Written by Gerald Eidelman, J.D., LL.M.
Let’s begin by addressing a rather unsettling scenario – envisioning ourselves in a situation where we are unable to communicate or make crucial decisions regarding our health and finances. While we don’t wish to dwell on this, it is essential to take proactive steps to ensure that someone trustworthy can step in and act on our behalf if the need arises. It only requires a few moments of reflection to consider who you would entrust with making these important decisions in the event that you are unable to do so. To accommodate your request, you have the option to select either the same person or a different person for each individual step. This flexibility allows you to tailor the process according to your preferences and needs. Once you have made your decision, Eidelman Law Firm’s attorneys will prepare the necessary documents to grant that person the legal authority they need. If you have any further questions or need assistance with anything else, feel free to let us know.
The advance health care directive is a comprehensive document that can incorporate both a living will and a power of attorney. With a living will, you have the opportunity to express your specific wishes regarding medical treatment. On the other hand, the power of attorney grants your trusted loved one the authority to communicate with healthcare professionals and make decisions on your behalf during a medical emergency. It’s important to note that this document only becomes relevant if you are unable to advocate for yourself. Otherwise, it remains securely stored in your medical records, allowing you to continue with your daily life as usual.
The power of attorney for finances functions in a similar manner. By granting your appointed individual (referred to as your attorneyin- fact) the authority to handle bill payments, fund transfers, and investment choices. You have the option to keep the original signed document and inform your attorney-in-fact about how to access it in case of your incapacity or when you decide to hand over financial responsibilities.
Section One: Protecting Yourself in Case of Incapacity
As the baby boom generation reaches the later stages of life, our focus is gradually shifting from practical concerns like Social Security and Medicare to deeper questions: What is the true significance of it all? Once we have lived our lives to the fullest, what will be our legacy? What kind of influence will we have had on the world, and more importantly, on our loved ones, our children and grandchildren? How will they remember us once we are no longer here?
Legacy planning goes beyond traditional estate planning and encompasses a broader scope. It is not solely focused on wills and trusts, but rather, it involves baby boomers reflecting on their lives and preparing to pass on not only their financial assets and family heirlooms but also their stories, memories, values, and wisdom. The aim is to ensure that our lives have made a meaningful impact and to utilize the remaining time we have to plan for this significant transfer of riches. This is not the conventional idea of “getting one’s affairs in order” on one’s deathbed. Instead, it involves a comprehensive journey of gathering cherished memories, arranging important documents, reflecting on our loved ones and their needs, and ensuring that our passing is as smooth as possible for them. There are tasks ahead that require our attention and effort.
At Eidelman Law Firm, we firmly believe in the importance of legacy planning, which consists of six essential components. While these components naturally follow a logical progression, we understand that there may be some flexibility in the order in which they are addressed.
As an example, you have the flexibility to engage with Section Five: Creating Your Legacy at any stage of the process. This step entails capturing your memories as they come to mind, whether through writing or recording, and gathering photographs and keepsakes that hold significance for your children and grandchildren. It’s important to note that this endeavor is intended to be a lifelong journey.
Section Two: Assessing Your Records and Making A Plan
Imagine this scenario: Your loved ones are grieving over the loss of you, and in the midst of their sorrow, they are faced with a daunting task. They must sort through a pile of papers, trying to piece together information about your belongings and figure out what steps to take next. It’s a challenging and overwhelming situation for them.
Now, picture an alternative scenario: Your loved ones are provided with a meticulously organized list of everything you own. Alongside this comprehensive inventory, they find clear instructions on who to contact and what actions to take. This thoughtful preparation allows them to focus on their emotions and the grieving process, rather than being burdened by administrative tasks.
By taking the time to create a neat and well-documented record of your possessions, you can provide your loved ones with peace of mind during an already difficult time.
To begin, it would be beneficial to compile a comprehensive list of your bank and investment accounts. Make sure to include the name, location, and contact person associated with each account, as well as the account numbers and login details for any online accounts. This information will prove essential when you reach Part Four of the legacy planning process, which focuses on traditional estate planning.
In estate planning, it is essential to recognize the significance of certain items that are often overlooked. These items play a crucial role in ensuring that your loved ones understand your wishes and know how to act accordingly. One such item is the critical letter of instructions, which outlines what needs to be done immediately after your passing. This includes important details like caring for your pets, handling mail, and notifying individuals beyond your immediate family. Additionally, it is important to address your digital legacy, including instructions on how to handle your email and social media accounts such as Facebook. By including these aspects in your estate planning, you can provide clarity and guidance for your loved ones during a difficult time.
The final step of this process involves evaluating the overall value of your estate, which includes your assets minus any liabilities, as of today. This assessment is crucial in determining whether your estate would be liable for estate taxes. Having this information ready will be vital for Part Four: Formalize Your Estate Plan. Our attorneys play a crucial role in this process, and by preparing as much as possible beforehand, we can ensure a more efficient and productive meeting.
Section Three: A Guide to Identifying Beneficiaries
During this stage, you and your financial advisor will discuss the importance of securing adequate income for the surviving spouse, regardless of who passes away first. It’s crucial to remember that Social Security benefits cease upon death. If the spouse with the higher benefit passes away first, the surviving spouse will receive a survivor benefit equivalent to that higher amount. However, their own individual benefit will no longer be available. Instead, the surviving spouse will continue to receive Social Security income equal to half of the original amount with most likely, the same amount of expenses they had as a couple. It is crucial to explore ways to enhance the surviving spouse’s income, whether through insurance options or ensuring there are sufficient assets for increased withdrawals following the passing of the first spouse.
Consider what holds greater significance to you when distributing assets among your children (and possibly grandchildren): fairness or necessity? Is it paramount for each individual to receive an equal share, or do their unique circumstances, abilities, or life decisions necessitate a more tailored approach where some may receive a larger portion than others?
You have the option to simply name your beneficiaries without informing anyone, taking the easy route. However, if you want to make the most of this process, consider holding family meetings to openly discuss plans and expectations. While your children may initially resist, questioning why this topic is being brought up when you’re still alive, engaging in these conversations can actually be quite fulfilling and foster stronger bonds within the family. Remember that estate planning documents can be modified until the day of your passing or if you become incapacitated. The choices you make now are not permanent and can be adjusted as needed.
If you decide to have family discussions, it would be a good opportunity to begin preparing your children for their inheritance. Consider introducing them to your financial advisor* so they can gain insight into your investment strategies and understand the reasoning behind the structure of your accounts. It’s important to emphasize that your main objective is to preserve and grow capital for the future. Ensure
that your children understand the importance of responsible financial management and the goals you have set for their inheritance.
*It’s worth noting that some advisors offer discounted financial planning services to the children of their clients. This can be an added benefit to ensure that your children receive professional guidance in managing their future inheritance.
Additionally, you should review the beneficiaries of your life insurance policies and retirement accounts. These accounts typically pass outside of a will and directly to the named beneficiaries. Keeping these designations up to date is crucial to ensure your assets are distributed according to your wishes.
Section Four: Making Your Estate Plan Legally Binding
Let’s now delve into the realm of traditional estate planning. During this process, we will carefully draft the necessary legal documents to ensure that your assets are distributed according to your wishes after your passing.
Death is a significant occurrence that holds legal implications. Once an individual passes away, their demise is officially documented by the state, and any possessions they leave behind must be handled according to specific regulations. In the absence of legal professionals and estate planning resources, or if one fails to utilize the available tools for estate planning before their passing, the state in which they resided at the time of death would assume the responsibility of making decisions on their behalf.
However, even if the laws of succession in your state align with your desired distribution (such as leaving everything to your spouse), there are compelling reasons to avoid leaving your estate in the hands of the state. Firstly, the court would assume control, and the probate process can be quite burdensome. Without delving into the intricate details, it is safe to say that probate incurs additional expenses that could have otherwise benefited your heirs. Moreover, it is a time-consuming procedure, potentially causing your heirs to endure months or even years of waiting before they can receive their rightful inheritance. Additionally, if you do not have a will, the court will appoint someone to handle the administration of your estate, and this person may not align with your preferences. Having a will is crucial as it allows you to designate your own executor (and, if applicable, a guardian for your minor children).
While wills serve an important purpose, they may not always provide the desired flexibility, particularly when dealing with complex family dynamics and significant assets that raise concerns about estate taxes. In such cases, seeking the guidance of a lawyer can be beneficial as they can suggest tailored estate-planning tools to address your specific situation.
Section Five: Leaving A Lasting Impression
Let’s move on to the exciting phase of legacy planning – crafting your actual legacy. While it’s important to ensure that your children are financially secure and equipped to handle their inheritance responsibly, the true value lies in the legacy you leave behind. Its worth cannot be measured in monetary terms. This is where you have the opportunity to encapsulate the essence of your life, showcasing what you stood for and solidifying your position within your family and the broader world.
You can begin sharing pieces of your legacy without having to wait until the end of your life. In fact, you can start creating new memories right now by prioritizing family vacations, sending heartfelt cards and letters to your grandchildren, and visiting them more frequently. During your visits, generously impart your knowledge, wisdom, and life experiences. Take the opportunity to teach them valuable skills and show them how to navigate various aspects of life. Engage them with captivating anecdotes from your own youth, offering insights on nature, sports, cooking, gardening, history, art, music, philosophy, and beyond. While we don’t intend to be a reminder, it’s important to acknowledge that time is fleeting. Each passing day makes moments shared with loved ones all the more precious.
Why not create beautiful albums or scrapbooks to organize your family photos? It’s a wonderful way to preserve those precious memories and provide endless enjoyment for your kids. There’s something special about flipping through the pages of an album and seeing faded snapshots that evoke nostalgia and meaning. Sometimes, these tangible keepsakes hold more sentimental value than their high-resolution digital counterparts. It’s best to have both the tangible photos and their digital counterparts. Just remember to take the time to organize your family photos and ensure they are easily accessible. By doing so, you can ensure that these cherished memories are passed on to your loved ones and remain within the family for generations to come.
Begin the practice of documenting your memories as they unfold. These cherished recollections will serve as the foundation for your family narratives, whether you choose to share them verbally during gatherings or preserve them in a dedicated notebook or journal. Over time, these fragments of memories may evolve into a comprehensive memoir for your loved ones to cherish. If you have the inclination, exploring books and classes on memoir writing could make for an engaging retirement project and help you leave your legacy in a cherished and lasting way.
Section Six: Reviewing Your Estate Planning Documents Regularly
Legacy planning is an ever-evolving journey. While it may feel reassuring to have your wishes documented and signed, it’s important to acknowledge that life is full of unexpected twists and turns. What happens when your desires shift? What if new additions, such as a grandchild, enter your family? Or if there are significant changes like marriages, divorces, or remarriages? And sadly, what if someone passes away?
Births, deaths, marriages, and divorces serve as catalysts for reevaluating your estate plan. They present opportunities to reassess and determine whether any adjustments are necessary. By taking a fresh look at your plan, you can ensure that it continues to align with your evolving wishes and circumstances.
When relocating to a different state, it is important to enlist the assistance of an attorney in your new location. This is because estate planning is governed by state laws, and moving to a new state may necessitate updating your documents to ensure their legal validity. By working with an attorney familiar with the laws of your new state, you can ensure that your estate planning remains in compliance and up to date.
Periodically review your estate plan to ensure it aligns with your current wishes. Are the individuals you have designated on your health care directive and power of attorney for finances still the ones you desire? Do your beneficiary designations and estate-planning documents accurately reflect your intentions? Remember, these choices can be modified, and you have the flexibility to update your estate plan whenever necessary.
Start Planning Your Legacy Today
Legacy planning is a crucial step towards building and preserving your legacy, ensuring that your desires are fulfilled during your lifetime and beyond. It’s an important task that you’ve been meaning to tackle. To begin, we recommend scheduling an appointment with your financial advisor. Our commitment to providing comprehensive financial advisory services, including estate planning, means that we are well-equipped to assist you in setting up a plan tailored to your needs. We would be delighted to discuss this further with you today.
Eidelman Law Firm: www.eidelmanlawfirm.com
Copyright c 2023 Market Advisory Group. All Rights Reserved.
Please note that the information provided in this document is accurate as of August 14, 2023. However, it is important to be aware that legislative changes may occur, which could affect the accuracy of the information. This document is not intended to provide legal or tax advice. For advice tailored to your specific circumstances, we recommend consulting a qualified tax advisor. Please be aware that this material is provided “as is” without any warranty of any kind. We cannot guarantee the accuracy and completeness of the information, and all warranties, whether expressed or implied, are hereby excluded.
