I regularly meet with clients who want to take preventative measures to make sure their families are not burdened if they become incapacitated or die. The most common question I hear is, “What do I need to do to make it easy for my loved ones?”
I do have a few recommendations.
1. Prepare Your Will
When you die without a valid will in Texas, the law determines how your property is divided. You can see my previous post on that topic as it relates to single persons here. The statutory formula that determines how your property is distributed does not take into account your wishes or your unique circumstances. This often leads to a different outcome that you would expect or want.
Also, the process of settling your estate without a will may be significantly more complicated and, as a result, significantly more expensive. Having a will is the only way to make sure your assets are distributed the way you want and to make sure your estate is settled in an efficient manner.
2. Name a Guardian for Your Minor Children
Because you know your children better than anyone else, you are in the unique position of choosing the best person to raise them in the event of a tragedy in your family. But, if you don’t name a guardian, that decision will be made by a judge who must follow certain legal guidelines and doesn’t know you or your children. Again, this can often lead to consequences you would not want.
Suppose, for example, that the law requires a court to award custody to an orphaned child’s grandparents. But, the extended family of the child’s parents do not get along and disagree about who would be best suited to care for the child. In that situation, a legal custody battle over guardianship may be the outcome. Your child would be caught in the middle of that battle and be subjected to more stress during what is already an emotionally tumultuous time.
3. Leave Assets for Your Children in a Trust
Minors in Texas are considered incapacitated. If you leave them more than a nominal amount of money outright, a guardianship will have to be created to manage those assets for them. Guardianships can be expensive and time-consuming. Additionally, the assets you leave them will be distributed to them when they turn 18 years old when they may not have the wisdom or foresight to manage them wisely.
A trust can make sure that your assets are managed by a person of your choosing and that your property is ultimately distributed how and when you decide.
4. Coordinate Your Non-Probate Assets with your Overall Estate Plan
Non-probate assets include things like life insurance. I have seen clients spend time and money creating an estate plan only to forget to change the beneficiary designation on assets like life insurance that will not go through the probate process. You don’t want to let that happen.
After you finalize and sign your will, you must change your beneficiary designations to match the way your will disposes of your assets. If you don’t do this, your property may not be distributed in the way you desire.
5. Make Your End of Life Wishes Known
Do you know now whether you would want life sustaining treatment if you suffer from an irreversible or terminal condition? If you know what you want in that situation, share it with your loved ones. When they know your wishes and your reasoning behind those wishes it relieves a lot of stress they may feel in making those decisions without your guidance.
6. Prepare a Durable Power of Attorney
Should you become disabled without having a durable power of attorney in place, it may be necessary for your family to seek a court-ordered guardianship of your person and estate so they can manage your affairs for you. Such a guardianship proceeding is time-consuming and expensive. You can avoid that possibility by creating a durable power of attorney before a tragedy occurs.
7. Make Sure You Have Enough Life Insurance
Life insurance is the best way to ease the financial burden on your family in the event of a tragedy. This is especially true if you are the sole provider for the family. Not having enough assets or insurance at the time of your death may mean that your spouse cannot afford to maintain the family home or pay for living expenses.
Life insurance is especially important if you and your spouse both die together. Ultimately, it is your responsibility to provide for the financial support of your children in the event the unthinkable happens. Life insurance can help the guardians you’ve selected support your children.
8. Plan for the Disposition of Intangible Treasures
I find that many clients take great care to plan for their higher value assets like homes, 401Ks, IRAs and jewelry. But, my experience is that the items causing the most conflict after the death of a loved one are items that hold sentimental value.
My recommendation, therefore, is that your family openly talk about the items that hold specific sentimental value for any individual. You can then include a special bequest to those individuals for such sentimental items.
9. Organize Your Records
Your family will not appreciate having to rummage through your disorganized records while they are grieving your loss. Do them a favor and get your records in order so they can easily find what they need when they need it.
10. Tell Loved Ones Where Important Documents are Located
It really doesn’t matter where you keep your estate planning documents if know one knows where to find them. Tell your beneficiaries and your executor where you are storing your estate documents. And, don’t just tell them once but remind them over the years at family gatherings.
Following these 10 steps will allow you to rest easy and know that you have protected your loved ones when tragedy strikes. And, your family will be grateful.