Thursday, November 26, 2015

Some Difficult But Important Conversations To Have This Thanksgiving

FROM FORBES.COM

Thanksgiving is right around the corner and with it comes family gatherings and overindulging. While I enjoy a good turkey dinner as much as anyone else, let’s not forget that the holiday is really about being thankful for our loved ones and not taking them for granted. I was recently reminded of this when I read the story of a woman named Chanel Reynolds. Her husband went for a bike ride one day and ended up in the hospital after being hit by a van. Chanel was forced to make the difficult decision of removing his medical support after she was told that he had no chance of recovery, leaving her a single mom.

With all her trauma and grief, what pushed her “over the edge” was the stress of not knowing basic things such as how much life insurance he had, if his will was valid or even what the password to his phone was. To help others avoid the same fate, Chanel created a website that provides a checklist of steps to take to get your stuff (although Chanel uses a more attention-grabbing word in the name of her site) together, free templates for basic estate planning documents, a free “Monthly Nudge” email newsletter, and links to other resources. We all know we need to get our “stuff” together, but sometimes it takes a story like that to motivate us to act.

Even if we know the importance of it, it’s easy to procrastinate since we always think we have more time…until it’s too late. So after enjoying a wonderful Thanksgiving dinner, make the time to have some important family conversations with those who may be directly affected. After all, there may be few other times when you’re all together. Tell your family your wishes – what type of medical care you’ll want when you can’t talk for yourself, what you want your final services to be like, who you want to raise your minor children, and how you want your possessions handled. Then help make sure your wishes are actually carried out with this checklist of documents and insurance policies:

A health care directive includes a living will specifying your wishes for end-of-life care and a health care proxy or power of attorney appointing someone to make health care decisions for you if you’re unable to.

A durable power of attorney appoints someone to make financial decisions and manage your money on your behalf. If you make it “springing,” it would only take effect if you’re incapacitated.

Disability insurance can replace up to 60% of your income if you’re unable to work. See if it’s offered through your employer since it’s generally much more expensive on the individual marketplace. In deciding how much you need, just keep in mind that the benefits are taxable if your employer is paying for it and tax-free if you are.

A will can designate who inherits your assets and perhaps even more importantly, who would be the guardian of any minor children you may have.

Beneficiary designations on any retirement accounts, HSAs, education savings accounts, and life insurance policies you have trump your will and allow those assets to pass on directly to your beneficiaries without going through the time and cost of probate. This is especially important if you live in one of these states with high probate fees.You can also generally add beneficiaries to a bank account by asking them for a POD (payable on death) form and to an investment account by asking for a TOD (transfer on death) form. In some states, you can even add beneficiaries to real estate with a beneficiary deed and vehicles with a TOD registration with your DMV.

A living trust can prevent any remaining assets from going through probate and establish more complex rules for administering and passing on your estate.

Life insurance can close the gap between what your dependents will receive from their inheritance and pension and Social Security survivor benefits and the income they will need. For any additional coverage you need, compare the cost of getting it  through your employer (check to see if it’s portable or able to be taken with you if you leave your employer) with the cost of purchasing it individually.

An ethical will isn’t a legal document but a way to convey personal stories, messages, or explanations to your loved ones after you pass away.

In addition to Chanel’s site, you may be able to draft any documents you need through your employer. Many employers offer a basic estate planning document drafting program for free or through a pre-paid legal benefit. The latter can also include discounted attorney services for reviewing any documents you create on your own and for drafting more complex documents like a trust.

Otherwise, you can find an estate planning attorney through referrals from family, friends, or other professionals you work with, through your local bar association’s lawyer referral service or through estate planning organizations like the American Academy of Estate Planning Attorneys and the National Network of Estate Planning Attorneys. It’s a good idea to interview at least three before picking the person you’re most comfortable with. You can find some questions to ask prospective attorneys here.

Finally, all the perfect documents and insurance policies won’t do much good if your loved ones can’t easily locate them when needed. Make several copies of your documents and give one to the executor of your will, your trustee, and your powers of attorney. Keep another copy with your other important documents, like your life insurance policies, titles and deeds, and a list of your accounts along with usernames and passwords. You can use an online storage site, like MyDirectives. The Doc Safe, Everplans, and AfterSteps,  but don’t forget to communicate how to login to that site as well. That way, if something happens to you, your loved ones can carry out your wishes as easily as possible.

I know these are not always comfortable topics to think about and discuss. However, the only certainty is that some type of estate plan will be needed someday. When that time comes, having your “stuff” together can really make things much easier on your loved ones and they’ll be thankful you did.