Life happens. How many times have you heard that phrase? And how many times are you still surprised by what life throws your way? In my agency, we see so many difficult situations. Peoples’ lives are changed in ways they never imagined. Insurance is for “what you couldn’t imagine.” It’s funny how many people say to me, “that will never happen to me.” If they could only be that lucky, and I joke, “I will take you and your crystal ball to Vegas.” I’m not throwing darts because I am also guilty of taking life and my current situation for granted. One small misstep by you or someone else can drastically change your life forever. Unfortunately, bad things happen even when it is not your fault. Why am I talking about this? Because estate planning is important BEFORE the worst happens. This is vital if you have a family or someone who depends on you! Considering your own death is not a popular thought but getting your affairs in order and estate planning is critical for everyone.
This week we had a sad event in our agency. A client died, and we helped her daughters and sister handle the insurance information. Titles of cars changed, and insurance policy names needed to be revised. The sister who is the executor of the estate had a huge folder with all the necessary paperwork. She said,” I always carry this with me because I need it a lot.” While making the changes and talking with the sister, she said, “I didn’t expect to be raising kids again. My kids are grown. This has really thrown all of us for a loop.”
If life throws you for a loop, how prepared are you? How easy will it be for the loved one handling your estate to complete the task? (Have you made it easy, or will they carry the extra burden you didn’t complete while you were alive?) What if you are incapacitated and your power of attorney takes control? (You do have a power of attorney, don’t you?)
There are two sides of the story. You could be the one left to handle the affairs of someone who didn’t properly plan, or you could be the one who leaves your loved ones holding the bag. Several items must be taken into account when planning end of life. Different people handle grief differently. I would advise not to put an extra strain on your loved ones by neglecting to complete your personal matters while you are alive. If you don’t have enough time to complete these tasks, how do you think they will have enough time while they grieve?
Most consumers don’t have the key end-of-life documents in place. A 2014 study published in the American Journal of Preventive Medicine study states that 74 percent of adults have no healthcare proxy, living will or advance directives. Caring.com reports only 42 percent have a will. I advise you to be responsible and complete the necessary paperwork to make life easier for your loved ones.
Estate Planning Checklist
Creating a checklist can make a difference if you become incapacitated or depart this world. While it may be overwhelming, the checklist below contains important elements you should share with your loved ones.
- Name your durable power of attorney. A durable power of attorney allows you to designate someone as your agent. The authority granted to that agent stays in effect even when you are incapacitated. Having a will and a living will is important, but these are not as important as your durable power of attorney. This person will manage your assets and can also handle your advanced medical directive.
- Complete your will. Many people do not think completing a will is necessary, but it absolutely is. A will is a legal document that details your wishes regarding your assets, minor children, and any other items you deem important enough to include. If you want special family items to go to certain individuals, you need it listed in your will. Wills can be as simple or as complex as you want them. Having a will can avoid disputes between family members and friends. Your personal possessions can be a significant source of will contests and family disputes, so it helps to have a thorough rundown of who gets what. Wills can be easily changed and updated if circumstances change.
You can also name a legal guardian for any minor children and their property, as well as leaving instructions for the care of your pets. If you have kids, decide who you want to raise your kids. You should leave very detailed instructions. Have a very honest discussion with whomever you select. Just think how life will change for the people raising your kids. Will they need a new home to handle the kids? Will they need a larger vehicle? How much strain will it put on them financially? With my recent client, it totally changed her sister’s life. Can your designated person handle the change?Young people tell me they don’t need a will because they don’t have valuable assets. These days young people should consider a will to protect their digital possessions. Most young people have amassed digital assets such as photograph and music collections or other electronic data. Even social media accounts and social presence can accrue value especially when it comes to content sites like YouTube and Instagram or platforms like Patreon that monetize creative digital content.Specify in your will who you want to own or have access to your digital assets and accounts like social media and email. According to the National Conference of State Legislators, at least 46 states have enacted laws addressing that issue. Under the Fiduciary Access to Digital Assets Act, which many states have adopted, digital assets must be mentioned in the will or they expire upon death. Without mention, access may pass according to the terms of service for that site or service.
Without a will, you are leaving decisions to your state’s intestacy laws, which apply when someone dies without a will. What this means is if you die without a will, the government will make the decisions for you and your family. Each state has laws regarding distribution of assets. Most people will be truly surprised by what happens in Tennessee if you die without a will. With all the blended families, I’ve seen very difficult situations arise when details are not completed before someone dies. Attached is what happens if you die in the state of Tennessee without a will.
- Complete a medical directive. Medical directives share your wishes for end of life efforts and explains what treatments you want and don’t want. Please don’t leave your family guessing. Please make these wishes crystal clear to your family! Tennessee makes it easy to complete your medical directive. I have literally seen families torn apart because of the differences in opinion regarding the medical care of someone who did not have a medical directive. The emotional and financial stress can destroy families.Also available is the Five Wishes planner ($5), which covers a wide range of comfort and care preferences. The Five Wishes Planner meets the legal requirements for a standalone medical directive in 42 states and Washington, D.C. and in the rest can be used in conjunction with the state’s living will forms.
It is wise to choose only one person to make healthcare decisions on your behalf if you’re incapacitated. Choosing two individuals sets the stage for trouble if the two agents don’t agree on the best course of action. However, you should also have at least one alternate listed, so you’re covered if your first designee predeceases you, or becomes incapacitated in the same accident that injures you.Discuss with your trusted person about what quality of life means to you, and at what point you no longer want artificial interventions. This answer will be different for individuals. Some individuals want to stay alive with every means possible and others want an early exit.
- Complete a POLST. A Physicians Orders for Life Sustaining Treatment (POLST) is along the same lines as a medical directive. This may seem redundant with a medical directive in place, but both may be needed. With a POLST, the client and doctor complete the form. Once the doctor signs it, it becomes a medical standing order for you. The POLST becomes part of your medical record, and medical professionals are bound by it. Check out polst.org to learn more. Even though you may have a POLST completed, we recommend completing a DNR as well. These should be in plain view if you are at home or in the hospital. All family members should be aware of your wishes. It is difficult in emotional times to allow these decisions, but if you have expressed your wishes, your chances of getting what you want are greater.
- Prepare a list of account information. Complete a list of recurring payments, debts or accounts you have including the usernames and passwords. Some examples include bank accounts, credit cards, utilities, mortgage, vehicle titles, property deeds and social media accounts. The more information you include, the easier it will be on your family. Financial information will be critical at this time. Make sure you include banking, 401k, IRA, stocks, bonds, pensions, land or deeds. Also including the name of your attorney, insurance agent and doctor are good items to include.At the end of your life, documents will play a major role. In many instances, families spend days locating, reading and completing complex forms. Your family should not have to go on a scavenger hunt to gather all this information. Planning on your part makes it much easier for the people you love. The more prepared you are, the easier it will be for your family. Keeping documents in an easy place to find and letting a family member know where your information is located is critical. Wouldn’t it be nice if your family could spend their time reminiscing and grieving instead of searching through mountains of paperwork?
- Make certain beneficiaries are correct. You would be surprised how many ex-wives and ex-husbands receive death benefits (thousands of dollars) because beneficiaries were not changed after divorce. Insurance companies have a legal contract, and at death they will abide by the contract. This happens all the time and often the ex is an ex for definitive reasons, so the chances of them being charitable are slim. Just last week, a husband called our office to change his beneficiary—and his divorce was final over four years ago. Also, it is never a good idea to make a minor child a beneficiary as they cannot make decisions regarding the accounts.
- Complete payable on death at your bank. The payable on death (POD) simply names a beneficiary for your banking accounts. I have several banking friends and wrote the auto and home insurance for one several years ago. Our new business checklist discusses payable on death (no that isn’t insurance, but we are very comprehensive and helpful in our meetings). The banker started laughing because I mentioned it. I said, “Bankers don’t tell people about this do you?” and she said, “No, we don’t.” Bankers like that money sitting in the account while the estate is being settled. I’m not saying put someone else’s name on your account (DON’T EVER do that). A payable on death sends the funds directly to your beneficiary upon your death which means it by-passes probate. This POD means the beneficiary does not have to wait months until the estate is settled to receive the funds and who knows, the funds may be needed immediately.
- Become an organ donor. I am very proud to say my 18-year-old nephew recently volunteered to be an organ donor for a cousin with kidney disease. Unfortunately, he could not donate because of a medical condition. This cousin is 25 years old and recently received a kidney from someone not related to him. The more people donate, the more people we can benefit. If you needed an organ, wouldn’t you want someone to donate? Again, if you make the decision PRIOR to a catastrophic event, your family and loved ones can know your wishes and be prepared to complete them. Many families are simply too overwhelmed at the tragic time to make the decision of organ donation.
You should check the box on your driver’s license, but this may not be enough. Who knows if your license will be with you at this time, and your family may override the designation. You can register on the National Organ Donor Registry. Emergency rooms typically check this registry and families cannot override the opt-in on this site.
- Plan your funeral. Do you want to have a specific type of funeral service and do you want to be buried, cremated or your body donated? If so, you should complete funeral planning and write these directions down. Funerals can be very expensive. If you let your loved ones make these decisions while they are emotional, the cost could be more. If you preplan what you want and share you wishes, this could save money. You should have life insurance or a savings account to pay for your funeral. Go fund me is not the way! Also don’t make the mistake of relying on your 401k or qualified accounts to pay for your funeral as there will be a penalty if the recipient is younger than 59.5 years.We also give this handout to all our new clients. I saw most of this on a funeral home brochure. As you have always heard, there are two definitives in life—death and taxes. Just because you don’t talk about death does not mean it won’t happen. People often change their demeanor when I mention the subject. I know it is not a pleasant thought, but we all are leaving this planet some day, so why not make it easier for the ones we love? We do love them, don’t we?
- Preserve memories for your family. I’m sure you have read stories of people who’ve made special videos for loved ones. These can be lasting memories for your family. Other ways to share memories would be with pictures or cards written to special loved ones telling them how much you loved them. Sentimental messages to your family can help make a difficult situation easier to handle.
These ten items will make life much easier for your family if you die. One of the worst things you can do with end of life decisions is procrastinate. There is positive evidence that individuals who plan are in a better position. Current research shows that patients who plan ahead for the end-of-life and prepare advance directives spend less time in the hospital, receive fewer intensive treatments, and have greater quality of life in their final days. Additionally, their surviving relatives experience less stress, anxiety and depression during the process.
Unfortunately, only about one-third of Americans have actually put their healthcare wishes in writing in the form of a living will or other legal document, so as a nation we are vastly unprepared for the end-of-life. People do a lot of planning for births but we do very little for the end of life. I know many of my client don’t like to discuss end of life but there is 100 percent certainty it will happen.
The more we become comfortable accepting death and discussing it, the easier it will be to plan. Once you get the work completed, you can spend more time loving your family. Wouldn’t it be tragic if you spent more time planning your vacations than making life easier for your family when you leave this planet?