One of the easiest action items to consider, but never do, is listing your New Year’s resolutions. One particular important but commonly ignored activity is estate planning. Combine the two and it is understandable that very few people have given much serious thought to estate planning when creating their New Year’s resolutions. Still, as many Estate Planning professionals and attorneys will advise, one of the most common challenges is when individuals and families are forced to make major life-changing decisions or deal with the passing of a loved one, with out-of-date or non-existent estate planning documents. Bearing this in mind, below are four estate planning resolutions for the New Year that everyone should consider:
1.) Have the difficult conversations
To establish a sound estate plan, your family must confront the reality that everyone will die and some may become incapacitated prior to death. The family should resist the temptation to avoid certain legal, financial and emotionally-charged issues. If not enough attention is devoted in advance to communicating an individual’s wishes, there is a good chance those wishes will not be honored. Having the challenging conversations now is a major step towards honoring those wishes later. Such issues typically include who should make legal and financial decisions under a Durable Power of Attorney, who should serve as Executor of the estate, who should make medical decisions for you, what type of care do you want if you are in an end-stage medical condition, and who should receive your property when you die, when and how. Your planning will help survivors better know your intentions and such knowledge may reduce the tension between and among heirs, because your goals and objectives were thoroughly communicated and recorded in advance.
2.) Confirm Your Estate Plan is Current
What kinds of changes have occurred in your life since the last time you updated your Estate Plan? Have you married, divorced and remarried or had a spouse prematurely die. Have once minor children grown into adults? Have any children married or had children of their own. Have you had additional children? Have you retired? Any of these major life events, can have a significant impact on how your estate is managed when you are no longer able to make your own decisions, and distributed when you are gone.
3.) Make the Most Important Decisions in Advance
One of the most important estate planning decisions is what to do while we are still alive. More to the point, there could come a time when sensitive decisions need to be made on end-of-life issues. What measures do you want to be taken to extend your life (or not) when you are not in a position to communicate your wishes? Four important documents come to play:
- Durable Power of Attorney – allows your designee, or agent, to take control of your financial and legal matters.
- Release of Information – lets healthcare providers share your medical records with your family or other designees.
- Healthcare Power of Attorney – allows your designee, or agent, to make your medical decisions.
- Living Will – a document which includes specific instructions on what kind of medical care and treatment you want, or do not want, if the medical determination has been made that there is no realistic hope of your significant recovery from your end-stage condition.
4.) Revisit Your Life Insurance
Do you have enough to cover your family’s needs when you’re gone? At a minimum, is there enough to cover your healthcare and funeral costs? Alternately, if your children are grown and your retirement funds are substantial, do you need the current level of insurance coverage? Now would be a good time to review how much insurance you have and consider whether you need more or less. Another reason to have life insurance is to provide your heirs with immediate cash proceeds to satisfy death taxes related to the distribution of your estate.
Any one of the above four resolutions, if adopted and implemented, is a positive step forward. Following through on all four should provide comfort to you and your family by knowing you have tackled and made the difficult decisions. If you are interested in reviewing your estate plan, do not hesitate to contact any of the attorneys in our Estates and Trusts Group.