Individuals often ask what they can do now to prepare for unexpected illness and death. There are a few key questions that everyone should answer to ensure they are prepared. These questions come from common oversights – oversights that have our clients kicking themselves after the fact!
- Is your estate plan up to date? Review any prior estate plan documents. Does your will or trust still reflect your wishes? In addition to a will or a trust, do you have an up to date and properly signed health care directive and financial power of attorney? Do you understand how your assets will be distributed and who will be in charge of carrying out your wishes? Do you need to update beneficiaries or want to include specific gifts to any individuals or institutions? A will or trust does not expire and the passage of time does not invalidate your estate plan but if you have questions or want to make changes, an attorney who specializes in estate planning can help you review your documents and suggest appropriate edits. Never got around to doing a will? Now is the time.
- Do you have a trust? Is it properly funded? One of the main reasons an individual prepares a trust is to avoid probate. Probate is necessary when an individual passes away owning property in their own name that does not have a designated beneficiary or a transfer on death designation associated with it. If you have prepared a trust, review your assets and ensure they are properly titled so you do not own anything in your own name alone when you pass away.
- Do you own real estate? Exactly how is it titled? Track down the recorded deeds to all of the real estate you have an interest in. Are the names listed on the deed accurate and up to date? Oftentimes when a spouse or parent passes away their name is not removed from the deed in a timely manner. Eventually when the surviving spouse or child passes away or wants to sell or transfer the property to another individual, they are surprised to find mom’s name still on the title! This can result in a costly delay in a sale or transfer. Understanding how real estate is owned will provide the information necessary to plan. For example, if you and your spouse own property as joint tenants, the surviving spouse becomes the sole title owner when the first spouse passes away. If, however, you and your spouse and each of your two kids all own the cabin as tenants in common, your ownership interest will pass to your beneficiaries according to your will or trust and NOT to the other title owners. Understanding how property is owned and updating deeds so they reflect current title owners is a fairly easy and inexpensive step to avoid potential complications after an individual passes away.
- Are your beneficiary designations updated? Even with an updated will or trust, your accounts with beneficiary designations will pass to the individuals listed regardless of any other planning you have done. It is important to understand how the assets will pass to the individuals you have listed. For example, if you list your grandchildren as beneficiaries on an account but they are minors, they will not be able to inherit that money until they are adults. This could create an expensive hassle for your family. If you have a financial advisor, enlist their help in confirming that your accounts have the appropriate beneficiaries listed. A professional can help you think through the best way to provide for your intended beneficiaries.
- Are your loved ones aware of your plans? Once you have reviewed and updated your estate plan, real estate titles and beneficiary designations, tell your loved ones. Let the people who you are likely to leave behind where they can find your important documents. If you feel comfortable, review the list of accounts with them and tell them your wishes. Put together a list of any professionals (attorney, financial advisor, insurance agent, etc.) who might have helpful information that would be needed after you are gone.
Although it is not anyone’s favorite topic, reviewing the above questions and ensuring you are prepared for the unexpected is a gift not only to you, but to your family and friends as well.
Andrew Lehner, is an attorney with offices in Edina/Bloomington, St. Louis Park and West St. Paul.
He specializes in guardianship, wills and conservatorship.