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Thursday, June 29, 2017

Why you need estate planning

estate planning, estate plan

Estate planning can prevent unnecessary pain and suffering for loved ones.

On Memorial Day weekend in 2005, one of my best friends was killed in a head-on collision while returning home from a camping trip with her husband. She died almost instantly; her husband was left comatose.

Her two young daughters — who were staying with their grandmother — suddenly found themselves without parents.

To this day, it’s hard for me to talk about that tragedy. Not only because I miss my friend, but because it struck a chord within me.

After that, when my husband and I went on a date night, I always left extra emergency numbers with the sitter “just in case.” I also started taking seriously the responsibility of estate planning.

What is estate planning?

“Estate planning” sounds like an intimidating term. But if you have children, own personal property, own your own business or have savings or retirement accounts, estate planning is crucial to protect your loved ones in the event of your death. Estate planning is more than simply a will or trust. It also entails beneficiary designations, health-care directives and more.

Hillary Gagnon, a mother of two young children and law partner at the Phoenix firm Jennings, Haug & Cunningham, spends the majority of her workday providing estate planning, probate and probate litigation for families.

Gagnon, who has practiced in Arizona since 1998, has this advice for parents: Don’t delay. People who have not properly prepared for tragedy, she says, “may cause unnecessary pain and suffering for their families.”

Gagnon says she has seen too many cases where families never got around to creating the proper documents, and family members are inadvertently left unprotected.

Other times, well-intentioned individuals have downloaded their forms from the internet, thinking this was the best way to protect their loved ones. Unfortunately, without the benefit of a legal adviser, their wishes were never properly documented. This, too, can result in unintended consequences.

Fortunately, with good legal counsel, families can address the most pressing issues of an estate plan.

Guardianship

This is the most important reason families should consider estate planning. But guardianship also is one of the most common explanations clients give for not coming to her sooner, Gagnon says: “They delay because they can’t agree on a guardian.”

If it’s difficult for parents to decide, just imagine how much more challenging it will be for the courts to determine. When assigning a guardian, Gagnon recommends letting everyone in your immediate circle know whom you’ve chosen and why. This prevents conflicts and hard feelings later.

“The smoother the transition, the easier it is on the children,” Gagnon says.

Conservatorship

While a guardian makes health and living decisions, a conservator manages the finances for minor children. Very often, this is not the same person.

A conservator designation is extremely important, because if one is not appointed, the courts will order all funds to be locked down until the child turns 18. This money may be inaccessible, even for the guardians paying living expenses for the child. Once 18, however, the child may receive the entirety of the money, which may not be in the child’s best interest either.

Living wills and health-care powers of attorney

These documents relate to health care and address which extraordinary measures, if any, should be taken in the event of a severe accident or illness. A financial power of attorney should also be designated to make financial decisions on your behalf should you become incapacitated.

Special-needs trust or supplemental-needs trust

For families who have children with special needs, extra considerations need to be made. Unfortunately, even though families in this situation usually are aware of how important it is to put protections in place, they’re not always proactive in doing so. For one thing, it can be difficult to find the time and energy to address yet another issue, even one so vital to the child’s long-term well-being.

Gagnon says proper advance planning actually can provide a better quality of life for children with special needs, should something happen to their primary caregiver. Designating someone to care for children with special needs, while maintaining eligibility for needs-based government assistance, are vital components for an estate plan.

Single parents and blended families

Single parents are in an especially precarious situation when it comes to estate planning, and matters of guardianship and conservatorship should be established early.

Second marriages and other circumstances involving blended families can make estate planning even more vital. How you hold title to assets and who you designate as beneficiaries can determine whether your loved ones are provided for. Gagnon has seen instances where children have been unintentionally disinherited because the proper legal forms and beneficiary designations were not in place.

Business owners

If you own a business, it’s important to determine successorship.

“You really want someone to take over the business who will do so in the best interest of your children,” Gagnon says.

Peace of mind

Although Gagnon has seen many cases where family members were hurt when estate planning was not established, the opposite also has been true. In one case, a woman said to her, “What a gift our mother has left us.”

By putting the proper documents in place and planning ahead, the transition after a death can be made that much smoother.

“There’s no way to predict how someone’s going to deal with grief and tragedy,” Gagnon says, but a well-thought-out estate plan can make a huge difference in the lives of those you love.

NOTE: The cost of estate planning depends on one’s overall financial picture. The forms alone for do-it-yourself wills are about $100-$150. Hiring an attorney (which is optimal), can range from $300 to $1,500 or more when there are complicated assets or circumstances.

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Sheri Smith

Freelance writer Sheri Smith, of Scottsdale, is the mother of Aidan (17) and Sarah (13).

 

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