If You Wait Until Mom or Dad Have Dementia Before Starting the Estate Planning Conversation, You Have Waited Too Long!
I speak with several families every day, and I often hear the following:
“I Don’t Need This Right Now”
“I’m Not Old Enough to Start Talking about Estate Planning”
“Estate Planning is Really Just for the Elderly and Not for Us”
From an estate planning attorney, this can be the most expensive mistake that a person could make when it comes to their own family. None of us know when we are going to die, and if we did, this discussion would be much easier.
John’s Example:
John is 85 years-old and his mind is not as good as it once was. His children, James and Ashley, knew from talking to their father over the recent weeks that something wasn’t right. They took their father to the doctor and discovered he had Alzheimer’s.
Several years ago, John had written a will leaving everything to his wife. If she should predecease him (which she did), then everything would be left to his two children equally. In addition, John had named his wife as the Transfer-on-Death (TOD) beneficiary on his bank accounts, his investment accounts at Edward Jones, and his IRA. Unfortunately, since his wife’s death, John did not make any changes to his will and made no changes to his financial accounts to have the TOD beneficiaries updated.
James and Ashley took their father to see an estate planning attorney regarding his will and financial accounts. Unfortunately, there was nothing that could be done. John was not competent to make changes to his will. In addition, he was not able to change the TOD beneficiaries on his financial accounts. John was now in a situation where he could make no changes. When he dies, James and Ashley will have to go through the probate court system. All the financial accounts will be frozen at his death, and they will have to wait many months or even years before their father’s assets will be distributed to them in accordance with his last will.
Why This is Important: A Revocable Living Trust
This is all too common. A family thinks all they need to do is write a last will and testament and name beneficiaries on their financial accounts and everything will be simple for the surviving family. However, that is frequently not the case. The TOD beneficiary passes away, the family forgets to name a new beneficiary, the family member passes away, and then the surviving family is left with a long and drawn out probate court proceeding where all the bank accounts and financial accounts are frozen, and the surviving family members can’t even access the accounts to pay for the funeral expenses.
This is why estate planning is so imperative. It needs to be completed early and needs to be continually updated so that you never have a situation like John and his children. One way to accomplish this is with a revocable living trust. A revocable living trust provides an avenue in which to distribute your assets at death outside of the probate court system. It also provides for your trustee to make decisions on your behalf in the event of your incapacity. In addition to a revocable living trust, by executing a durable power of attorney and a healthcare power of attorney you will have further protection from the story we shared above happening to you.
The purpose of estate planning is to reduce this risk of a stressful public court proceeding for your children.
For More Information
You can avoid the probate nightmare from happening to your family by implementing a simple estate plan so that the risk of frozen assets and a public court proceeding is eliminated for your children and surviving family. If you have questions on how to plan your estate so that this risk is eliminated for your family, then please contact our office for a complimentary visit so that we can discuss your estate planning needs.
We look forward to hearing from you![