Life Preparedness – Our Future Is Not Guaranteed

I took a road trip back home to Iowa the end of September. Partly to see and catch up with old friends, but primarily for funeral pre-planning for my mom.

Mom is 87 and unfortunately has Alzheimer’s. I had put off checking on pre-planned funeral arrangements for several years, but with her declining health I needed to act. Though we live in Kentucky, my grandparents are buried in our home town and that’s where mom wants to be buried, so I went back to Iowa.

I was prepared for sticker shock, but it was amazing how many things are involved in a regular, graveside funeral, with viewing at the chapel. I could have easily spent over $75,000 for the works. The process is almost overwhelming. In the end the total price tag was just under $17,000. Not cheap but worth it as I want my mom to have the funeral she desired. That’s another reason why I am doing this – to live the dream life I want and be able to meet any unexpected expense with no worry, as I don’t have an extra $17K just sitting around.

This experience made me realize the value of pre-planning the rest of our life. Yes, I have an advantage of being an attorney and understanding estate planning. I have prepared many wills and powers of attorney during my legal career and have seen two recurring problems: many people don’t understand the difference between a will and power of attorney and many people put off getting a will done because they don’t want to think about their own death.

Well, ever since Adam and Eve sinned, death is inevitable. I admit the area of estate planning is very confusing with a lot of legal terms and principles. This post is not meant to give you advice on what to do as everyone’s situation is different. I merely want to give an overview on this part of estate planning so you have a better idea of what you might need and can discuss with your attorney. Estate planning is essential for a business owner.

A power of attorney (POA) is for the living and a will is for the dead. A power of attorney gives someone the authority to act on your behalf regarding either a specific issue or in general while you are alive. A will expresses your desires on how you want your estate administered after your death.

• A Limited POA gives someone the authority to act for you in a specific situation – child care, pet care, purchasing an auto, etc, if you are not or will not be able to do so. As the name says it is limited in scope and time.
• A General POA gives someone broad authority over all of your affairs, other than health care, and should only be used with a thorough understanding of what it entails. It can expire on a certain date or be indefinite until your death. If you are a business owner and no longer able to manage your business but want to ensure it keeps going, have you already planned for someone to do that? Of do you want someone to wrap up the business and close it? Have you planed for that?
• Regarding health care, an Advanced Directive is a document that provides instructions for your medical care and is only effective when you are not able to communicate your own wishes. There are two types:
  • A Living Will is a document that tells medical personnel how you want to be treated if you cannot make your own decisions about emergency treatment. You do not appoint anyone for this and it only takes effect in an emergency. You may be in a serious accident or have a stroke, and are unconscious or temporarily mentally impaired such that you cannot make your own decisions. This document will say which common medical treatments or care you would want, which ones you would want to avoid, and under which conditions each of your choices applies.
  • A Health Care POA (also know as durable POA for Health Care or Health care Proxy) gives someone else the authority to make health care decisions on your behalf when you are incapable of making and executing those decisions yourself. This only takes effect if you are incapacitated, such as having Alzheimer’s and are no longer able to make those decisions.

I have a general POA for my mother since she is incapable of managing her own financial and personal affairs. I also have a Health Care POA for her as she is unable to make any medical decisions for herself and has no idea of anything medical concerning her. As you can imagine, giving someone such broad authority requires a great deal of trust in the person that they will always have your best interest at heart. This is especially important for a business owner. You should always consult an attorney in creating any of these documents because they are state specific and have certain requirements to be legally effective.

A Will is a document that specifically expresses your desires on how you want your estate (all of your property and holdings) to be distributed (administered) upon your death. The more assets and family you have, the more you need a will. With few exceptions, all wills go through Probate. Probate is simply the legal process your estate goes through after you die. During this legal proceeding, a court will start the process of distributing your estate to the proper heirs. 

So do you need a will? For most people, especially a business owner, yes.

• If you are young, healthy, just starting out, single with no children, do not own any real estate and have no or minimal investments, then most likely you do not as there is not much of an estate to distribute.
• If you die without a will, your property will be distributed under the Laws of Intestate Secession. These are laws in each state that provide for the distribution of a person’s estate who die without a will. While each state is specific, in general, if you die as a single person with no children, those laws will distribute your property to your parents first. If no parents then next to your siblings. If no siblings then likely next to your grandparents. If no grandparents then likely next to your aunts/uncles or cousins.
• If you are married, and/or have children, own a home or real estate, have investments and/or retirement accounts, have personal property you want specific people to have after you’re gone, and/or own a business, you need to have a will.

As I mentioned, with few exceptions, when you die, your estate will go through Probate to distribute to your heirs. You want the court to have a legal document that expresses your desires for the distribution of your estate, rather than letting the judge decide, which is your will. Certain type of property do not have to go through probate, which are:

• Items with a named beneficiary (such as life insurance)
• Items placed inside a living trust
• Payable or transfer on death items (real estate, bank accounts, retirement accounts, investments and vehicles with POD or TOD)
• Jointly titled property with survivors rights

Obviously, if you have any of those situations, you need to consult with an estate planning attorney/professional as they can be complex.

While my mom has a will that was completed years ago, her estate will not go through probate because she has no assets, investments or any valuable personal property. Thus she does not need a will. Since she does not have any estate, that is why I went back home – to pre-pay her funeral expenses.

As you can see, everyone’s personal situation is different and if you are not sure whether you need a will, please consult with an estate professional. If you are a business owner and have business assets, a will can make sure your business continues on to the person(s) you designate, if that is your desire. I need to update my will because I have not taken into account my affiliate marketing business.

One thing few people think about are intangible assets and information. If you were to die tomorrow, who has the passwords to your social media accounts, online portals to all of your bills, bank accounts, investments, property and assets, and your crypto accounts, crypto wallet passphrase(s) and your sign-in 2 Factor Authentication App? Someone, likely the administrator of your estate, will need to have the username and password for all of your online accounts, especially for your business, to either transfer that to the proper heirs or wrap up and close all of your accounts and affairs. Do not overlook the intangible information you have in your memory.

If you are the proactive type and already have a Will and a Living will, and perhaps a Health Care POA, kudos! If you do not but have been thinking about it as you get older, I recommend you do not put that off any longer because we are never guaranteed tomorrow.

While I am single, I have an adult daughter (and her family) and a brother, as well my home, retirement accounts, crypto investments, several social media accounts, online portals for all my credit cards and bank accounts, this Blog, my FB business page and my photography website, so I definitely need a will. I will be updating my will and also updating my living will as a result of going back home to pre-pay mom’s funeral expenses and thinking about my own life. It is good practice to review your living will every year for any changes in circumstances and to update your will after any major life event, such as marriage, divorce, death of family member, purchase or sale of real estate, purchase or sale of investments and any other significant life event.

I know this is a deep subject that many people don’t want to think or talk about. However, tomorrow is not guaranteed. I hope this gave you a better idea of planning your estate and took a some of the mystery out of it. As always, consult with an estate planning attorney as this is a complex area and there are also tax consequences on the event of death and transfer of property. While I hope to live for several more decades and enjoy my life, I can only live one day at a time and do not know what tomorrow will bring. Now that I need to take action and ensure I have an updated estate plan, time to get back on my voyage. Let’s go!