of their own. To select a POA to manage your financial life, it should be someone who you trust will always put your interests first, is good at managing money and has a track record of being responsible. Spouses are typically chosen for POAs, but if your spouse is poor at money management, or if your marriage is new or on shaky ground, it may be better to consider an alternate person.

If the wrong person is named a POA, a self-dealing agent could change beneficiaries, redirect portfolio income to themselves, or completely undo your investment portfolio.

The person you name as a healthcare POA could protect the quality of your life and ensure that your remaining years are spent with good care and in comfort. However, the opposite could also occur. Your healthcare POA is responsible for arranging for your healthcare. If the healthcare POA is a beneficiary, could they hasten your demise by choosing a substandard nursing facility or failing to take you to medical appointments to get their inheritance? It has happened.

Most POAs, both healthcare and financial, are not evil characters like we see in the movies, but often incompetence alone can lead to a negative outcome.

How can you protect yourself? First, know what you are empowering your POAs to do. A boilerplate POA limits your ability to make decisions about who may do what tasks on your behalf. Work with your estate planning attorney to create a POA for your needs. Do you want one person to manage your day-to-day personal finances, while another is in charge of your investment portfolio? Perhaps you want a third person to be in charge of selling your home and distributing your personal possessions, if you have to move into a nursing home.

If someone, a family member, or a spouse, simply presents you with POA documents and demands you sign them, be suspicious. Your POA should be created by you and your estate planning attorney to achieve your wishes for care in case of incapacity.

Different grown children might do better with different tasks. If your trusted, beloved daughter is a nurse, she may be in a better position to manage your healthcare than another sibling. If you have two adult children who work together well and are respected and trusted, you might want to make them co-agents to take care of you.

Your estate planning attorney has seen all kinds of family situations concerning POAs for finances and healthcare. Ask their advice and don’t hesitate to share your concerns. They will be able to help you come up with a solution to protect you, your estate and your family.

Reference: Medical Economics (Feb. 3, 2022) “Avoid powers of attorney mistakes”

What Items Should Not Be Stored in a Safe Deposit Box?

We’re reminded daily about living in a digital world where anything of importance is stored in the cloud. However, if you were thinking about getting rid of your safe deposit box, says the article “9 Things You’ll Regret Keeping in a Safe Deposit Box,” from Kiplinger, think again.

By all means keep your prized possessions like baseball cards in a safe deposit box. Some documents also do belong in a bank vault. However, it’s not the right place for everything.

Even if the bank’s ATMs are open 24/7, access to the safe deposit box is limited to hours when the bank is open. If you need something in an emergency on a weekend, holiday or at night, you’re stuck. The same goes for natural disasters, which seem to be happening more frequently in certain parts of the country. Reduced operations and branch closures happened because of the pandemic and today’s hiring problems might mean a longer wait even during regular business hours at a bank branch.

Here’s a look at what not to put in your safe deposit box:

Cash money. Most banks are very clear: cash should not be kept in a safe deposit box. Read your contract with the bank. The FDIC does not protect cash, unless it’s in a bank account.

Passports. Unless you travel often enough to keep a passport next to your wallet, it may be tempting to put it in the safety deposit box. However, if an emergency arises, or you get a great last minute travel bargain, you won’t have quick access to your passport.

An original will. Keeping copies of your will in a safe deposit box is fine, but not the original. After death, the bank seals the safe deposit box until an executor can prove they have the legal right to access it.

Letters of Intent. A letter of intent, or letter of instruction, is a letter to your family, telling them what your wishes are for your funeral or memorial service and giving details on specific bequests. However, if it’s locked up in a safe deposit box, your final wishes may not see the light of day for months. Keep the letter of intent with your original will. You might also wish to send the letter of intent to anyone who is designated to receive a specific item.

Power of Attorney. Similar to the will, the POA needs to be accessible any time, day, or night. Keep it with your original will and provide copies to anyone who might need it. The same goes for your Advance Directives for Health Care or Living Will. It won’t do you any good to say you don’t want to be kept alive on a heart and lung machine if your agents can’t get to these documents.

Valuables, Jewelry or Collectibles. The FDIC does not insure safe deposit boxes or their contents. There are no federal laws governing safe deposit boxes and no law says the bank has to reimburse you for stolen items. Protect valuables with a supplemental policy or a rider to your homeowner’s insurance policy and keep them at home.

Spare House Keys. How likely are you to be able to get to your house keys even if the bank is open, if your key to the safe deposit box is in your home? Enough said.

Illegal, Dangerous, or Liquid Items. When you opened your safe deposit box, you signed a contract listing what you may and may not keep in a safe deposit box. Firearms, explosive, illegal drugs, and hazardous materials are among the things prohibited from being kept in a safe deposit box. The same goes for less dramatic items: if you have a collection of rare whiskey, keep it at home.

Reference: Kiplinger (Sep. 24, 2021) “9 Things You’ll Regret Keeping in a Safe Deposit Box”

Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

Why Gen Z Needs to Pay Attention to Estate Planning

Your College Student Needs a Power of Attorney for Finance and Healthcare

What are the Important Steps in the Estate Planning Process?

Make Power of Attorney Part of Your Estate Plan

What Does “Power of Attorney” Mean?

Can a Power of Attorney Withdraw Money from Bank Account?

Can We Prevent the Elderly from Being Scammed?

No Will? What Happens Now Can Be a Horror Show

Who Is the Best Choice for Power of Attorney?

What Items Should Not Be Stored in a Safe Deposit Box?

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Why Gen Z Needs to Pay Attention to Estate Planning

Your College Student Needs a Power of Attorney for Finance and Healthcare

What are the Important Steps in the Estate Planning Process?

Make Power of Attorney Part of Your Estate Plan

What Does “Power of Attorney” Mean?

Can a Power of Attorney Withdraw Money from Bank Account?

Can We Prevent the Elderly from Being Scammed?

No Will? What Happens Now Can Be a Horror Show

Who Is the Best Choice for Power of Attorney?

What Items Should Not Be Stored in a Safe Deposit Box?

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