My dad and Aretha Franklin have something in common.  No, he wasn’t a world-famous Rock and Roll Hall of Fame singer and songwriter.  I can’t say that I have ever actually heard him sing.  He was a quiet and private man who lived a relatively simple life.  What they did have in common is that they both died intestate, which means they died without having a will in place. 

I wonder if my father truly understood just how challenging a situation he was leaving behind for me and my siblings.  I know for certain that my father loved us all deeply and would have done anything to protect us.  The way he lived his life made that very clear.

But the way he passed from this life left his children with a heavy burden to bear.  I’ve been reflecting these past few weeks on how the choices we make while we’re still alive have such a powerful impact on the people we love after we’re gone.  If you want to protect your loved ones from these burdens, here are five lessons that I know, from personal experience, will really help your family.

 

MY FAMILY’S STORY

I have worked in the wealth management industry for over 25 years and I completely understand the importance of a sound estate plan as part of an overall financial plan.  I feel like the proverbial shoemaker whose kids don’t have shoes or the carpenter whose house is in shambles.  This never should have happened in our family (or Aretha Franklin’s family). 

As my dad’s health declined over the past few years, I would broach the topic of a will, powers of attorney for property and health, his finances and other topics.  He would always avoid the topic as something to be discussed for another day.  Nobody ever likes to think of their own incapacity or death.  It’s just not a pleasant subject.

Luckily, I was able to get involved by helping him pay his bills to gain a basic understanding of his financial situation.  Yet, we never got “around” to executing a durable power of attorney for property.  This very important document names an agent who is responsible for asset and financial management in the case of illness or incapacity.  Somehow, I thought my dad would live forever so there was no rush in taking care of these formalities.  I was so wrong.

This summer, his health took a turn for the worse and he spent some time in the hospital and then a rehab facility.  During this time, he completely lost his mobility and quickly lost his cognitive abilities too.  The medical facility coordinated the advanced healthcare directive, or living will, which provides instructions on what kind of medical treatment a person wants – or doesn’t want – in the case of critical illness and most certain death. 

My brother and I were left scrambling to get durable powers of attorney for property and healthcare in place.  This allowed me to continue to pay my dad’s bills by granting me authority on his bank accounts and allowed my brother to be involved in making medical decisions on his behalf.  There was no way we could physically get him to an attorney to draft a will or trust document, by that point

My brother and I discussed having a will drafted for him, but we were hesitant to bring up the subject with our dad since he was in such poor health.  We felt like it would be calling attention to the fact that we thought he might not be around much longer.  We were so busy with so many other things including trying to spend as much time with our dad as possible that it never seemed to be the right time.  You can guess how this story ends.  It ended much sooner than anyone would have expected.

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THE HEAVY LIFTING THEN STARTED

At a time when my siblings and I were struggling emotionally with the passing of our father, we were also contending with a new set of burdens.  Here are just some of the situations we’ve had to face.

I met with an estate attorney to start the process of opening an estate for my dad.  However, without a will or trust in place, the attorney must obtain written disclaimers from all of my siblings before going to probate court to petition for me to be appointed administrator of my dad’s estate.   

Once I’m appointed the administrator, which could take a few months, I will need to obtain a surety bond.  This serves as insurance to protect and compensate any affected parties (beneficiaries or creditors) if I should fail to perform my duties.  A surety bond is required by law in cases such as mine.  On the other hand, a will can include a waiver of the requirement for the bond and the executor would not be required to obtain one.

While we waited for the estate to be opened, my dad’s bank accounts were not accessible.  His bank accounts were titled in his name only and were frozen by the bank upon his death.  Because durable powers of attorney become invalid upon the death of the grantor, the bank cannot take instructions from me until I’m formally named the administrator of his estate.  This also means we can’t sell his real estate, or car or other assets until the estate is established.  This creates short-term financial burdens for me and my siblings – something I know my father would have never wanted.  

The carrying costs for his home, and other bills like funeral costs, will need to be paid out-of-pocket by me or my siblings these next few months.  I suppose we are fortunate that I have excellent bookkeeping skills and everyone will be refunded once the estate is opened.  We are also fortunate that there are no disputes amongst us siblings that would cause issues in settling the estate.  Not every family is so lucky. 

 

FIVE LESSONS LEARNED – THE HARD WAY

The passing of a loved one, whether old or young, is a devastating experience to any family.  But I believe that burden can be greatly reduced by preparing now for what we all know inevitably will come.  Here are five lessons that can help your family, based on my family’s experiences:

  1. Don’t avoid having the difficult conversations
  2. Time is not your friend
  3. Knowledge is not enough
  4. Make your wishes clear
  5. Seek advice from an outside, qualified third-party

The difficult conversations are important, even necessary, and they can protect the ones you love.  Don’t avoid them.  Don’t put them off for another day.  I wish I had been more persistent with my father.  Families who don’t have these conversations put their loved ones at risk, especially if seeds of discord already exist in the family.

Time is not your friend.  This became evident to us only after it was too late to take action that we knew we needed to take.  Don’t procrastinate.  Don’t put off until “a better time” the things you know need to get done.  It is not safe or wise to assume that you can take care of these issues at some point in the future.  What’s wrong with now?

Knowledge is not enough.  I knew precisely what needed to be done…  And yet, it didn’t get done.  This is hard to admit.  Getting an estate squared away can be a time-consuming and laborious process.  But it’s MUCH easier to do this when a loved one is still alive.  This is why I believe you need a plan to get the work done, a division of duties among family members and a commitment to completion by a specific date on the calendar.  This greatly increase the likelihood that you’ll actually do what needs to be done.

When you are planning your estate, I advise you to make your wishes clear.  This is especially important in families where conflicts exist.  It is possible that a family member might be upset with the decisions you’ve made.  But it is far more likely that your family members will be upset with each other if you leave the decision-making up to them.  When you make the decisions, you increase the chances that they will love and feel connected to each other for the rest of their life, after you’re gone.

I also advise you to bring in a qualified third party, someone your loved-ones will respect and listen to.  I believe that if my family would have had this – someone to help drive the process and not let things just linger on – we could have avoided a lot of problems.  It’s relatively easy to dismiss a family member, or in my case, a person my father still thought of as his little girl.  It’s much harder to dismiss a professional who does this work for a living and is persistent and professional in their approach. 

 

FIVE FUNDAMENTAL ESTATE PLANNING DOCUMENTS

There are some foundational planning documents all legal adults (a person having reached the age of majority) should have in place, regardless of age.  Unfortunately, young adults can also become incapacitated or pass away.  I recommend that you put these documents in place for your adult children if you haven’t already done so:

  1. Advanced health care directive.  Also known as a living will, this document provides medical professionals with instructions on what kind of medical treatment a person wants or doesn’t want in the event of terminal illness or irreparable injury.  This document covers a narrow range of situations, most notably when the patient’s health status is determined to be terminal and death is likely within a matter of days or weeks.
  2. Durable power of attorney for property (DPOA).  This is a legal document in which the grantor names an agent responsible for asset and other financial property management in the event of the grantor’s illness or incapacity.  This document is only valid during the grantor’s lifetime.
  3. Durable power of attorney for health care (DPOAHC).  This is a legal document in which the grantor authorizes an agent who will be responsible for all health care matters in the event of the grantor’s illness or incapacity.
  4. Last will and testament.  This legal document outlines the disposition of assets at one’s death.  The document also typically appoints an individual to serve as executor of one’s estate.  It also appoints a guardian to take care of minor children if applicable.  This document is filed with the probate court upon the death of the testator.
  5. Living trust.  Unlike a will, assets titled in a living trust avoid probate and pass upon the grantor’s death according to the terms of the trust.  Typically, the grantor will serve as the trustee of their own living trust.  The trust document names a successor trustee to serve upon the death or incapacity of the grantor.  It’s important to understand that assets held individually by the grantor are not automatically included in a Living Trust. Once a living trust document is executed, it is the grantor’s responsibility to have assets (such as a home or brokerage accounts) legally retitled into the name of the Living Trust

If you have these documents in place already, it’s a good idea to review them periodically for validity and have them updated if necessary. 

 

NEXT STEPS

Please learn the lessons of my dad and Aretha Franklin.  Do your family a favor and put these basic estate planning documents in place while you are of sound mind and body.  If you have young adult children or aging parents, have the conversation regarding the importance of executing these documents.  If you need guidance on what’s right for your situation, we stand ready to help you in the process.

 

© 2018 Whitnell & Co.  The information contained in this article is provided for informational purposes only.