Everyone
needs a will and certain other documents, and nobody should draft these
documents themselves.
Before
you go to a lawyer, however, it pays to have certain discussions with loved
ones and to start asking yourself important questions.
1) Get a lawyer.
I can’t
say that enough.
I have
seen many bad wills in my day, and all of them were drafted without the
assistance of a good lawyer. This is one task that you shouldn’t do yourself.
Estate planning requires knowledge and experience in state law, including
testamentary and real estate law, as well as federal income tax law.
Choose
a lawyer who drafts wills as a large part of his or her practice. Estate
planning is a highly technical area of law, so it’s best to choose a lawyer who
works almost exclusively in this area.
When you
hire a lawyer, you protect yourself against claims of undue influence, fraud,
and incapacity. A good lawyer has practices in place to prove that you were of
sound mind and weren’t making bequests under duress.
2) Don’t be afraid to have difficult
conversations.
Nobody
wants to face his or her mortality, but it must be done.
It’s
important to express your wishes to your loved ones, particularly when it comes
to the guardianship of your children, funeral instructions, and what
end-of-life care you want.
Choose
a time when your family is together and can focus on these topics. Let everyone
know ahead of time that you’ll be discussing your estate plan and end-of-life
wishes.
Be kind
but firm. You are doing a wonderful thing for your loved ones by having these
discussions and making decisions in the right way.
3) Understand which documents you need and
what they’re designed to do.
Once
you understand which document is which, your knowledge will shape the
discussions that you’ll want to have with your doctor, loved ones, religious
adviser, etc.
Every
estate is different, and yours may or may not require a variety of instruments.
These are the documents that everyone needs, however:
Last will and testament
A will
has three main purposes: 1) Appoint an administrator (formerly known as an
executor) to manage your estate, 2) Determine who will inherit your real and
personal property, including your business interests, upon your death, and 3)
Appoint a guardian for any minor children that you may have at the time of your
death.
Springing power of attorney
This
document appoints someone to make legal and financial decisions for you if you
are still alive but become mentally incompetent. It “springs” into effect at
the moment that you become incapacitated, but has no effect before then.
Obviously, your general power of attorney should be an organized, responsible
person who you trust to make decisions on your behalf.
Health care power of attorney
Unlike
the springing power of attorney, a healthcare power of attorney is limited to
health care decisions and does not include the power to make legal or financial
decisions on your behalf. This could be the same person as your regular power
of attorney or could be a different person. Like the springing power of
attorney, it becomes effective once you become incapacitated—and it should of
course also be someone you trust and who understands your wishes.
This
person should be comfortable with your choices—or at least be able to carry out
your wishes without serious moral and ethical dilemmas. For example, if you
wish to refuse a feeding tube as you’re dying, don’t choose a relative who has
religious objections to this decision.
Living will
A
living will comes into play if you are unable to communicate your wishes
regarding end-of-life measures. This document informs health care providers
(and your health care power of attorney) regarding which measures you’d want to
accept or refuse.
Commonly,
you’ll hear people refer to an “advance directive.” That’s a living will that
also appoints your health care power of attorney. Sometimes, these documents
are combined.
This
document should be very specific. Consider these questions, and discuss them
with your loved ones or religious adviser if you wish: If you cannot eat, do
you want a feeding tube? Do you want hydration delivered via an IV? If your
heart stops, do you want to be resuscitated by CPR or a defibrillator? If you
can’t breathe on your own, do you want to be put on a ventilator?
You
will recognize these questions as those that were litigated among the family
members of Karen Quinlan and Terri Schiavo. A living will is designed to
prevent these disputes.
This is
also a good place to specify whether you’re an organ or tissue donor, although
you should also choose this on your driver’s license and tell your family and
doctor.
4) Decide who will care for your children.
In your
will, you’ll name guardians who will care for your minor children. You’ll want
to name a guardian and an alternate in case the first person cannot or will not
take the job.
Many
people fail to discuss this appointment with their family members and with the
people they name as guardians. Don’t skip this step.
You
need to choose people who are reasonably healthy, financially solvent, and who
share your values. This may or may not be your child’s grandparents or aunts
and uncles.
5) Don’t do anything shady with estate
planning.
In a
misguided attempt to avoid taxes or to qualify for government benefits such as
nursing home Medicaid, people sometimes try to hide assets. This is a recipe
for disaster and is usually ineffective and illegal.
A
common ploy: To qualify for Medicaid, an applicant puts real estate into a
relative’s name and agrees with that relative that the applicant still owns the
property even though it’s no longer in his or her name. Then, when the applicant
applies for Medicaid, he appears to be impoverished and qualifies under
Medicaid’s financial eligibility rules. This is fraud, and it’s illegal. It’s
also risky, because the co-conspirator relative may decide that he or she
actually owns the property and may deny the secret agreement. Now, the
applicant may have lost his or her property, is barred from applying for
Medicaid for five years, and may face fines or criminal charges. Government
agencies have seen every trick in the book. The cost of dishonesty is very
high.
There
are legitimate ways to spend down assets or to avoid taxes. Stick to those.
6) Be thoughtful about who should receive
your property.
Squabbles
over property can tear families apart.
Be very
specific about who should receive certain personal items. If you’re elderly
and/or you don’t use a particular piece of furniture or wear an item of jewelry
anymore, why not give these things to your heirs now so you can see them enjoy
these pieces?
If
you’re aging, consider downsizing. After a very trying death in the family and
a funeral, it’s very hard on the survivors to be forced to immediately turn
around and go through hundreds of unwanted items to distribute, give to
charity, and discard. It’s a generous gift to relieve them of this onerous
task.
Direct
that any vacation or investment real estate be sold and the proceeds divided among
your heirs. Do NOT leave a vacation property to more than one heir and expect
them to share it. Instead, allow the property to be sold. If one or more of
your heirs wants to buy the property, let them make that decision. Don’t force
people to own things jointly.
7) Remember that wills don’t cover everything.
First,
do not express your funeral and burial wishes in your will. It’s not binding,
and many families don’t read the will until after the funeral. Instead, discuss
your wishes with your family, write your instructions down, and give family
members copies.
Second,
keep the beneficiaries current on life insurance and certain retirement
accounts—and give copies of the cover pages of these policies and accounts
(WITH the policy or account number and company name visible) to your
beneficiaries and to your lawyer and administrator.
Third,
understand that wills don’t include “non-probate property.” For example, if you
own a home with another person as joint tenants with rights of survivorship
(JTWROS), then your interest in the home automatically passes to the other
joint tenant(s) at the moment of your death. If this is not what you want, work
with the other joint tenant(s) to change this to a different type of ownership.
The
fallout from a death in the family can affect the survivors for years. It
doesn’t have to be this way. If we make thoughtful, informed decisions and
communicate these decisions with the help of a competent lawyer, we leave our
loved ones with a legacy of peace and comfort.
