Last week I had the privilege to speak to a standing-room-only crowd at the Observer & Eccentric Senior Spring Expo. My topic was Estate Planning and What Everyone Needs to Know. I thought I would answer some of the questions I received during and after my talk.
One gentleman mentioned to me that about 20 years ago he did a living will and wanted to know if that was sufficient or whether he needed a medical durable power of attorney. My answer to him was that without question he needs a medical durable power of attorney. Living Wills were popular 30 years ago, but in today’s world they are no longer effective. A living will basically deals with end-of-life decisions; the simple interpretation of them is if I don’t have a quality of life, I don’t want to be around. The problem with that is who determines what quality of life is? In addition, it doesn’t deal with medical situations where you may not be able to make a decision, but it’s not an end-of-life call. A medical durable power of attorney basically says, if I don’t have a quality of life, I don’t want to be around and this is the person I want to determine what quality of life is. In addition, a medical durable power of attorney is much broader in scope, and thus deals with potentially non-life threatening situations. Therefore, my advice to him is that without question he needs a new medical durable power of attorney.
A woman told me that she had children from two different marriages. Because she had no relation whatsoever to the children from her first marriage, she wanted to know if she could disinherit them without affecting her child from the second marriage. My answer to her was without question she could disinherit some children without disinheriting the other. The key for her is to make sure that her estate planning documents are clear as to whom she wants to disinherit. The key in disinheriting the child is you need to mention the child in the estate planning document. If you ignore the child, then the presumption is the child was forgotten and they would have rights. When someone wants to disinherit a child, it doesn’t only have to be because of a lack of relationship; it may be that they just don’t need the inheritance. Either way, I generally recommend you have a professional draft your document so you be sure all the I’s are dotted and the T’s are crossed.
An elderly gentleman came up to me and mentioned that basically he has no surviving family and no one to leave his money to. He wanted to know what would happen to his money if he died without doing anything. My answer to him would be that if there were no surviving relatives or children of relatives, the money would basically go to the State of Michigan. My recommendation to him was that he should look for a charitable organization to leave his money to. He mentioned to me that he was passionate about animals and therefore I told him he should look for some sort of animal charity, whether it’s the Humane Society or some other organization, and work with them. This way he can be assured that his money would go to a cause he believes in as opposed to giving it to the State of Michigan.
One last question I was asked was how often someone should update their estate plan. My answer was I don’t think there’s a magic number, but I certainly believe that we should relook at our documents every two to three years to make sure they’re current. Family situations change and so do the laws. In addition, whenever there is a change in the family such as a birth, death or divorce, it’s not a bad idea to also review your estate planning documents. After all, we all know that death always occurs at the wrong time, so it’s important that our documents are up to date and reflect our current wishes.
I ended my talk with a reminder that the most important reason to do estate planning is not to save on taxes or to avoid probate but rather, because we love our families and want to make sure our passing is as easy as possible on them.
Rick is a fee-only financial advisor. His website is www.bloomassetmanagement.com. If you would like Rick to respond to your questions, please email Rick at firstname.lastname@example.org