Steps for End-of-Life Planning

Most people don’t consider anything about planning for incapacity or death to be joyful. However, if you consider estate planning documents as a way to share your wishes and make your departure easier for those you love, as well as a means to express your thoughts and feelings, it could make these tasks a little easier and establish a legacy for your loved ones. A recent article from The Washington Post, “6 joyful steps for end-of-life planning,” could help reframe how you think of estate planning.

From a practical standpoint, death and incapacity are complicated for loved ones. There is always an emotional toll which renders loved ones less capable than they typically would be in dealing with post-death tasks.  Preplanning through your estate plan will help ease their burden.

They will appreciate your preparing medical powers of attorney or similar documents which should be created when a person is healthy, and not when they are in a hospital bed. The same goes for funeral arrangements, which are costly. There are so many choices and decisions to make—do your loved ones even know what you want? Leaving instructions in an appointment for the disposition of remains and maybe even prepaying services will remove the burden for loved ones to know what you wanted and dealing with the expense of paying for it.

Digging through a loved one’s credit card bills, cellphone accounts, bank accounts and internet passwords is a big challenge in today’s digital world. It was far easier when there were stacks of paper for every account. Today’s fiduciaries need to have access to more information to avoid lost assets, avoid identity theft and prevent roadblocks to wrapping up your estate.

Here’s a checklist to help get your estate plan moving forward.

1 Estate Planning Notebook. The author of the article called this a crisis planning binder.  We actually give our clients one binder with all the estate planning documents to make it easier for loved ones. You should make additional copies, but keep originals in one place—and tell your fiduciaries where the originals and binder can be found.  You can also include information in the binder to facilitate gathering assets and administering your estate, such as information on bank accounts, contact information for professionals you’ve worked with, information on assets, debts, contracts, the above-referenced final internment instructions and more.

Please see Mary’s article here for more ideas on what to include in the binder:  https://galligan-law.com/not-a-little-black-book-but-a-big-blue-estate-planning-binder/

2 Have a medical power of attorney created while you are having your estate plan made. This tells your loved ones what you want in case of incapacity and end-of-life decisions and isn’t typically what people think about in an estate plan.  Appointing a person to act for you in these situations and communicating these wishes will greatly ease their burden.

3 Have an estate plan created with an experienced estate planning attorney. Without an estate plan, the laws of your state determine how your property is distributed.  Most people mistakenly assume that the law will quickly and easily let property pass to their loved ones, but that is often not the case, or worse, they make bad assumptions about which loved ones inherit.

Estate plans are also state-specific, so a local estate planning attorney is your best resource. Be wary of online documents—if they are deemed invalid, or even worse, valid but terrible, you will have greatly increased the cost, time and energy of your estate administration, and may still not get what you wanted.

4 Make a digital estate plan. No doubt you have more than one email account, shopping accounts with more than a few retailers, credit cards, car leases or loans, home mortgage payments, social media, cloud storage, gaming accounts and more. Without a complete and comprehensive list of all accounts, your executor won’t know what needs to be closed, where your personal documents or photos live or how to retrieve them.

5 Plan your Final Internment. This isn’t always easy for a person to do, but if you find it difficult, imagine how your loved ones will feel.  Even if you don’t prearrange, many states, Texas included, provide the power to name a person to execute your wishes for final internment and to describe those wishes.  This is often called an appointment for the disposition of remains. You’ll feel better knowing your wishes will be followed, whether it’s for a “green” funeral or a cremation, with a long period of mourning following your faith’s tradition or a short memorial service.

6 Write a letter of intent and any final farewells. This is an opportunity to share your thoughts with those you love, with healthcare providers and anyone else who matters to you, about healthcare decisions at end of life, or to convey your values, hopes and dreams for those you love.  This is similar to the “ethical will” and leaves the legacy of your values to your loved ones.

When these issues are complete, you’ll be surprised at the sense of relief you feel.

Reference: The Washington Post (Jan. 5, 2023) “6 joyful steps for end-of-life planning”

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Can You Refuse an Inheritance?

It’s a bit of a strange thought, but occasionally there are reasons for people not to want their inheritance.  They may have expected the money to go to someone else and want to facilitate that, they may feel they have enough money and want it to pass to someone else, or perhaps they are concerned about taxes.  Whatever, the reason, no one can be forced to accept an inheritance they don’t want. However, what happens to the inheritance after they reject, or “disclaim” the inheritance depends on a number of things, says the recent article “Estate Planning: Disclaimers” from NWI Times.

A disclaimer is a legal document used to disclaim the property. To be valid for at least most tax purposes, the disclaimer must be irrevocable, in writing and executed within nine months of the death of the decedent. You can’t have accepted any of the assets or received any of the benefits of the assets and then change your mind later on.  Basically, you can’t receive the assets, and then decide to give them back as though you didn’t want them in the first place.

Once you accept an inheritance, it’s yours. If you know you intend to disclaim the inheritance, have an estate planning attorney create the disclaimer to protect yourself.

If the disclaimer is valid and properly prepared, you simply won’t receive the inheritance. Instead, the property will go to whomever would have received had you predeceased the decedent.  That might be many individuals, so it is important to understand to whom the property will go if you disclaim.  It might be based upon the trust or will that named you originally, a beneficiary designation on a financial asset or the intestate laws of the state where the decedent lived.

Once you disclaim an inheritance, it’s permanent and you can’t ask for it to be given to you. If you fail to execute the disclaimer after the nine-month period, the disclaimed property might then be treated as a gift, not an inheritance, which could have an impact on your tax liability.

Persons with disabilities who receive means-tested government benefits should never accept an inheritance, since they can lose eligibility for benefits.  Now, some states will consider a disclaimer a transfer for government benefits, meaning you may lose the benefits anyway.  So, the best solution is to consult with a lawyer as soon as possible how to handle such an inheritance.

A supplemental needs trusts may be a good solution so the beneficiary with a disability can receive the inheritance without loss of benefits.  You can see more on SNTs here.  https://galligan-law.com/how-do-special-needs-trusts-work/  

The high level of federal exemption for estates has led to fewer disclaimers than in the past, but in a few short years—January 1, 2026—the exemption will drop down to a much lower level, and it’s likely inheritance disclaimers will return.  So, if you want to consider a disclaimer, definitely speak to a qualified attorney who can assist you with the process.

Reference: NWI Times (Nov. 14, 2021) “Estate Planning: Disclaimers”

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Estate Planning Checklist

Dying without an estate plan creates additional costs and eliminates any chance your wishes for loved ones will be followed after your death. Typically, people think about a will when they marry or have children, and then do not think about wills or estate plans until they retire. While a will is important, there are other estate planning documents that are just as important, says the recent article “10 Steps to Writing a Will” from U.S. News & World Report.  To help identify those needs, I prepared an estate planning checklist which you can find below.

Most assets, including retirement accounts and insurance policy proceeds, can be transferred to heirs outside of a will, if they have designated beneficiaries. However, the outcome of an estate may be more impacted by Power of Attorney for financial matters and Medical Power of Attorney documents.  To help figure out what you may need, you can use this article as an estate planning checklist.

Here are nine specific tasks that need to be completed for your estate plan to be effective. The documents should be prepared based upon your state’s law with the help of a qualified estate planning attorney.

  1. Find an estate planning attorney who is experienced with the laws of your state.
  2. Select beneficiaries for your estate plan.
  3. Check beneficiaries on non-probate assets to make sure they are current.
  4. Decide who will be the fiduciaries named in your estate plan (e.g. executor, trustee)
  5. Name a guardian for minor children, if yours are still young.

There are also tasks for your own care while you are living, in case of incapacity:

  1. Name a person for the Power of Attorney role. They will be your representative for legal and financial matters, but only while you are living.
  2. Name a person for the Medical Power of Attorney to make decisions on your behalf, if you cannot.
  3. Create a Directive to Physicians (Living Will), to explain your wishes for medical care, particularly concerning end-of-life care.
  4. Tell the these people that you have chosen them and discuss these roles and their responsibilities with them if you are ready

As you go through your estate planning checklist, be realistic about the people you are naming to serve as fiduciaries. If you have a child who is not good with managing money, a trust can be set up to distribute assets according to your wishes: by age or accomplishments, like finishing college, going to rehab, or maintaining a steady work history, and they should not be in charge of your money.

Do not forget to tell family members where they can find your last will and other estate documents. You should also talk with them about your digital assets. If accounts are protected by passwords or facial recognition, find out if the digital platform has a process for your executor to legally obtain access to your digital assets.

Finally, do not neglect updating your estate plan every three to four years or anytime you have a major life event. An estate plan is like a house: it needs regular maintenance. Old estate plans can disinherit family members or lead to the wrong person being in charge of your estate.  See this article for my ideas as to when to update your estate plan and what to consider.  You might find reviewing the estate planning checklist helpful at that time as well.  https://galligan-law.com/when-to-update-your-estate-plan/

An experienced estate planning attorney will make the process easier and straightforward for you and your loved ones.

Reference: U.S. News & World Report (May 13, 2021) “10 Steps to Writing a Will”

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