Three Things to Take Care of Right Now

In view of the ongoing pandemic, there are three things you will want to make sure you’ve taken care of ahead of time, just in case……

Advance Directives  

The term Advance Directives refers to the Durable Power of Attorney (DPOA) and the Health Care Proxy (HCP). The DPOA is used to designate a person or persons to handle your financial matters. The HCP is used to designate a person to make healthcare decisions for you if (and only if) you become unable to make them for yourself. These basic documents should be executed by all adults. I tell clients that they should do these no matter what age they are.

When you’re doing your DPOA, you don’t just want to do a basic one. You want your DPOA to be very comprehensive. What that means is that you want to give your agent the authority to move your assets into a trust or into the name of another person (such as a spouse or sibling or adult child) in the event that some emergency planning needs to be done to protect your assets from being lost to the high costs of medical care. If you become temporarily incapacitated, and you haven’t done this type of document, your family may not be able to protect your assets.

What this document helps you avoid is the high cost of guardianship. Imagine the following scenario: You get a severe case of Covid and you survive, but it is going to be a long road ahead and you will require a stay in a rehab facility. Unfortunately, your accounts are all in your name. The bills need to be paid so your family can remain in their house or apartment. Who can access your accounts?  Who can move money – or the house – out of your name to protect your life’s savings from having to be exhausted before we can ask Medicaid to pay the medical costs?

If you haven't designated someone, your family will have to petition the court to have a guardian appointed for you. Guardianship proceedings cost in the thousands of dollars and take months to get through. Advance Directives cost in the hundreds and typically involve two appointments with your lawyer.  

This basic planning can save you and your family from financial devastation.

Does Your Family Know Where Your Documents and Accounts Are?

As my personal experience with Covid has shown, when emergencies happen, they happen fast and we have to spring into action quickly – often in a panic.  Even when you’ve done your estate planning documents and put beneficiaries on our IRAs and insurance policies and other accounts, and you think you’re pretty well organized, does your family know where to find everything?

While you’re healthy and life is somewhat normal, this is the time to make a directory, listing all your assets, what institution they’re with, the account numbers, the account manager’s name and number, who the beneficiaries are and the approximate balances.  You should also list your important documents, such as Health Care Proxy, Power of Attorney, Will, Trust and indicate where they are located – originals and copies. If you’ve given the originals to someone, indicate to whom you’ve given them. Write down that person’s phone number.  If you’ve given copies to anyone, state that as well.

If you’ve made any type of arrangements, such as a prepaid funeral or a burial plot, state the name of the funeral home and the cemetery and where the relevant documents are located. If you have anything in a safety deposit box, write down the bank name and branch and the box number, as well as who has the key. It would also be helpful to have the names and phone numbers of your physicians and any medical documentation you have about your health conditions.

If you want to be even more organized, you might compile a folder of the important documents your family would need to produce if you were to need rehab/nursing home or home health care.

For example:  birth certificate, marriage certificate, if divorced or widowed, your divorce decree or spouse’s death certificate, passport, naturalization papers, Social Security card, copy of house deed, car title, copies of insurance cards and life insurance policies.

Once you compile this directory, it would be a good idea to keep it together with your important documents that are described therein.  The objective is to make it as easy as possible for your family to take care of you and to respect your wishes.

To download a directory template, click here.

Do All Your Accounts Have Beneficiaries?

One of the most confounding things that we see frequently is when a client’s designated beneficiary goes to make a claim for the life insurance or retirement account after the client passes away, and somehow there is no beneficiary designation on the account. This happens more often than it should.  When we’re doing a client’s estate planning, we always advise the client to check all their accounts to make sure they have beneficiaries and that they are still the beneficiaries they want.  

For example, you might have named your spouse as a beneficiary on your accounts 40 years ago when you opened them.  However, now that you and your spouse are both seniors, you may want to name your children as beneficiaries instead.  As we get older, we are in a position of trying to protect assets by getting them out of seniors’ names, so we don’t want them to inadvertently inherit money. This is the case because seniors might need long-term care, and inheriting money may interrupt their government benefits or cause them not to be eligible in the first place.

As we enter different stages in our lives, we want to review our plans to be sure they are still appropriate for the stage we’re in.  Ideally, we should do this every few years. When our life circumstances change, our plans may need to change as well. For instance, if we start having grandchildren, if we develop health problems, if one of our children develops health problems, if we get divorced or lose a spouse or remarry, just to name some common ones.  

If you make a point to review your financial/estate plans every few years – maybe put in on your calendar every other December - you will be sure that your plans are keeping pace with your family circumstances, and there won’t be any surprises when your family needs them the least.