An Estate Planning Reminder for Parents with Minor Children

I just tweeted an article by a Boston financial planner, Dee Lee, who discusses the importance of parents with minor children getting their estate plans in place.  I strongly feel that setting up an estate plan with protections for minor children is just as important as the other aspects of parenting for which we take so much care and concern.  I have written about this here and here.   Just like finding the right pediatrician, car seat, and child care, an estate plan is an essential protection for your children.  This writer said it so well, that I am posting here some highlights — and  a good reminder — from her article:

“Experts estimate that less than 35% of individuals have wills. This is one thing people procrastinate about, especially parents with young children.

These parents are focused on the safety issues around their home to keep the kids safe but have not done any estate planning to keep the kids safe if something should happen to them.

At the very least, you need a will naming guardians for your children if something should happen to you and your spouse.

Without a will you are leaving behind a messy situation to be handle by whoever the court appoints. And if there is life insurance involved I can guarantee even your cousin Vinny will offer to take the kids.”

By Dee Lee, Where There’s a Will, There’s A Way, August 27, 2015

 

 

A Celebrity’s Daughter’s Death and Estate Planning for Young Adults

A few weeks ago, I wrote about the importance of having your now adult child get his or her estate planning documents prepared.  The idea may seem unnecessary at first blush — your now 18 year old (or twenty-something) “adult” child has just reached the legal age of adulthood and likely has yet to accumulate significant assets.  He or she may in many ways seem still like a child to you, and not yet ready for important adult documents.  However, under the law, they are adults, and you are no longer their default decisionmaker nor are you automatically granted access to your adult child’s medical records.  This is an important time for your child to designate whom he or she wishes to make these types of decisions.

A celebrity death serves as reminder to us of all the necessity of getting these documents in place.  Bobbi Kristina Brown, the twenty-two year old daughter of Whitney Houston and Bobby Brown, died recently after several months in a comatose state.  You can read more about the tragic story here and here.  Unfortunately, her lack of incapacity planning documentation and resulting legal protections (not unusual, given her age) resulted in a family legal fight during her incapacity.  A reminder to talk with your young adult children about the necessity of getting, at a minimum, their incapacity documents in place under the counsel of an estate planning attorney.

My Child is 18 Years Old! Estate Planning for Young Adults

Having a child attain the age of 18 brings with it the legal age of majority and autonomy in her decisionmaking.  One aspect of this age of “adulthood” that may not be readily apparent to both the now-adult child and her parents is the immediate loss of the parents’ ability to serve as a decisionmaker.  Simply stated, as the “child” is now an adult, the young adults’ parents no longer have access to and ability to serve as a financial or medical decisionmaker for their child.  As this article explains, this can have serious implications in the case of an adult child who becomes incapacitated for any reason — illness or accident — even of a temporary nature.  Well planned parents and their adult children should consider getting, at a minimum, incapacity planning documents in place, which includes an Appointment of Health Care Representative and Power of Attorney document.

Estate Planning and Our Four Legged Friends

Yesterday I visited Indianapolis’s Cat Haven, a wonderful local non-profit that provides homes for abandoned cats.  Many of these cats are elderly (10 years old or older), which gave me pause to consider how a cat that age would end up abandoned.  It seems likely to me that those animals may very well have been loved by an owner who passed away, leaving no one to care for the beloved pet.

High-profile estates, such as Joan Rivers, often provide for well-funded pet trusts.  However, planning for your pet to be cared for upon your death does not  require large sums of money, great wealth, or celebrity.  Pet Trusts are legally-enforceable instruments under Indiana law.  You can set aside a certain sum of money to provide for your pet(s) in a Pet Trust, designating a person or persons to care for your pet(s) and providing funds for your pet’s welfare.  Upon your pet’s death, you can direct for any remaining Pet Trust funds (not used for your pet’s benefit during his lifetime) can be distributed to your human beneficiaries or charities.  Even if you do not wish to provide for a Pet Trust, your Last Will and Testament is an ideal place to identify the person(s) who will care for your pet after your death.   I enjoy assisting estate planning clients with Pet Trusts and planning for beloved pets and would be happy to answer questions about planning for pets.

Here are some additional sources of information about planning for a pet’s care in the event of the owner’s death:

Humane Society of the United States: Providing For Your Pet’s Future Without You

ASPCA: Planning for your Pet’s Future

Prof. Gerry W. Beyer: Frequently Asked Questions About Pet Trusts

 

 

Joan Rivers and End of Life Planning

Fellow legal bloggers Danielle and Andy Mayoras (find them here and here) have a great article today about end-of-life lessons to be learned from Joan River’s passing.  All estate plans should include planning for incapacity and end-of-life decision making.  The Mayoras’ article excellently explains why this is so important.

As they explain:  “Too many people think that estate planning is all about wills and trusts.  Far from it, end of life planning is often more important.  In fact, every adult over the age of 18 needs to have some type of advance directive in place.”   The consequences of not having such documents and place, can include a public and invasive guardianship proceedings through the courts, in order for the family to be legally appointed the decision makers.  In the case of facing an end of life decision, such as in Joan Rivers’ example, this process could be particularly painful and compound the grieving process of the family forced to make such decisions.  (Can you imagine the pain of having to go to court to obtain a guardianship while your loved one is near life’s end?)  Further, as the Mayoras explain, the guardianship process “can set the stage for a nasty family fight if people disagree on termination of life support (Terri Schiavo being a prominent example), or even a complete refusal to allow the life support to end, if the patient’s wishes were never reflected in writing.”

Bottom line: incapacity planning, including appointing a decisionmaker and stating your end-of-life wishes through a Living Will, are essential to any solid estate plan.  Such planning is an invaluable gift to yourself and your loved ones.

Estate Planning Beyond Documents

See the New York Times today for an article titled There’s More to Estate Planning Than the Will.  It is an excellent article and well worth the read.  I agree with the conclusion that documents are not enough.  While it is truly a gift to your family and loved ones to have all of your documents in place and up to date, the gift of well organized affairs — paperwork, passwords, records all in one place and organized — cannot be overstated.   I have seen firsthand the relief and deep appreciation of surviving family members when their deceased loved one has left everything “all in order.”  It is a true gift.

The article describes the book by author Erik A. Dewey.  His Big Book of Everything can be downloaded for free here.  What a nice gift!  His form, or a similar one, could be a good place to start — in addition to estate planning documents — to “get your affairs in order.”

 

 

What Can Celebrity Deaths Teach Us?

High profile celebrity deaths are regularly in the headlines. The ongoing legal battle faced by Anna Nicole Smith, and now her Estate, continues.  That case included allegations of interference with inheritance.  Casey Kasem‘s last months raise questions about guardianship, elder abuse, fiduciary roles, and end of life decision making.  Philip Seymour Hoffman‘s estate plan, lacking in planning for the Federal Estate Tax and failing to include a child born after the his Will was executed, was largely seen as incomplete protection for his family.  Similarly, James Gandolfini’s Will was panned.  As one commentator summarized, “the most common tag-line is that his will is a tax disaster.”   In contrast, Robin Williams’ estate plan, is viewed by some as an example of a solid planning.

These estates serve as reminders for all of us to revisit our estate plans.  Key among the lessons are that even if you have a plan in place, you need to revisit that plan every couple of years or after a change in life, such as after the birth of a child or a divorce.  Questions to consider:

Do you have an estate plan?  Do you have a Will?  Could a Trust be a helpful instrument for you?

When is the last time you reviewed your plan?

Are all of your children included in your plan?  Who do you name as their guardians?  Are these still the right people?

Do you have trusts to provide for your children until the are the appropriate ages to handle money?

Do you have incapacity documents in place?  Who have you named to be decisionmakers in the event you are incapacitated?  Are they still the right people?

Could your Estate be subject to Federal Estate Tax?  Do you have a plan in place to minimize potential Federal Estate Tax liability?

Dying Without a Will in Indiana – Part II: Indiana’s “Default” Estate Plan for Married Persons

First Marriage and no children:  Your surviving spouse will receive three-fourths (3/4ths) of your estate and your surviving parents will receive one-fourth (1/4) of your estate.  If your parents predecease you, then your surviving spouse will receive all of your estate.

Who does this default “plan” exclude?  In the event your parents survive you, your spouse is not fully provided for by your estate.  This plan also excludes everyone else for whom you may wish to provide, including your stepchildren, siblings, friends, and charities.

Married and children with your spouse:  Your surviving spouse will receive one-half (1/2) of your estate and your surviving children will share one-half (1/2) of your estate.

Who does this default “plan” exclude?  Neither your spouse nor your children are fully provided for by your estate.  This plan also excludes everyone else for whom you may wish to provide, including your parents, stepchildren, siblings, friends, and charities.

Second (or subsequent) Marriage, and no children with current spouse:  Your surviving spouse (who did not have children with you) will receive one-half (1/2) of your estate personal property, but only one-fourth (1/4th) of your net real estate.  Your surviving children (from a prior marriage) will share one-half (1/2) of your estate and three-fourths (3/4ths) of your net real estate.

Who does this default “plan” exclude?  Neither your spouse nor your children are fully provided for by your estate.  This plan also excludes everyone else for whom you may wish to provide, including your parents, stepchildren, siblings, friends, and charities.

Dying Without a Will: Indiana’s Default Estate Plan

Indiana law provides a “default” estate plan for you, if you do not have a Will at your death.   This is called an “intestate” estate.

Does Indiana’s default plan match your intentions to provide for your loved ones?  Here’s a guide to determine what the law would provide if you died without a Will in Indiana.

First, a look at your estate plan if you are not married:

Not Married and without children:  Indiana law provides for your estate to be distributed, in equal shares, to your surviving parents and siblings.  Each of your surviving parents will receive no less than one-fourth of your estate.

Who does this default “plan” exclude?  Everyone else.  Only your brothers and sisters (or their children, if a sibling dies before you) and your parents will receive your estate.  A significant other, regardless of years together, will be excluded, as will lifelong friends or caregivers.  Each sibling will be treated equally, regardless of whether your relationship with that sibling was a good one.

Not Married, with children:  Your children will receive your estate, in equal shares.

Who does this default “plan” exclude?  Again, everyone else.  Only your children, in equal shares, will receive an interest in your estate.

In either of these situations, dying intestate as an unmarried person means that friends, other relatives, significant others, and charities, are completely excluded from your “default” estate plan.