Regardless of where you are on your financial journey it is utterly important to have some type of plan for unexpected events. There are numerous stories of people who have died without a will or any document stating their intentions. These situations make the death of a person even more difficult. They often end up with family members losing all or part of the inheritance or having to go through long and expensive processes.
Don’t think that you have nothing to leave to anyone. Even your small personal possessions may be left to someone who would really appreciate them. Furthermore, it is possible to die with a pending lawsuit, insurance compensation due or even a winning lottery ticket in your pocket.
These are a few documents you need to consider in your estate planning.
- WILL – A legal document that explains your intentions for your possessions after your death.
- TRUST – Also a legal document that explains your intentions for your possessions after your death. It is required in most states to transfer substantial assets (amount varies by state) and is required to transfer most property without having to go through the probate process.
- DURABLE POWER OF ATTORNEY – A document that designates a person to make financial decisions and access your assets if you are ill or incapacitated and unable to do so. It may also state your financial intentions.
- HEALTHCARE POWER OF ATTORNEY – A document that describes your medical intentions if you become ill or on life support and designates a person to make medical decisions if you are ill or incapacitated and unable to do so.
- GUARDIANSHIP FORM – Document which states your intentions for the care and custody of your children if they are under 18 years old.
There are a few ways to learn about estate planning and legally document your intentions.
- PROFESSIONAL ATTORNEY – The most secure way to handle these documents is to make an appointment with an attorney who specializes in estate planning. You will need to provide them a list of all your assets, possessions and debts. You will need to tell the attorney your wishes upon your death as well as if you become suddenly ill.
- CREATE LEGAL DOCUMENTS YOURSELF – Legal documents can be researched on the internet and can be purchased on the internet or from a business specializing in forms. Some government entities provide basic information on these documents. Government and business employees are not allowed to provide you legal information if they are not a licensed attorney. Make sure you get a form/document specifically for the state you live in. Most documents need to be notarized or signed by two people who are not family members or listed in the documents.
- BENEFICIARIES/PAYMENT ON DEATH/ADD TO ACCOUNT – Banks, investment companies and other businesses have very simple processes to add a beneficiary to your account. In the event of your death, the beneficiary will need to send the company a copy of the death certificate and will be able to take possession of the asset. If you have beneficiaries whom you trust, you can also add them to an account. This will give them full access to such account immediately, but it also gives them immediate access to the account in an imminent or emergency situation. This is beneficial when a situation occurs where immediate money is needed to pay for bills, travel and funeral costs.
- SIGN TITLES – If you have a secure place to store car, boat and recreational vehicle titles (such as a safe or safe deposit box), you can sign the title and keep it safely stored. In the event you pass away, your heirs can more easily take possession or sell the asset.
- WRITE IT DOWN AND SIGN IN FRONT OF TWO WITNESSES – If you find yourself procrastinating at making estate plans or feel you can not afford to hire an attorney, write down your intentions. It can be very simple such as “In the event of my death I want Steve Jones to inherit my car, Jackie Smith to inherit my dining room table and master bedroom furniture and my son, Joe Jacobs, to inherit all of the rest of my cash, assets and possessions.” Then, sign the and date document in front of two witnesses who are not named in the document and are not family members. And have the two witnesses sign and date the document as well.
Take some time to consider your family members and friends. Who do you want to have your assets and possessions? Have a discussion with your heirs and beneficiaries and let them know your plans, the legal documents that you have and where those documents are stored. You may choose to provide the beneficiaries with copies of documents. Most documents are not filed in public databases. Attorney’s might not keep a copy of your will or trust nor are they required to file it with a court upon your death. Sometimes these documents need to be filed with a court after your death and sometimes they are provided directly to banks and businesses to obtain your assets.
Don’t procrastinate. Figure out a plan and a time frame for your estate planning and creating the appropriate documents today. This is too important.
STORY 1 – BROTHER JOHNNY
In 2019, my brother Johnny quickly and unexpectedly died. He was 49 years old. He was the youngest child in our family. He had no will. He was not married and had no children.
My mother was 82 years old. She had been widowed for eight years after being married for 28 years. She had not yet recovered from my father’s death and was still dealing with selling some of his assets and rebuilding her life. She was also taking care of her sister, who was in her 90’s, as well as taking care of her sister’s care and estate.
Since my brother was not married and had no children, my mother was the next of kin to his estate. Suddenly, my mother had a third estate to handle. Johnny had two small bank accounts, two small stock accounts, two cars and a house full of possessions. Although my mother dug in and did what she had to do, it was horrible to see her having to deal with all of his assets, debts and obligations at her age and in addition to grieving for her youngest son.
STORY 2 – INTENTIONS ARE NOT LEGAL DOCUMENTS
A dear friend of mine passed away after a battle with cancer. Although she had been receiving treatment, her health seemed to be improving when she quickly died. Her husband had passed away many years before and she had no children.
She lived with a man whom she loved dearly and intended to take care of him by leaving a fully paid-off house and all her possessions to him. She had one step-son who never called to see how she was doing and had no consideration for her. This beautiful lady told her boyfriend and many friends how much she loved him and that when she passed he was to receive all of her possessions, including the house. She stated several times that the step-son was to receive nothing.
However, she never had any legal documents created. She never wrote anything down. Even after receiving chemotherapy and undergoing surgery, she “never got around to” completing the paperwork.
Before she died, she collapsed and was in the hospital for a few weeks. Her boyfriend had no legal documents stating he could see her, be provided medical information on her or make medical decisions for her. It was torturous for him. The hospital finally took her off of life support and she passed.
He learned that the house was in her deceased husband’s name. She had never transferred the title to herself. The man was left without anything and homeless.
It is never too early to plan ahead and legally document your assets and your intentions.
Photo by Scott Graham on Unsplash