The hard reality about putting off making a will and how it can destroy your child’s life. Why every parent needs a last will and testament.
Why does every parent need a will?
Did you know that if you, a parent, do not have a will and die leaving young children, that the state will decide what to do with them? This is why every loving parent needs a will.
(*I am an attorney, but I am not your attorney. Nothing in this post constitutes an attorney-client relationship or should be taken as legal advice. The information here is merely for educational and informational purposes. You should always discuss your situation with your own attorney.)
I am an estate planning attorney and am shocked to meet with people All. The. Time. who tell me “my parents know what to do” or “they know the plan” or “they will be taken care of.”
NO. THEY WON’T.
Your children need you to make a will to protect them.
I have seen it. Over and over and over. If you don’t have a will, and you leave minor children, yes, they might have a roof over their heads, but they won’t just be fine.
If you die on the first of August, who signs them up for school (the school will require proof of address and guardianship)?
What if you die while you are on vacation? Who has authority to pick them up from the police department (the police department may release them to child services if no one has been appointed guardian)?
If you die, and they get sick, who can consent to medical treatment on their behalf (hint…it won’t be you who has all the forms and insurance cards because you are dead)?
Every Parent Needs a Will to Name a Guardian
Even bigger: if you die, and you don’t have a will, what if the person you thought would take care of your children already died or is unwilling to care for them? Don’t shrug it off; I see it happen. More than I ever care to see. It’s horrible. The children are left sitting in my office or outside my office having experienced the worst loss a child could ever feel, and they don’t know where their bedroom will be, who wants them, and if they will ever feel love again. (Ugly tears.)
Want to know something else that is terrible? In Indiana (and I am sure other states), if a child of divorce loses both parents, the stepparent does not have any legal obligation to the child. The stepparent can wash his/her hands of the child, take the estate money, and leave the child penniless and orphaned. Stop pretending that I am just preaching a horror story. It happens. It has happened In. My. Office.
Ok…so I have your attention, right?
Every parent needs a will. Every single one. Now you know that, but what do you do? Where do you start? What do you need to know?
First step: Call an attorney.
First, let’s start with the very beginning. You will need to contact a local estate planning attorney who is licensed in the state where you reside. There are loads of legal sites out there that will draft you a quick and cheap will. However, I am a strong advocate that there is no substitute for an actual attorney. Someone who will discuss options with you and identify problem areas in your planning. A form generator only gives you what you ask it for rather than actual legal advice.
Yes, this will cost you some money. A sweet and simple will appointing a guardian may be $300-$500 all the way to $1,500.00. But, the reason for the variation is because your particular circumstances might dictate different treatment or more complex planning.
For example, if you are divorced, you need different language than if you are married. If you are appointing someone to manage the children but another person to manage their money, then you need different language. If you need to set up a trust for the kids, then you need different language.
Your will can be very specific.
Some parents opt to take a very specific approach: where the children should live, how much money should go to a particular fund, what kind of car the guardian has to drive. Others choose to defer to the wisdom and experience of the person who serves as guardian of your child.
At any rate, whatever your wishes, you need to talk to someone about them. One of the best parts of my job is getting to meet with new and interesting people. It is a huge weight off of my worry-wort shoulders when a young family meets with me and gets their affairs in order.
So, step one, call an attorney.
Second Step: Gather information about your stuff.
You might already have an asset report of your own. You might even be savvy enough to understand what the different titles to your home mean. However, a good estate plan and will are tailored to the individual assets, dreams, and family. For an appointment with me, I ask that clients always know these three things:
- What you own. (Your estate)
- The value of what you own. (Net worth.)
- Who you want to receive it. (The objects of your beneficence.)
What you own:
Don’t worry about bringing your Quicken books or even bringing your deeds and mortgage information. Your attorney might have even looked up a lot of your public records (deeds, personal property taxes, mortgage records, judgment information… Did you know that was public??). Simply bring a simple list. Chances are you will forget about something that your attorney can discuss with you.
What it’s worth:
I don’t need you to get a professional appraisal; tell me a Zillow or Trulia estimate, the approximate amount of your mortgage, what you keep in your accounts, how much you contribute to your retirement plans, and your other big dreams.
Want to get an A+ for preparing? Ask your retirement adminstrator to send me your summary page that shows types of accounts, values, and beneficiaries. All of these things matter.
Planning to buy a vacation property? Tell your attorney.
Know that you have a big inheritance coming down the pike? Tell your attorney.
Do you invest in income generating property like rentals or agriculture? Tell your attorney.
Likewise, tell him or her about your liabilities (this means debt). Assets–liabilities=worth. Don’t worry, your attorney has heard it all. From enormous amounts of credit card debt to student loans that are higher than your mortgage. It won’t make your attorney blush or kick you out, but she does need to know about it. Why?
Well, some debts actually are forgiven if you die before you pay them off, while others follow the encumbered property. Knowing how to plan for different contingencies is another reason you need to meet with a real live person rather than your forms generator.
Who you want to receive your estate:
The third thing you will have to know and decide is who you want to receive your assets. In estate planning classes we call these the objects of your bounty or the objects of your beneficence.
However, in real life, we usually call these your spouse and children! Most parents I meet with leave their assets to each other, then their children almost exclusively. But, you will want to discuss your options if you have a second spouse.
There are other options for gifting, however. For example, you might want to make some specific gifts such as a charitable gift of cash to your church or local community center or a specific gift of personal property to a sibling, cousin, or niece. Grandma’s wedding ring? You probably know who you want to receive it.
Other ways to transfer your estate.
Other options are gifting to a trust. If you have minor children, I highly recommend having a trust set up for them. It does not have to be anything that you think about outside of the estate planning consultation as it will never be funded if you live to a ripe old age.
However, in the event you die while your children are young, then you can create specific trust terms to protect them. Some of those terms might be for the trust to extend beyond the standard 18 years. What would you have done with $50,000 at 18?
Other terms are uses for college, first cars, first homes, and retirement. All of those terms help you to be a parent to your child long after your death. It gives them the provision and the directional wisdom that they might need to make healthy long-term financial decisions. Further, it gives your trustee (the person managing your children’s money) a scape goat for why they won’t let the child have a big check to spend on whatever. A trust is a great alternative option for planning for children.
That’s it. 2 steps. Call the attorney; meet with the attorney.
If you haven’t been convinced, read on.
WHAT YOUR ATTORNEY WILL DISCUSS WITH YOU:
I don’t just want you to show up, I also want you to be prepared. So, what is your attorney going to talk to you about? Your estate plan, yes. But, what is an estate plan?
WHAT IS AN ESTATE PLAN?
When most people think of an Estate Plan, they think of Wills and Trusts. They might think of wealthy and elderly people attempting to guard or control their money. However, a good estate planner will look more holistically at how you want to build, control, and transfer your assets during your life and at your death.
Estate Planning considers your assets both during and after your life. Two of the most powerful weapons in the estate planning arsenal are powers of attorney and wills. Although there are dozens of other documents, these two documents plus trusts are what we will focus on for now and probably the main tools that your attorney will recommend to you.
1. Powers of Attorney.
A power of attorney (or durable power of attorney) allows you to choose someone to make financial and personal decisions for you during your lifetime at your incapacity.
A Property Power of Attorney provides the legal mechanism for someone else to take care of your assets when you cannot.
Powers of Attorney for Health Care allow you to name a representative to make your medical decisions in the event you are incapacitated. Specifically designating your agent (the person who makes your decisions when you can’t) protects you and your family by leaving you and your family in control rather than the state.
Set the stage: You, a relatively healthy individual with young children and certain joie de vivre contract Coronavirus. Although most of your friends had the virus and didn’t notice a thing, you are completely wiped out by it. You are rushed to the hospital, put on a ventilator, and forced into a coma. Now…who can talk to your doctors? Who can talk to your insurance? Who can take care of your kids. You might say…well duh, my spouse…and you might be right in some circumstances, but what if your spouse is also sick? What if your spouse is traveling? What if you are a single parent? The agent can talk to your doctor, pay your bills, and continue caring for your young children in the same way that you would do if you were well.
What if you don’t have a Power of Attorney?
Take it one step further. What if your own parent does not have a power of attorney and he or she is hit by the Coronavirus? Who can talk to the insurance and doctors then? Who can pay the utilities and the mortgage then? A court-appointed guardian, that’s who.
You would have to get a Guardianship. You will have to meet with an attorney, go to court, wait for a hearing date, prove that your parent is incapacitated, and then wait for the court to issue an order. Then, after you have the order, you will have to file an update through your attorney every sixty days (depending on your order) until your parent has recovered enough for the guardianship to expire. I guarantee that will be more expensive than meeting with an attorney who will draft a power of attorney.
Moving on.
2. Wills.
Unlike a power of attorney, a will only takes effect at your death. A will designates the beneficiaries of your estate and gives you control over who gets what assets or how much. Wills are particularly important to young families because a Will can also designate a guardian for your children. Otherwise, they could be subjected to complicated court proceedings (see example above).
At some point in your life, you have probably heard or said that someone gets a particular piece of property because it is in that owner’s will. But, wills are freely revocable and modifiable. They can be changed or cancelled at any time prior to death. Wills give no interest in property during life but only control upon the testator’s death (a testator is a person who signs a will).
3. Trusts.
Trusts are not all created equally. There are more types of trusts than you have fingers and toes. But, the beauty of a trust, is that it is a separate entity (like a business) that has effect BOTH during your life AND after your death. Although many people think that Trusts are only necessary if they have a large estate, trusts are also important for protecting minors. Thanks to recent changes in state statutes, transfers for a minor’s benefit are simple with proper planning.
WARNING: Don’t you dare try to set a trust up all by yourself. You might trigger the statutory rule against perpetuities, violate state or federal tax laws, or even subject yourself to costly penalties. Talk to your attorney.
WHAT IF I AM A PARENT WHO DOESN’T WANT TO PAY FOR AN ESTATE PLAN?
If you die “intestate”, meaning, without a will, state law controls your assets. In that case, despite wanting your assets to pass to your spouse or children, the state law might make an alternate plan (a topic for another time).
Similarly, the same issue arises with regard to minor children. The state allows parents to designate guardians for their children by Will. However, if you have no estate Plan, then the state will ultimately decide who will care for the children.
Yes, meeting with an attorney might cost you a couple hundred or a couple thousand bucks. But, stop acting like you are invincible. Go do it. Call now. We have seen people die this year in unprecedented numbers.
Get Started by Filling Out An Estate Planning Questionnaire
Your attorney would even be happy to give you an estate planning questionnaire to help guide you into the process and might even throw in a free consultation.
Many attorneys give free consultations. Find someone who is willing to sit with you, educate you, and hold your hand. Don’t let them tell you what you need, ask them to explain why. You are entrusting your attorney with your children’s lives. The least they can do is make you feel comfortable.
Don’t put it off anymore. Tell your spouse, tell your friends, tell your family, and make a plan. A legal one. Don’t write it in a Google doc and think it is the same thing. It isn’t. Your children’s lives would be torn apart enough if you died while they were young.
Further, don’t put them through a traumatic event that you could avoid with a couple of hours of your time and a little bit of your money. Do this one little thing and get a will!
GRAB MY FREE ESTATE PLANNING QUESTIONNAIRE AND CALL AN ATTORNEY.
IF YOU MISSED IT, HERE IT IS AGAIN: ESTATE PLANNING QUESTIONNAIRE.