It seems like there is a day or even a month for everything these days, doesn’t it? The powers that be have dubbed August “National Make A Will Month.” (Seriously, who decides these things?) As an attorney, I’m constantly approached by friends asking me if they need a will, and if so, can they do it themselves online? Here are my two cents about these issues–keeping in mind, of course, that this is just the opinion of one attorney who also happens to be a mama with young kiddos.
So, let’s start with everyone’s first question: “Do I need a will?”
YES! Yes, mama, you need a will. Actually, you really need an estate plan, which really should include (at a minimum) a will, a durable power of attorney for finances, and a health care power of attorney. A trust is also an appropriate planning tool for many families with young children. Which of these documents are appropriate for you and your family should be determined on a case by case basis (this is definitely not a one size fits all endeavor), so it’s truly crucial that you sit down with an attorney who is experienced with estate planning. If you try to take shortcuts and do it yourself online, you are likely to waste money on a plan that doesn’t actually accomplish your goals–and may not accomplish anything at all.
If you’re asking what the heck any of this means and why you need multiple documents, please keep reading. And if you are saying, “but I don’t have an estate, why do I need an estate plan?” then please hear me out. Here is a very basic overview of a simple estate plan.
Last Will and Testament: Your will is a basic document that lays out instructions about what happens after you die. For a person with minor children, your will should designate a guardian of your children (the person who will have physical custody and have decision making authority for daily life) as well as custodian (the person who will manage any assets that your children are inheriting from you). Your will also specifies who will receive any money you have left in your individual name after you die and after any final expenses are paid (think of your funeral bill or final medical expenses, for example). Your will also designates someone to serve as executor. The executor is responsible for carrying out the terms of your will in paying your debts and then distributing remaining money to the people you’ve named as beneficiaries.
General Durable Power of Attorney (“GDPOA”): A GDPOA is a disability planning document. For a young person, disability planning is just as important (if not more important) than death planning because you are much more likely to become disabled than you are to die. The person you name in your GDPOA to serve on your behalf is called your “agent.” A comprehensive power of attorney will give your agent the broad authority to do anything that you could do for yourself in relation to your finances. In addition to being a crucial tool in the event of an emergency (you want to make sure your bills are still paid if you’re laid up or otherwise incapacitated), practically speaking, a GDPOA can be really helpful from a convenience perspective too. Imagine your husband has a credit card in his name only, but he’s traveling for work and you need to speak to someone from the credit card company about your bill. If they won’t talk to you because you aren’t the cardholder, just email them a copy of your GDPOA, and you should have full authority to deal with the credit card company.
Health Care Power of Attorney (“HCPOA”): Just like a GDPOA, a HCPOA is a disability planning document. In the event of an emergency, your HCPOA designates a person to make medical decisions on your behalf. Some people are freaked out about the idea of giving someone else authority to make medical decisions for them, but this document doesn’t come into play until you are unable to make your own decisions. This is something that you’ll be asked for any time you go to the hospital (remember being asked when you went to deliver your babies?) and it’s a great tool to have on hand and provide for the hospital, even if you are there for a totally typical reason. Better safe than sorry, right? In conjunction with a HCPOA, many people decide to also sign a Living Will (different than a Last Will and Testament), which is basically a medical directive that instructs your doctors not to take extraordinary measures to keep you alive if nothing else can be done to save your life.
Revocable Living Trust: Why am I mentioning a trust–that’s just something for older people with money, right? Actually, that couldn’t be further from the truth. One of the most common estate planning goal for young couples with children is protecting their children’s inheritance. Imagine you and your spouse both die and leave behind two minor children. You each had a life insurance policy with a $500,000 death benefit. Without a well-drafted will, your children could each receive approximately $500,000 outright at age 18, no strings attached. What would you have done with that kind of money at age 18? However, with a will that includes provisions related to the Ohio Transfers to Minors Acts, you can stipulate that your children don’t receive their inheritance until age 25. Better yet, with a trust, you can spread the distributions to your kids out even further (for example, give them 1/4 at age 25, 1/2 of the remainder at age 30, and the remaining balance at age 35). You can also write in stipulations about how and when your children should be able to withdrawal money. A trust takes your estate plan to the next level by allowing infinite flexibility in the planning process. If you can dream it, a good estate planning attorney can write it into your trust.
Mamas, this is just Estate Planning 101 in a nutshell. There are so many different factors that should be considered when developing a plan to meet your family’s specific needs and goals. I encourage you to take the first step and call an attorney to discuss what steps you should take to get started with your estate plan. It’s well worth the expense–because you can’t put a price on the peace of mind you’ll get from knowing that you and your family will be protected no matter what curveballs life may throw at you.