Wendy Witt, founder of AMillionFamilies.org, is one of my guests on the Caregiver Smile Summit. She is an Attorney and her social enterprise is focused on protecting a million families with responsible estate planning. She has mentored over 8,000 estate planning and elder law attorneys, empowering them to protect more families. During the course of our interview, it became clear that in some ways, estate planning is misnamed, because it implies that one must have extensive assets to even consider an estate plan. That is not true.
“Everyone needs an estate plan because it is simply about control and protecting the ones that you love,” she said.
As she emphasized, it’s not just for the rich. It’s about creating a set of instructions so people know what to do and when if you’re not there to tell them anymore. It’s more than about money. It’s about making sure your kids are protected and cared for, making sure your wishes are carried out and yes, even keeping peace in the family she says.
The Components of a Good Estate Plan
The components are pretty standard. What is not standard is how you customize them. For example, everyone should have an advance directive that includes a living will, the kind of medical care you want should you not be able to articulate it, and a medical power of attorney, the person you designate to abide your wishes. If you don’t designate someone then your care could be left to the interpretation of medical professionals and family members. Likewise, you need a financial power of attorney should you need help in that area. Leaving these to chance can wreak havoc and also cause schisms in families.
Take a Holistic Approach
Multiple professionals should be involved in your estate planning as it has implications beyond the legal realm. So if you have a tax professional, a financial professional and an attorney, they all need to be on the same page, understand your wishes, and help you create one plan that protects you while maximizing your investment potential and minimizing your tax liability.
Trust in the Trust
I admit to being somewhat confused on the issue of Trusts. My simple logic was that as long as there was one surviving spouse, all assets automatically transfer to him/her and that it became more of an issue when the surviving spouse passes.
Wendy cautioned that while it may be easier if there is a surviving spouse, it gets complicated when there is a blended family or a power of attorney is not honored. The trust protects you. Trusts also can protect you from probate. Often people weigh the cost of probate against the cost of transferring assets into a trust. But that is short-sighted. As Wendy shares, probate is a public process and the information is readily available to everyone. Aggressive charities, unscrupulous friends, and even strangers can take advantage. Plus probate delays things.
Don’t Put Children’s Names on Bank Accounts and Home
I’ll admit, my sister and I put both of our names on mom’s checking accounts mainly because it was easier to do her bills for her and we were not talking about a huge amount of money. And oh yes, my sister and I trusted each other. But let’s say mom puts her house in joint ownership with one daughter and she has other children. First, should anything happen to that daughter financially – she is sued, has liens put on her, goes to jail even – the house is fair game for others to come after. Also said daughter has the right to move in with you and try to force you out. It happens more than you realize says Wendy. You could also end paying more in capital gains taxes while trying to avoid inheritance taxes. And you can accidentally disinherit the other siblings should the daughter not liquidate the estate and divide the money.
Draft an Ethical Will
An ethical will is not your living will, your health care wishes. It is not a will, where you dispose of property and name guardians etc. An ethical will is where you pass on your love, Wendy says. Your hopes, your dreams, your wishes can all be documented. It can take the form of a letter. It could be letters to individual people you love. You can make a video. Create a scrapbook. It could be your advice for the future. What would you say to your grandson when he turns 40 for example? Guardians of children would welcome your wishes. It is something I had not heard of until I interviewed her and it is truly a wonderful idea.
Estate planning is not just for the rich. It’s holistic. It’s more than money and assets. It’s about protection of your loved ones and your legacy.
Want more great advice about aging and caregiving? Attend our virtual caregiver summit, The Caregiver Smile Summit, where 52 experts will cover 54 topics that will inform, educate and empower you.
(This article should not be construed as actionable legal and financial advice. Please consult your tax professional, financial advisor and attorney and follow their instructions.)