Uncertainty and Estate Planning
By: Dennis Fordham
Elder Law Associates Newsletter dated April 28, 2017
Uncertainty makes most of us uncomfortable. It is something most wish to push aside. Much of what happens over the course of our lifetimes, however, is uncertain until much closer to when it actually happens. Estate planning necessarily grapples in the present with the uncertainty of what may happen to us and our loved ones in the future. Let us discuss how we can protect what is important in the face of life’s uncertainty.
Are you and your family protected if you unexpectedly became incapacitated? Incapacity can occur in many different ways and without any warning. If you were to become mentally or physically disabled then who will manage your assets, legal affairs, health care decisions and take care of you and your dependents? Have you considered who you want to manage your finances, your assets and your health care decisions? Do you have a trust, power of attorney, and advance health care directive that authorize your chosen representatives to act on your behalf? If not, then are you aware of what may be the alternative — an expensive, time consuming, and aggravating court supervised conservatorship proceeding?
With properly drafted trusts and powers of attorney in place, when incapacity unexpectedly occurs your chosen agents and successor trustees can manage your affairs and assets without petitioning for court authorization. What would you want done on your behalf? You can provide general and specific instructions in your legal documents for your representatives to follow.
We cannot take it for granted that our first choice of representative will be available, able and willing to act. That is why alternative agents and alternative successor trustee should also be considered and named.
Ultimately, whe you die, how will your surviving loved-ones manage without you? How will they remember you in terms of what you did to make life easier on them? Will they have to petition the court to probate your estate? Will their future circumstances mean that someone else should manage their inheritances — in further trust — or will their circumstances allow them to inherit directly? Will your intended loved ones even survive you, and, if not, are alternative beneficiaries effectively named to inherit each of your assets?
Retirement accounts, annuities and other pay on death beneficiary assets are often neglected when it comes to naming alternative beneficiaries. Do you know who would inherit such non probate accounts if both the primary and first alternative beneficiary predecease you? Often parents name their spouse and then their children on such accounts but don’t update the death beneficiary designation when their spouse dies.
Naturally estate planning requires careful consideration and professional guidance. Bad estate planning can sometimes produce worse results than no estate planning at all.
Estate planning is best done in advance when there is no compelling reason to do so. You are much more likely to get it done correctly. It should periodically be reviewed and if necessary updated over the years to reflect changes involving your family, your wishes, and the law.
Some people nevertheless prefer to avoid addressing incapacity and mortality issues as they feel that it is uncomfortable and is not immediately necessary to do so now. Procrastination is the path of least resistance when there is no compelling reason to act now.
Nonetheless, if you procrastinate you are not guaranteed to both be able and have the opportunity to prepare and sign estate planning documents in you and your family’s best interest. Being proactive not only safeguards you and your family but also provides you with some peace of mind in the now. Something that procrastination will never do for you no matter how long you wait.