Expect the Unexpected: How to Take Care of Your Loved Ones & Avoid an Estate Planning Tragedy
“Expect the unexpected” sounds like the ominous warning you’d get from a villain in a movie, but it’s actually a great piece of advice to live by—at least when it comes to your financial, legal, and healthcare decisions. Whether it be an illness, accident, dementia, or even death, it’s important to prepare for unexpected events ahead of time by having the appropriate estate-planning documents in place. The last thing you or your loved ones will want to do is navigate complex decisions about finances during a physically or emotionally stressful time.
At WealthBuilders, we have helped many families prepare for things like death, disability, and terminal illness by guiding them through the estate-planning process. Here are my top tips for taking care of your loved ones and avoiding an estate planning tragedy.
Outline Your Wishes With a Last Will and Testament
A will spells out your final wishes and names a person or entity to handle your financial affairs upon death. It will detail your assets, which heirs receive what, and any other final requests you may have. Most importantly, a will is used to identify a legal guardian for your minor children should you pass away before they become legal adults. If you don’t specifically name a guardian, the choice will be made by the court with no input or consideration for your preferences.
Streamline Your Medical Decisions
Making life-or-death medical decisions is challenging enough without also adding the hassle of HIPAA laws and bureaucratic red tape. Make sure both you and your family are protected by having these documents in place. They can provide comfort and alleviate unnecessary stress in what is an otherwise already extremely stressful situation.
Medical directive: This document outlines what type of life-saving intervention you would like and in what situations it should be used. This can help your family find solace in their decisions because they know they align with your wishes.
Healthcare proxy: Identifies a specific person who is authorized to make medical decisions on your behalf. Without a healthcare proxy, your medical decisions may be left to someone you didn’t choose.
HIPAA authorization: Allows an authorized individual to receive your medical information in the event of an emergency. Not everyone in your family is automatically entitled to receive important medical information on your behalf. If there is someone specific you would like to make decisions, make sure they are also authorized to receive your healthcare information.
If there are no documents in place, conflict can arise between who should make the decisions and what course of action should be taken. Take the guesswork out of your medical wishes so your beneficiaries have a clear idea of what kind of care you prefer.
Protect Your Financial Interests With a Power of Attorney
Covering everything else outside of medical rights, a power of attorney (POA) allows an authorized individual to make decisions on your behalf, including financial and business decisions. Like medical directives and healthcare proxies, POAs take the guesswork out of stressful events. A POA can help in times when you are incapacitated due to illness, injury, or disability, or even if you are simply unavailable to make a decision (like if you are traveling).
Regardless of the circumstances, having a POA on file is a great way to prepare for the unexpected. Since a POA is only valid if it is drafted and signed while you are of “sound” mind, it’s crucial to do this well ahead of an illness or disability, either of which may diminish your mental capacity. Planning ahead and clear communication about who holds what responsibility are two of the best things you can do to provide comfort for your family and safeguard your financial interests.
Add a Trusted Contact to Your Investment Accounts
In an effort to prevent financial exploitation and fraud, the SEC approved the role of a trusted contact person as part of FINRA Rule 4512. This means that investment custodians are required to encourage clients to name a trusted contact as an extra line of defense on your investment accounts.
This comes into play if the custodian feels you are being financially exploited or suffering from diminished capacity (like trying to send your entire account balance to an overseas “friend” or receiving a suspicious email requesting a large investment trade). The custodian can reach out to your trusted contact to express their concerns before things escalate to full financial exploitation or fraud.
A trusted contact cannot make changes to your accounts or see transactions, but they can discuss the custodian’s concerns and provide a “second opinion” on requests that seem suspicious. This is an extra layer of protection that can help you prepare for the unexpected and it only takes a few short minutes to complete.
Limit Hassle and Expense by Avoiding Probate
Probate is the legal process of settling your estate after death. It involves filing documents with the court, and it can be both expensive and time-consuming. When an estate goes through probate, it can cause major delays in the transfer of assets to your heirs. This is the last thing you want for your family after experiencing loss. There are three main ways to avoid probate:
Joint Tenancy
Joint tenancy is when an asset is owned equally by two or more individuals with a right of survivorship. This means that the asset will automatically pass to the remaining tenants upon the first tenant’s passing. Consider retitling assets that are solely owned to joint tenancy with rights of survivorship as a way to avoid probate.
Beneficiary Designations
Beneficiary designations exist for many different assets, including qualified retirement accounts, life insurance policies, and checking and savings accounts. Any asset that has a beneficiary listed will transfer automatically upon death without having to go through probate.
Many people often forget to assign beneficiaries to these accounts and the funds wind up as part of their estate. Be sure to double-check that all your accounts have up-to-date designations, so your beneficiaries are not left struggling through the probate process.
Revocable Trusts
Though wills are the most well-known estate planning vehicle, revocable trusts are the true linchpin. They operate as a separate entity that holds all your assets while you’re alive, thereby removing them from your personal estate. You will act as trustee over these assets, and upon death or incapacitation, a named successor trustee will take over. The trustee can be a family member, friend, or a professional fiduciary. They will distribute the trust’s assets to your beneficiaries in accordance with your will, avoiding the hassle and expense of probate.
How I Can Help
Part of my role at WealthBuilders is to help spouses and family members know that everything will be taken care of when either spouse is no longer around. I have helped numerous clients prepare for the unexpected by ensuring that these important documents were in place well ahead of when they were actually needed. I am here to help clients feel prepared and comforted in the face of the unexpected.
To learn more about WealthBuilders and how we can help you, please call 715-386-3735 or email info@wealthbuilders.financial.
About Dan
Dan Olsen is the president, founder, and wealth advisor at WealthBuilders, an independent financial services firm based in Hudson, WI. Before becoming a financial advisor, Dan had a nearly 25-year career as an on-air radio personality and spent several years in corporate America.
Dan helps clients build and manage their wealth to create a specific plan for retirement and loves teaching them that being wealthy is about more than just money. Through his distinct collaborative approach, he provides the financial guidance and resources necessary to help clients move forward in life and put their values into action. He loves knowing he has a purpose and that his work and effect on people and their lives matters. Through his education and 20-plus years of experience in the financial world, he has gained extensive knowledge and expertise in the financial industry, including obtaining the Series 7, Series 66 held with LPL Financial, and Life/Health & Accident insurance licenses.
Outside the office, Dan enjoys visiting the Great Lakes with his wife, spending time with his grandchildren, fishing (and ice fishing), listening to ’70s and ’80s music, and supporting charities that address food insecurity, especially with children. To learn more about Dan, connect with him on LinkedIn.