Estate Planning

It’s February already, and today is another gloomy, drizzly day. As I’m writing this, it is getting close to February 28, the day when most people give up on their New Year’s resolutions. How are you doing with those resolutions?  I’m trying to stick with my resolution to go outside every day for 23 minutes, but days like today make it much more difficult to get out the door.
 
One resolution I would urge you to keep, is to get an Advance Directive for Healthcare, or help someone you are caring for complete one. Clients often get stuck because they don’t really know what care they might want at the end of life, or don’t know who should make the decisions about end-of-life care.
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I just got back from a trip to the beach where there were back-to-back weddings near the ocean.  So many new brides and grooms!

Are you planning to get married or divorced in the near future?  How will that affect your estate plan?

An estate plan has lots of pieces and moving parts, but let’s start with how marriage and divorce affect the basic legal documents you should have in your estate plan.

WHAT HAPPENS TO MY OLD WILL?

If you marry after signing a will and you have not specifically stated in the document that you are executing the will in anticipation of a future marriage, that will signed previous to marriage will not be valid.  If you then die without executing a new will, you will die intestate and the rules of the state of Georgia will control distribution of your assets.  That means that if you have a wife and children, your new spouse will share the assets in your probate estate with your children.

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For many of you, the bulk of the estate ("stuff") that you will be passing on to your loved ones is controlled not by your will, a trust or the probate court, but by the beneficiaries you designated on forms filed with financial institutions. 401(k)'s, IRAs, and Life Insurance policies will be distributed at your death based on whom you have chosen as a beneficiary.

Based on my conversations with clients, I'm betting that many of you have not checked those designations in a very long time - if ever.

What can happen if you name the wrong beneficiary or No beneficiary?

First, let's talk about what may happen if you name no beneficiary. If you do not name a beneficiary for a life insurance policy, after your death an estate will have to be opened to receive the money from that policy.
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If a person dies without a will, they are said to have died “intestate”.  When that happens, the person’s assets will be passed to the heirs based on the rules that Georgia’s intestate succession rules. 

The probate process for a person who is intestate is called an administration and the person named to take care of your estate after your death is called an administrator.  The administrator will file a petition in the probate court, and once appointed and sworn in by the judge, the administrator will first pay the debts of the estate and then make distributions to the living heirs of the deceased person.

• If you have a spouse but no children, the spouse will get the entire estate; 
• If you have children, but no spouse, your children will divide the estate equally.

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Mary, an independent, strong-willed woman all of her life, realized that she might need help managing her finances.  She came to me with concerns that her memory might be slipping a little, and she was afraid that she might forget to pay her bills.  After assuring her that she was fine, I encouraged her to consider placing her assets in a trust so that she could write her own rules for management of those assets.  Mary was skeptical.  “Trusts are way too complicated for me!  I don’t even know what a trust is.

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Mary has several businesses, a real estate partnership with one other person, another business organized as a Limited Liability Company of which she owns 51%, and a third business organized as a corporation which Mary owns 50% of the shares and her brother owns the other 50%.

Mary has three children, two are well into adulthood, but her youngest is 17 and will be starting college next year and plans to study medicine after she completes her undergraduate degree.  Her oldest child, Lindsey, has been working in Mary’s LLC for several years, and has expressed interest in becoming an owner at some point in the future.  The other adult child, Hunter, has no interest in working in any of the businesses.

As a single mother, Mary is concerned about what will happen to her businesses because they are her main source of income and her largest assets.

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Last month, we discussed the most important documents you need to prepare yourself for a potential disability that impairs your ability to make financial or healthcare decisions for yourself.  This month we will discuss what to do if you are responsible for making healthcare or financial decisions for someone with a disability.

A few years ago, my father started to show signs that he was suffering from dementia.  He was always a very intelligent man and had good social skills, so the dementia was most likely hidden for a number of  years. 

At some point, he began paying his bills twice or not paying them at all, and he and his girlfriend got lost while driving to familiar places.

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Most parents are conflicted when their children reach their 18^th birthday.  For many families, that means their child will soon be leaving home for college, a new job, or the military.  For parents of children with developmental disabilities, it can be very scary when that child turns 18, because the law presumes an 18-year-old is an adult with the legal rights and responsibilities that come with adulthood.  When a child turns18, the parent no longer has the legal authority to make decisions for that child.

Joshua, a good-looking young man with a developmental disability, turned 18 six months ago.

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Phew!  I’ve reached that point in life where I can relax – not much, but a little- because both of my children are adults and, for the most part, out of the nest.  Until just a couple of years ago, I broke out in a sweat every time I had to go out of town on business by myself.  Not only did I worry about whether my kids would get fed, get their homework done and make it to soccer practice on time, but I also worried about what would happen to them if I had an accident and didn’t make it home. 

If you have minor children, children under the age of 18, I’m sure you worry about that, too.  If you are not around, who will feed them, help them with their homework and get them to soccer practice?

Choosing someone to care for your children is difficult.

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Last month, we introduced our year-long project to organize our estates.  How did you do? Did you check all the boxes?  As with most projects, sometimes getting started is the real goal, so give yourself a gold checkmark if you did anything to start getting your estate in order. 

This month, it is time to make sure we have legal documents in place to protect in case we become unable to make or communicate significant decisions about our healthcare or our finances.

Years ago, I had a potential client whose daughter called my office several times to make appointments for him to get his estate planning documents prepared.  As each appointment time approached, he called my office to cancel.

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Adults, those persons who are over the age of 18, are presumed to have the legal right to make their own healthcare and safety decisions.  However, in the event that an adult cannot make or communicate healthcare decisions, there should be legal documents in place to allow someone to be a healthcare surrogate decision maker.   In Georgia, an adult who is able to understand what s/he is signing, can nominate an agent to make healthcare decisions for her/him for the time when s/he is not able to make such decisions.  The primary document for nominating that person is called an advance directive for healthcare. 

What is An Advance Directive for Healthcare?

An Advance Directive for Healthcare is a document in which you nominate an Agent to make healthcare decisions for you if you are not able to make or communicate those decisions for yourself.

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