Category: Insurance

So you’ve done the hard work of establishing an estate plan. Good on you, as they say across the Pond. However, you still have serious work to do to ensure that the strategy you’ve selected will maximize your peace of mind and protect your legacy.

Estate plans are living, breathing creations. Your life can and will change due to new births, children getting older and other shifts in the family; changes to your portfolio, career and business; and changes to your health, where you live and your core values. Likewise, external events, such as tax legislation passed in your state or the development of a novel financial instrument, can throw your plan off track or open the door to opportunities.

Obviously, you want to do due diligence without spending inordinate amounts of time noodling over your plan. Good enough should be good enough. To that end, ask yourself the following “stress test” questions to assess whether you need to meet with an estate planning attorney to update your approach:

1. When was the last time you updated your will or living trust? Since then, have you had new children or gotten divorced? Have you moved to a new state, opened or sold a business, or just changed your mind about the type of legacy you want to leave behind? Especially if big, tangible life events have occurred, strongly consider updating your documents as soon as possible against all else.

2. Who have you named as executor and trustee? If you had to start your planning over from scratch today, would you still make the same decisions? If not, why not?

3. Do you have adequate insurance? Many people do not have enough insurance for themselves or their businesses. They also fail to name contingent beneficiaries. Get your insurance policies in order.

4. How much of your property is jointly owned with someone other than your spouse? Jointly owned property has the potential to be double taxed. Take a look at your real property and seek advice on the proper adjustments to make in order to save on taxes when it’s really necessary to save on taxes.

5. How’s your record keeping? Nothing drives an executor crazy like sloppy record keeping.

6. When was the last time you gave your plan a thorough once-over? Even if nothing “huge” has happened in your life recently, if it’s been over five years since a qualified estate planning attorney has assessed your strategy, schedule a time to meet. Identify any issues, and iron out the kinks one at a time.

As poet Robert Burns mused centuries ago, “The best-laid plans of mice and men often go awry.” Despite thoughtful effort and a concerted strategy, you cannot prepare for every emergency. A car accident, sudden illness, workplace injury or chronic medical condition can force you to re-evaluate the core assumptions you used to plan your future and set up your legacy.

A 2015 report published by the Centers for Disease Control and Prevention (CDC) offered this sobering assessment: “In 2013, approximately one in five U.S. adults reported any disability, with state-level prevalence of any disability ranging from 16.4% in Minnesota to 31.5% in Alabama.” The CDC also reported that “annual disability-associated health care expenditures were estimated at nearly $400 billion in 2006, with over half attributable to costs related to non-independent living (e.g., institutional care, personal care services).”

Frustratingly, you can’t turn back the clock. However, you can take meaningful actions to protect your legacy and estate in the wake of your newfound limitations. Here are some insights to that end:

Work with a qualified estate planning attorney to ensure that:

 ●There’s an authorized person to make financial and healthcare decisions for you if you become mentally or physically unable to do so yourself.

●There’s also an authorized person to manage your property, pay your bills, file your taxes and handle similar business if you’re unable to do these tasks.

●Your wishes about health care decisions, such as end of life care and do-not-resuscitate instructions, have been communicated in a legally valid and binding manner.

Get a recommendation from your estate planning attorney or your financial advisor, who can help you take additional actions, such as:

 ●Ensuring that you have appropriate insurance.

●Reassessing your investment options and portfolio in light of your new limitations and constraints on your ability to generate income.

●Making sure that you have a budget that works and that your bills will all get paid on time.

Mind this important distinction:

Be advised that “disability” for legal purposes is different than “disability” for financial planning purposes.

For example, disability for financial purposes might mean you can’t work gainfully anymore because of cancer or a workplace injury. On the other hand, “incapacity” in an estate planning context typically means that a person is no longer capable of making sound decisions, often due to systemic illness or injury. 

In other words, you can be “disabled” for financial/insurance purposes and be non-disabled for legal purposes. However, almost anyone who is disabled for legal purposes would also be considered disabled for financial purposes.

Either way, it’s important for us to work together with your financial advisor to make sure you and your family are fully protected.

Take these actions on your own:

●Pay attention to where your money is going as well as to your long term planning strategy. Your estate planning attorney can help you assess whether your current plans are still realistic and, if not, what alternative options you have.

●Maintain a healthy lifestyle. For instance, cut down on added sugars and refined vegetable oils and be sure to eat enough vegetables, protein, and healthy fats.

●Get the help you need from trusted professionals. Now is the time to tap your friends and family and network for assistance with the heavy lifting. No single advisor will have all the answers. But your team can work in concert to reduce the anxiety and uncertainty and keep you focused on what really matters.

Please reach out to us to assess your long term plans and documents and make sure you are as secure as possible in light of your new challenges.