Recently, a local lawyer advised a friend, “Sorting these documents, now, will save you a multiple of time, money and hassle – later.”
I would add… it is best to make end of life plans when stress is low.
With Andy’s death, I re-read my stuff last week. I was surprised how little needed to change.
Indeed, a good attorney saved my family time, money and hassle.
General Durable Power of Attorney – this lets someone I nominate act as “me” while I am alive – I do not need to be disabled.
The POA does not enable anyone of act on my behalf after I die. This limbo period (immediately after death) should be considered by you and your family.
The POA does not enable anyone to step into my work roles, say, as a fiduciary. This needs to be considered.
If you execute a POA then place the original in a fire safe where you can run it through a shredder (not joking) in case there’s an issue with the person you appointed – I’ve seen a lot of wacky stuff in my life, things change and this is a very powerful document.
Living Will – this covers how I’d like to be treated when I’m dying. Very useful for your family, who will be blasted if you’re in any sort of condition to need to dust off this document. Also useful for your medical representatives, who may be reluctant to deny you treatment.
Medical Durable Power of Attorney – just what it sounds like – who is authorized to make medical decisions on my behalf. Keep the contact details up to date and available to your family.
HIPAA Releases – who can receive my medical information. There could be people you’d like to have informed, but not act on your behalf.
Living Trust – a very useful form of trust – assets can come in/out and it can be used to title financial and real property assets – a local attorney can tell you more.
These documents are not expensive to put in place.
My current will was done ~13 years ago and has seen 4 changes.
The changes were minor, inexpensive and easy to arrange. Once again, doing it right the first time saved us time, money and hassle.
The original will predates my kids. You might get a kick out how it played out.
Before my wife was pregnant, I was leaving my life to charity. At the signing meeting, my lawyer, who drafted the docs, smiled and said, “I bet I see you in a couple years to change that part.”
Sure enough, my kids arrived, I got to know them and I made some revisions. Those revisions start to get a little complex so I’ll outline them in another post.
Most people don’t need complexity. All my assets, eventually, flow into my living trust, which already holds title to most of my assets. Standard clauses are used to protect my spouse and follow the tax code.
Whatever you decide to do – double check what’s required for a will to be valid where you live. There are places where a handwritten letter, witnessed by the sole beneficiary, doesn’t work. Colorado is one of them – link is to what’s required for a will to be valid in Colorado.
A good attorney, familiar with the laws in your state, is essential. She will have you decide, in advance, on the areas where disputes happen.
Ask your attorney about something called Joint Tenancy with rights of Survivorship. It can be a useful way to hold property titles for some situations. Link from the Colorado Bar Association.
Also find out about successor beneficiaries for your assets. Certain jurisdictions will let you nominate where your assets go, separate from a will.
Your attorney will likely have a checklist of items for you to consider => 529 accounts, retirement accounts, death benefits… take time to think it through.
The US has something called Stepped-Up Basis – it is worth learning about. Basically, certain assets (like real estate) have their taxable basis reset at the date of death.
I’ll illustrate with a quick example: Grandpa G bought a house in 1980 and his taxable basis is $50,000. He dies in 2020 and the house is worth $1,000,000. If he sells the house the day before he dies the gain is $950,000. If his estate sells after his death then then gain is $0.
Be aware there are wrinkles to do with trusts and certain types of assets don’t qualify.
With all this stuff => ask an expert.
If you trust someone enough to give them a General Durable Power of Attorney then consider making them a signing officer on an “operating account.”
More than a decade before we needed it, a grandparent did this in our family. This made it easy for a trusted family member to pay bills before we were in a situation to invoke the POA.
It also removes the expectation for the wealthiest member of your family to finance everything, which can create an unnecessary distraction when you should be supporting each other.
Kids => If your kids end up orphaned then you might want to split their “care” from their “finances.” The skills of a Guardian could be very different than those a Conservator. Are you familiar with these terms? Ask your lawyer to explain.
Andy used to joke that all we needed to do was leave him with enough to cover a beach hut in Central America. With a small nest egg, he’d ensure our kids were well loved and became pro surfers…
We miss him dearly.
Final words of advice…
1/. There are good people who are useless under duress
2/. There are people who cope with grief by misusing veto power
Think carefully about who you put in charge and what you let them control.
I have a medical doctor and a military officer in my structure => individuals I trust to be compassionate, and execute my wishes, under duress.
This a quick outline – take expert advice from someone familiar with your jurisdiction.
I’m not an expert. Over the years, I have hired experts and it has proven to be money well spent.