Estate Planning

Estate Planning

How to prepare for the unthinkable

Scenario:  You have been married to the love of your life for 20 years, raised children, and are looking forward to retirement with your spouse.  One morning, your spouse is in a car accident and is in a coma with little chance of survival.

  1. What is the name of your bank? Are all accounts in your name? What is the online password to these accounts?
  2. Are you named as joint owner on all financial accounts?
  3. Who holds your mortgage?
  4. Where is your Husband’s POA/HCPOA? Who has POA? Does the Dr. have his HCPOA?
  5. Does your Husband have a living will? Where is it?
  6. Does he have short term/long term disability through his employer? Does he have supplemental insurance? Who is the policy holder? Are you the beneficiary of the insurance? If so, are you the beneficiary, will they pay you directly, and when?
  7. Does your deed to the home or other real property contain rights of survivorship in case of your spouse’s death?
  8. Do you have your husband’s login and password to these various accounts?

These are just a few of the questions that can arise when you are faced with an unthinkable situation, such as the incapacity or death of your spouse.   If you do not know these answers now, the stress and anxiety of not knowing them at a time of crisis can be unbearable.  However, if you are prepared, you will be able to spend time focusing on your family not struggling to pay your bills.

Below is a Top Priority List of how to prepare yourself:

  1. Know your financial accounts
    1. I recommend you create a notebook for your loved ones. In this notebook place one statement from every account you and/or your spouse hold.  Gas bill, water bill, savings account, stock account, insurance policy, supplemental health insurance, disability insurance, investment accounts, stocks, mutual funds, bank accounts, 401k, pension, credit cards, mortgage statement, other debts
    2. If something should happen to you, and/or your spouse, these accounts need to be maintained, or closed, to avoid late or missed payments that will affect your credit. The last thing anyone should have to worry about is tracking down you and/or your spouse’s accounts.
    3. What are the usernames and passwords to these accounts?
  2. Know your policies, how they trigger payment and when they pay
    1. Many employers provide supplemental life insurance and disability pay. Does your employer?  Does your spouse’s employer?  Do you and/or your spouse have a separate life insurance policy or disability policy?  Do you know what triggers one of these policies to pay? When will the policy pay?
    2. Being aware of what incident(s) trigger a policy, and when it will pay, will alleviate the stress of wondering “how am I going to…” and “what is going to happen now…”.
  3. Designate beneficiaries
    1. Make sure you and/or your spouse have designated beneficiaries on all accounts that provide for a beneficiary. Any account naming a beneficiary will automatically pass the funds to the beneficiary at the triggering event.  If no beneficiary is named, the account will fall into probate and could take 6 months to a year to pay out.
  4. Create a safety net
    1. Start a bank account, put money into the account each month (as much as you can afford) until you have six months of living expenses saved. Should something happen to the primary wage earner in the home, death/disability, the last thing you need to worry about is money.  In the scenario above, how is the mortgage going to be paid? The utilities and car insurance?
      1. In our fact pattern: Husband is in a coma, so life insurance does not apply.
  5. Assign a POA
    1. A financial Power of Attorney allows someone to act on your behalf regarding your financial affairs. Your husband is in a coma, the primary bank account is only in his name – you are not able to pay the monthly bills without a POA.
    2. A POA can be effective immediately, or spring into action when you have been deemed incapacitated by two licensed physicians.
    1. Assign a HCPOA
      1. A Health Care Power of Attorney allows someone to make medical decisions for you if you should become incapacitated. For example, home health care vs. nursing home, surgery or no surgery, medication or no medication.  You will not have the capacity to make these decisions, someone else will be making the decision for you. This document allows you to name the person you wish to make these decisions.
  6. Draft AND execute a Will
    1. A Will allows you to make your wishes known at the time of your death. If drafted properly a Will helps to avoid family drama and confusion after your death, as you are providing your loved ones with the much needed direction to handle your affairs.  Please know a Will is not proper unless properly signed and executed.
      1. Choose an Executor/Executrix wisely.
      2. Make your own funeral arrangements if you have a strong opinion about it, buried v. cremated; open casket v. no viewing.
  • Parents with young children- you must establish a guardian for your children in the event that something happens to both mom and dad; kids may ask you what your plans are- it is ok to discuss it with them as they will be the ones living with the guardian should something happen to both parents.
  • Frequent Question: Can I draft these documents on my own online? Answer: Sure- there are online resources BUT in order to ensure that you have valid documents that are enforceable, understand the documents and guarantee that they are tailored for you and your family, you should use an experienced attorney.
  • Execute and Preserve
  1. Draft a Living Will
  • Limited to Deathbed concerns only- If you do not wish to live by artificial means, if you do not want a loved one to be placed in the position of making that decision for you, please have a Living Will in place.
  1. Talk to your people
    1. The most difficult part of this process, of planning for the unthinkable, is to have the conversation with your loved ones. However, if you do not explain your wishes to the people you give the power to, they will not know how to use their power. Talk to your parents, children, siblings and friends.  Let them know what you want and how you feel.  Let them know you do, or do not, want home health care, or that you do, or do not, want to live by artificial means.
    2. How to choose the best people for the job
      1. Avoid sibling conflict; consider age (not too old, not too young); Choose alternates. Never choose co-executors, or co-powers.
      2. Always discuss the responsibility ahead of time.
  • Once you have your documents in place, make them known. If your family does not know these documents exist, they will not be followed – but likely found months after it is too late to follow them.
  1. Live each day as though it were your last!
    1. Know that you are organized and have planned, enjoy your time with your family
    2. Live with no regrets.
    3. Hug your loved ones today and tell them you love them!