By now, you may have heard of 24-year-old Damar Hamlin. Mr. Hamlin is a young man who had a near-death experience while playing football in the National Football League in front of a national TV audience in Cincinnati on January 2, 2023. Thankfully, as a result of prayers and excellent medical intervention, he survived.
Unlike a typical 24-year-old that may not have an estate plan in place, Mr. Hamlin more than likely had an estate plan because of being part of the NFL. However, the typical 24-year-old does not have the awareness of the importance of having an estate plan.
During the period when Mr. Hamlin did not have the ability to make his own healthcare decisions, Ohio law would be relied on if he did not have a healthcare surrogate designation in place. It is imperative that everyone over age 18 have an estate plan in place.
You should not rely on the Florida Statute to determine who makes health care decisions for you and who inherits your assets. A proper estate plan addresses issues while you are alive, during incapacity, and at death.
No one wants to think about becoming seriously ill or dying, but scrambling to get an estate plan and healthcare documents done while in the hospital or nursing home is a bad alternative, says a recent article titled “The Essentials You Need for an Estate Plan” from Kiplinger. Not having an estate plan in place can create enormous costs for the estate, including taxes, and delay the transfer of assets to heirs.
If you would like to avoid the cost, stress, and possibility of your loved ones having to go to court to get all of this done while you are incapacitated, it is time to have an estate plan created. Here are the basics:
Last Will and Testament (“Will”) People think of a will when they think of an estate plan, but that’s only part of the plan. The will gives instructions for what you want to happen to assets, who will be in charge of your estate—the personal representative—and who will be in charge of any minor children—the guardian. No will? This is known as dying intestate, and probate courts will make all of these decisions for you, based on state law. However, a will is not enough.
Beneficiary designations determine who receives assets from certain types of property. This includes life insurance policies, qualified retirement accounts, annuities, and any account that provides the opportunity to name a beneficiary. These instructions supersede the will, so make sure that they are up to date. If you fail to name a beneficiary, then the asset is considered part of your estate. If you fail to update your beneficiaries, then the person you may have wanted to receive the assets forty years ago will receive it.
Some banks and brokerage accounts may have an option of a Transfer on Death (TOD) agreement. This allows you to plan out asset distribution outside of the will, speeding up the distribution of assets.
A Living Will is used to communicate in advance what you would want to happen if you have a terminal condition, an end-stage condition, or in a persistent vegetative state.
Health Care Surrogate Designation names an agent to make medical decisions on your behalf when you are unable to make decisions for yourself. Not having the right to make medical decisions for a loved one may require petitioning the court and requesting the appointment of a guardian.
Durable Power of Attorney names an attorney in fact to manage finances, pay bills, oversee investments, and maintenance of your home, etc. Without a DPOA, your family can’t take action on your financial matters which will likely lead to having to file for guardianship. If the court appoints a non-family member to manage this task, the family may see the estate evaporate.
A trust should be a part of most people’s estate plan. A trust is a means of leaving assets for a minor child, or someone who cannot be trusted to manage money. The trust is a legal entity that inherits money when you pass, and a trustee, who you name in the trust documents, manages everything, according to the terms of the trust.
Today’s estate plan needs to include digital assets. You need to give someone legal authority to manage social media accounts, websites, email and any other digital property you own.
The time to create an estate plan, or review and update an existing estate plan, is now. COVID has awakened many people to the inevitability of severe illness and death. Planning for the future today protects the ones you love tomorrow.
Reference: Kiplinger (April 21, 2021) “The Essentials You Need for an Estate Plan”