The best gift I (Amanda) ever received sounds morbid...
A few years ago, my husband's grandmother paid for us to have our wills, advanced directives, and powers of attorney drawn up by a lawyer.
Now, Grandmom wasn't trying to scare us. She wanted us to prepare for our future. And it was the kick we needed to finally get it done.
Here's the thing – no one wants to think about death. That's why so many of us put off planning for what happens to our assets and our loved ones after we die. Overall, only 42% of adults have a will or a living trust document. The percentage is higher as we age, but even middle-aged Americans are slacking. Take a look:
Imagine you're in a horrific accident. You're suddenly unconscious, hooked up to machines keeping you alive, and death is imminent. Do you have someone designated to make decisions for you? If you die, will your assets pass directly to your spouse, your children, or your parents without any problems?
Chances are, if you don't have any end-of-life documents, your loved ones will deal with the consequences like a longer probate process and heavy taxes, along with possible battles regarding who makes your health care decisions.
There are three main documents to consider:
Power of attorney: This document names an individual to make decisions for you should you become incapacitated. Think of someone who can handle your bills, manage your money, and make other financial and legal decisions.
Advanced directive: There are two types of advanced directives... A living will is a directive for the types of treatments you want or do not want should you become incapacitated. Think feeding tubes, assisted breathing, and pain management.
The second type, a health care proxy, may also take care of this, or your power of attorney might also share this responsibility. One question you might hear: Do you want a back-up proxy? In other words, if you name someone who can't be reached, who else can make the decisions? Also, consider whether your proxy should consult with anyone (like other family members).
Will or living trust: A simple will outlines the division of assets upon your death, and how your estate should cover any applicable taxes. It also names the person responsible for your children, as well as an executor to carry out all the requests. A living trust is more complicated, but involves things like transfers of property and avoids the legal entanglements of probate court.
Typically, a simple will is all you need if you're married and own your possessions jointly. It also works if you don't have a multimillion-dollar estate that may trigger high taxes in probate.
How to Find a Lawyer and What to Expect
A few of my friends scoffed at the idea of going to a lawyer for something you could "do online." But for me, going to a professional offered peace of mind. With a large family and children in the future, it was important to "get it right."
If you decide to follow this route, there are a few things to keep in mind.
- First, make a list of all your assets – house(s), cars, valuables, other vehicles (boats, RVs, etc.), bank accounts, retirement accounts, and life insurance holdings.
- Next, consider the following: Who would you like to inherit your assets? Will everything go to one person? Will it be split between people? And what kind of split?
- Consider which of the above three documents you'd like to include. Setting them all up at once can save you money and time.
When you begin searching for a lawyer, remember that word of mouth is still the best place to start. Anonymous reviews can be questionable, and knowing someone can often make it easier to set up an appointment.
Otherwise, try some trusted national databases like Avvo.com and Martindale. I also spoke to a lawyer here in Maryland for advice. She recommended finding your local area's bar association and look at their listings for estate planning attorneys. You can find your area's association website here.
When you have a few lawyers in mind, interview them to find out their fees and processes. Most charge a flat fee for estate planning – if they are hourly, ask why. Also be sure to ask who keeps a copy of the records and how they will handle the court process.
If you aren't sure you want to go through a lawyer, you might consider doing it online. It can be tricky to navigate the requirements, but we'll give you a full walk-through next week.
Here's to a fresh start,
Amanda Cuocci & Laura Bente
January 28, 2018