Part two: So, imagine you’re going to die tonight. What would happen?

Here is part two of the depressing series about what happens when you die.  I read this fantastic article, What Would Happen if you Died Tonight, and thought I would put my own spin on it, though it does a great job of laying out the issues.

We all know that we need to do some kind of estate planning, but many of us don’t know what, or how, or even how to find help.  We also know that we don’t really want to think about it, so all of these obstacles can add up to just not doing anything.  Are you one of those who has no plan in place?  Well, then this is the article for you.

What would happen if you died tonight?  What would happen to your children?  Who would care for them?  Would you have several family members fighting for that right and responsibility?  Does your estate have enough money in it to care for your children’s financial upbringing, or will your children be a financial burden on their new caregivers, too?

How about your assets?  Would they be tied up in probate for years because you did not create an estate plan?  Would you put your loved ones through that time, money, hassle and stress because you couldn’t find time to put a trust into place?  Who would get your stuff?  Is there an heirloom ring that your children will fight over because they don’t know who should have it?  Will your family be torn apart by the stress and grief of your passing, and all of the responsibilities and burdens you left for them?

These may seem like drastic and overly-dramatic questions, but if you have ever experienced the death of a loved one, or known someone who has, you know that these are very real considerations.  What would it really be like if you died tonight?  Would you have put your affairs in order to protect your loved ones?  Or will you make them figure it out on their own?

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The first in a two-parter: What you need to know but wish you didn’t

I recently read an article entitled, How Doctors Die, and was struck by its simplicity and elegance.  Also, I was struck by how doctors know what they want and don’t want, clearly, because they aren’t afraid to face death, the inevitability of it, and the need for anticipation and planning.  Tomorrow, we’ll talk about another article I read recently, What Would Happen if you Died Tonight, and how we can better plan for our own inevitable demise.  But today, let’s start with the cheery subject of the end of life decisions doctors make, and how we (unfortunately) differ.

First, they plan.  Necessarily, as a doctor, they see and comprehend in a way us regular folk cannot (except perhaps funeral directors) that death is inevitable. Not only that, and perhaps more importantly, they understand that not planning very likely means that things will happen to you and around you that you do not ever want to happen.  Procedures will be done to you that you would have refused if you could have, your family will suffer more than they should, you will suffer in pain and illness more than  you would choose to, and your estate (your money, your assets) will be in a tangled mess, causing more hardship on your family than you would ever have wanted.

We don’t want to think about death – no one does – but the reality is inevitable.  We don’t have a choice about that.  What we DO have a choice about is how we handle it, the dignity we grant ourselves, the burdens and responsibilities (or lack thereof) we leave to our loved ones, and the mess (or lack thereof) we leave to our loved ones.  If we have these choices, and it’s really the only choices we have in our anticipation of death, then why don’t we take advantage of them?

Second, doctors know of and learn from our mistakes.  It can be hard to acknowledge our own mortality unless and until we either experience serious illness or we see it in one of our loved ones.  But we can learn from their wisdom, and we don’t have to necessarily experience it to benefit from what they see.  Illness, accidents, & terrible diagnoses don’t generally come with advance warning and the ability to prepare.  They come on suddenly, shockingly, and require grave decisions to be made, sometimes quite quickly.  But the best time to make a decision is when you are calm and able to think all of the issued out.  The worst time?  When you’re facing a life or death situation.

The bottom line is that planning is essential to ensure that you are cared for in the way you want to be, and that you do not put unnecessary burden on your loved ones.  If you knew what the burden would be when it came time, you would definitely choose to plan ahead.  Why wait until it’s too late?

Who needs an estate plan? Top 7 reasons why you need one even if you think you don’t. Part II:

Last time, we talked a little bit about the top reasons why you may need an estate plan, even if you think you don’t.  Here are the last three reasons.

1. Your children’s guardian.  Have children?  Have you named their guardian?  Is this document posted prominently in your house in case it’s needed?  If you don’t decide on your guardian, the court will.  The court doesn’t know you, your children, your family, or who you think would be most appropriate (or, conversely, who would NOT be appropriate).  You may not have decided on someone, but you’ve probably eliminated some candidates.  When you name no one, no one knows who you have eliminated, as the job is up for grabs to anyone.  Name your preferences or your very last choice could very well raise your children.
2. Your child’s guardian, part two.  What happens if you’re in an accident and you and your spouse go to the hospital?  Will the police leave your children with the underage babysitter?  No, of course not. If you have not chosen a guardian, and posted that prominently (and told the babysitter), then the police are going to take your children to the police station.  They may very well put your children into foster care while you recover.  While the chance this would happen may be slim, why take the chance?
3. Other documents necessary.  If you don’t have an estate plan, you’re less likely to have powers of attorney, a living will/advance directive, and other necessary estate planning documents.  These documents generally help you when you become incapacitated and cannot make decisions on your own behalf.  Often a spouse is your first choice, but what happens if your spouse is also incapacitated?  You need to prepare these documents to protect yourself and your wishes from being honored if you can’t speak for yourself.

Convinced?

Estate planning is more than legal documents: Ethical Wills

When I work with clients on their estate plans, I work with them on the legal aspects, such as their living trust, will, and powers of attorney.  But I also work on other aspects of their estate plan and getting their affairs in order.  For example, I work with them to talk to their family about their estate plan.  I work with them to pre-plan and pre-pay for their funeral needs.  Happy stuff, right?  Well, it may not be the most desired of conversations, but –

• It’s necessary.  If you don’t want to talk about it now, you will at some point.  And if you wait too long, you may not get the chance.
• Once you talk about it once, especially with someone uninvolved like me, talking to the family becomes much easier.
• If you knew what you were doing to your family but not having the conversations, and making them guess at what you want, then you would never leave anything unsaid.

Another thing that I talk to my clients about is an “ethical will.”  An ethical will is a document where you share your life lessons, hopes, dreams, values, history, faith, love and forgiveness with your family, friends, and community.  Gaining in popularity in the last several years, there are several online websites where you can record your ethical will and keep it, or there are forms you can download and/or purchase.  For my clients, I ensure that they have the document then need to record everything they would ever want to, such as the items noted above, in addition to genealogical, medical, military, and other histories as well as other pertinent information.

As we get older, the desire and need to leave a legacy becomes stronger and stronger.  We want to be remembered, for our lives, for our contributions and for our love.  As long as we are remembered, we stay alive.  Creating an ethical will is a way to leave that legacy that is so important.

Estate planning for same sex couples in California

California has made some strides toward equality for same sex couples, but it cannot be said that there isn’t still a long way to go.  As unfair as it is, same sex couple have to do more: prepare more documents, plan for more contingencies/eventualities, update more frequently – than their heterosexual counterparts.  The worst thing that a same sex couple can do is bury their heads in the sand, hoping or assuming it’s ok not to put anything in place – that somehow, some way, it’ll all be taken care of should something go wrong.

Uh, no.

Even in the best of circumstances, what you effectively do when you don’t plan is place an enormous burden on your loved ones; the ones who have loved you and cared about you the most, and the ones you have loved and cared about the most, are going to be put in a horrific situation should something happen to you and you haven’t planned for it.  And this horrific situation, not only does it come at a time of grief for your loved ones, but it is entirely avoidable.

Some tips to get you started:

1. With no estate plan (will, trust), you die intestate (i.e. the government decides your estate plan) and the government’s plan discriminates against same sex couples.
2. Without powers of attorney in place, the parents who threw you out of the house when you came out could be making medical and financial decisions for you if you’re incapacitated.
3. Being a Registered Domestic Partner in California, or married, does not change these points in their entirety.
4. Holding your property in joint tenancy with your property will not avoid the problems here, plus they could work to DIS-inherit your children and/or cause additional problems down the line.
5. Not choosing a guardian for your child(ren) could mean they end up in foster care should something happen to you.
6. Without a living trust, probate fees could take up to 10% of your gross estate (your estate not taking debt into account) and take 2-3 years – if not more – to resolve.

The best way to take care of your family when you are a same sex couple is to put an estate plan in place.

Have step-children or a step-parent? Are you one? How to avoid disinheriting your family

Estate planning presents unique issues for blended families.  Blended families are families in which one or both parents have children from a previous relationship.  The problem comes when one spouse dies without an estate plan, or an old or outdated one.  Generally, when spouses hold property in California (or anywhere in the US), they hold it in joint tenancy.  When one joint tenant dies, the other one gets the entire property.

Can you see where we’re going with this?

When one spouse of a blended family dies, then the other spouse generally gets all the property of the couple, often by default.  When it comes time to distribute the assets at the death of the second spouse, the second spouse can essentially disinherit the first spouse’s children.  The second spouse, with all the property in his/her name, has control over the ultimate disposition of the property.  If there is a family rift between the second spouse and the step-children, if the second spouse is negligent in creating an estate plan providing for the step-children, or in other cases, then the children of the first spouse to die can be left out in the cold.

Don’t leave your children out in the cold by failing to provide for them with an estate plan.

How do you prepare for that permanent vacation?

Think back to your last vacation.  Sandy beaches or historical tours or thrill rides and cotton candy.  Got it?  Now think back to how you prepared for your vacation.

Did you put a special “I’m on vacation” message on your voicemail?

Did you create an auto-respond email saying you’d be gone?

Did you put a stop on your mail or newspaper?  Set a light to go on in the evening?

Did you have someone come to water your plants or care for your pets?

That’s a lot of planning for one vacation.  So, what kind of planning have you done for that vacation you’ll not be returning from?  What happens when you pass on from the earthly plane?  What kind of planning have you done for that kind of absence?  Anything?

If you’ve not done your estate plan, consider this:  what are the reasons why you go to so much trouble when you leave town for a few days or weeks?  It’s because, if you don’t, then when you return, there’s likely to be upset and angry clients/friends/family members who have been wondering where you are.  They want to know where the project is or the weekly communication or the return phone call.  They’re worried!  And you don’t want to worry them – or make them angry – so you do all of these little things to make sure they’re taken care of while you’re gone.  Same with the plants and the dog: without you caring for them, you make arrangements so they’re cared for.

But, when you go on that permanent vacation, you won’t be back to see the hurt and devastation you leave behind (if you don’t plan).  Your family, those closest to you, will bear the burden of your lack of planning.  And you’ll never know because you’ll be gone.

Consider making an estate plan – ANY estate plan – and use at least as much consideration as you would if you were going on a long vacation.  Your family is worth it.

Changing beneficiaries during/after California divorce

While you are married, generally you name your spouse as the beneficiary on your life insurance, 401K, pension, etc. Once you get divorced, however, you are going to want to change those beneficiaries. This may sound simple, but it is extremely common for someone to forget and their ex-spouse ends up with their assets upon their death.

Why is that? I can only guess. First, as I have discussed before, during the time your case is in the court system (after you have filed your Petition but before you have your Judgment), you MAY NOT change any of your beneficiaries or your will or trust without consent from the other party. You cannot even sever a joint tenancy without notifying your spouse. But AFTER, when the case is over, you are not only free to do so, but you really need to.

I think some people forget, or once they have their Judgment, they want to put all of the hassle behind them. Don’t do this! You took the effort to get divorced – don’t forget to complete the process and change the beneficiaries on your accounts!

A friend of mine came to me recently because the spouse of a colleague of his had passed away. The only asset this person left was a life insurance policy that named a girlfriend of his from nearly twenty years before. She’s likely to lose her home because her husband, in twenty years, never changed his life insurance policy beneficiary.

Estate planning for the digital age: what critical item most estate plans fail to include

I read a great article this morning about the failure of most estate plans to include information about computer account passwords and all of the transactions we do online on a daily basis (Estate planning for iTunes, passwords, and other digital assets). This is a great article because it highlights a problem in ‘modern’ estate planning.  A lawyer may be preparing your legal documents: your will and trust, and powers of attorney.  Your financial advisor is working with you to ensure that you have enough wealth to live out your life, and resources should you become disabled.  But who is assembling the information about your Amazon.com account (and perhaps an auto-ship of vitamins or other health care items)?  Who is ensuring that successor trustees or executors have access to online banking accounts to manage automatic payments. When you use a power of attorney (POA) to handle the finances of another, a copy of the POA goes into your file, but when you’re operating online, who is checking?

These are financial concerns, but there are also personal concerns here, too.  If a loved one of yours passed away suddenly, would you know everyone to contact? It’s likely that they have a contacts list on their computer or smartphone, but is the computer, smartphone, or even the contacts application locked? The same goes for email addresses and even Facebook. Your mom may have really taken to Facebook and rediscovered old friends from all aspects of her life.  When she passes, what do you do with that account?

In my estate plans, I always include a fillable book that can be used to record all of these kinds of information, and more.  I consider it to be my job to ensure that your whole estate and all of your affairs are taken care of when you’re finished with me. Sometimes I refer to other experts in other professions, and obviously I can’t force you to record your passwords and security codes anywhere, but I can let you know that this is a critical aspect of your estate plan, and encourage you to complete as much information as you can for your family, since the more you have available and accessible to your family when you pass, the easier it is for them. Who doesn’t want to do everything they can to make it easier for their family?

Did your estate planning attorney talk to you about estate planning for digital media?

If divorce is like a death, where’s my food?

No one is going to disagree with me when I say that divorce is awful.  It’s emotional, it’s taxing, it’s expensive, it’s time-consuming, it’s frustrating,…it’s just awful.  Psychological studies have likened it to a death, and divorce and moving are up there with death of a loved one as the top most stressful life events.  What’s odd, however is that we as a society don’t treat divorce like a death.  When someone dies, we worry about the loved ones left behind, and feel a need to take care of them by bringing them food, sending cards, posting thoughtful and heartfelt messages on Facebook, and visiting to help ease the loneliness.

When it’s divorce, it’s a different story.  It seems many friends will scatter, as if the divorce “bug” is catching.  The terms or the process are talked about in hushed tones.  Nearly half of all marriages end in divorce, though we talk about it as if it’s still a shameful secret to be hidden.  We have websites to track a loved one’s illness and to be able to donate to their cause and keep up with the ins and outs of treatment.  Where’s the divorce tracker?  How can someone donate to your divorce fund?

As one writer notes in a fantastic article, where’s your casserole?