As estate planners, we ask our clients a lot of questions and answer a lot of questions to help craft an estate plan that meets the needs of the client’s family and situation. We each have our own families and our own situations that need careful thought as well. Here are some of the thoughts that we have considered as we have created our own estate plans.
Entering the work world
As someone who recently entered the “real world,” there are many new responsibilities, including maintaining an apartment, investments, health insurance, bills and taxes. As a single adult with no dependents, an estate plan seemed unnecessary initially. However, part of my new responsibilities include being prepared for the unexpected as well. Taking the time to ensure my loved ones have a clear understanding of my wishes, in the case of an unexpected event, is another responsibility I have now. Health care proxy, power of attorney and will, here I come.
I do not have an estate plan or incapacity documents (i.e., power of attorney and health care proxy), which is not good for an estate planning attorney. I do anticipate putting a formal estate plan into place in the next year or so. For now, all of my financial accounts have transfer-on-death instructions and/or beneficiary designations, which name my parents as the primary beneficiaries and my sibling as the secondary beneficiary. I do not own real estate and do not expect to be purchasing real estate any time soon either.
It’s time for me to review my own plan. My concerns are: Are my health care proxy, durable power of attorney, will and trust up to date? Do they work with the recent changes to state and federal laws? Are the agents, executor and trustee I picked still good choices? Are all my assets titled in the name of my trust so that my estate avoids the expense and delay of probate at my death? Do my life insurance and retirement plan designations still work with my plan?
As I approach my wedding date, I am thinking about updating my transfer-on-death instructions and beneficiary designations to reflect my fiancé as the primary beneficiary and my parents as the secondary beneficiaries. My fiancé and I have discussed but do not plan to sign a prenuptial agreement as neither of us has any substantial assets or expects a substantial inheritance from our parents.
Prior to getting married, my (now) spouse and I were starting our careers as attorneys. We thought, “How can we advise clients all day long that they need an estate plan when we, ourselves, do not have one?” Despite not being married, we executed our powers of attorney, living wills, health care proxies and wills. In going through the process of drafting our own estate planning documents, we realized that we had appointed people who would not have been our default agents by law. Additionally, we realized that it was even more important for individuals who are engaged (and not married) to have these documents in place. Without them, my fiancé would have had no say in my medical or financial affairs.
Starting a family
As we begin to think about starting a family, we know it will be especially important to have proper wills in place that will allow us to appoint guardians of our minor children and provide that their distributions be held in trust, for health and education purposes, rather than given to them outright.
Young and growing family
As a parent of teenagers, I am getting my first glimpses of what my children might be like as adults. This has made me consider whether I want their inheritance to pass outright to them or remain in trust for a long or short period of time. I have also reconsidered which family members to name as guardians because I feel it is now important for them to remain in the Boston area. I have also thought about whom I would name as trustee of assets because I want someone in that role who is wise financially but can also relate to my children as they mature into adulthood.
Parent of an 18-year-old
As my daughter was preparing for college, I thought about how I would no longer be able to do things for her just because I was her mother. No longer would the doctors talk to me without her permission. No longer could I handle her financial matters. It was now time for her to take over these matters herself (even if I wasn’t sure she was 100% ready). What if she was injured and couldn’t make medical decisions for herself? What if she was too far away to take care of a financial transaction at our local bank? She needed a health care proxy and power of attorney before she headed off to college.
Parent of young adult children
My kids have graduated from college and started their careers. I have made sure they have health care proxies, durable powers of attorney and wills, that they are investing in their employer-provided 401(k) and that they understand how to think about their beneficiary designations for their retirement plans and employer-provided life insurance. I also put some money in their IRA accounts every year for which they will thank me when they are my age!
I want my kids to benefit from whatever I can pass to them, not my ex-spouse. Does my plan ensure that my kids are benefitted but that no unforeseen circumstance would result in my hard-earned money passing to my ex-spouse (or an ex-spouse of my child’s down the road)? In addition, are my kids able to handle money? They are good, hardworking and kind but I am not sure they are ready (sorry kids!).
As grandparents, we look at our grandchildren’s young lives and their need for money for education, necessities and buying a home someday. In doing our estate plan, we established a trust for the benefit of our children and grandchildren. The trust gives the trustees the discretion to distribute income and principal to both children and grandchildren with the primary purpose of providing for the education and support of our grandchildren. By having the assets held in a trust, they are protected from the creditors of both our children and grandchildren, including divorcing spouses.
Married with grandkids
It is a lucky parent who does not have to worry about paying a full college tuition for four years for each child. A relatively painless and tax efficient way for a grandparent to help out is by starting to make contributions to a 529 plan for each grandchild as soon as possible after they are born. Now that such plans can be used toward the payment of private school tuitions, they provide additional flexibility if the parents are concerned about having the resources to afford both a private school and a private college.
Families needing special planning
My sibling is in recovery from serious addictions. Although our grandparents wanted to treat my sibling equally, it was important that money not be left outright to my sibling. Our grandparents updated their estate planning documents so that my sibling’s share would be held in trust with our aunt serving as trustee. With this arrangement, my sibling has access to funds, and can use the money for worthy causes in his life, but they are restricted enough that they do not pose the same risk to his sobriety as an outright distribution may have.