Wills, POAs, and How Not to be Like Famous People

I have always been fascinated by the number of famous people who die without a will. Everyone from Picasso to Bob Marley to Michael Jackson, Prince, and Amy Winehouse and every 1980s kid’s most favorite singer, Kurt Cobain. You would think that people who have amassed as much money as these people have would have taken the time to decide where their money and belongings should go when they die.

So why do famous people and not-so-famous people postpone getting their affairs ready for when they die? I think one reason is that nobody wants to think about death. It is quite morbid. Another reason may be that it can be difficult to decide who should get all of your possessions: your kids, a charity, or your favorite pet. Family dynamics can be very difficult at times, and you may or may not be talking with all of your children. Or perhaps one of your children is more successful than the other, and you feel like it wouldn’t be fair to give the same amount of money to each. Lastly, most of us are too busy with things that have to be done today to take time for something that can be put off.

What If I Don’t?

We will cover the basics of planning how to move your money and possessions to who ever you feel should receive them. But first, let’s cover what happens when you do not have a will or trust in place when you die, like our famous friends above. Most states have laws that govern what happens when you die without a will (called intestate succession or probate). Basically, the courts decide who should get your assets. This process can be very time consuming, tedious, and something most people never want to do again. For the sake of making this a shorter blog post and not covering every scenario, each state and situation will mean a different outcome. The rules will differ based on your state and your unique situation. If you are remarried with step kids, that will be different than a single person with no kids. The best thing to do is talk with an attorney in your state and get the best advice on your situation.

Wills

A will is the first thing most people should have. It should be regularly updated. We recommend updating at least every 5 years because life changes, and what worked five years ago may not still be working now. So what is a will exactly? It is a document that spells out how you want your assets to be distributed when you pass away. If you have minor children, it can also appoint guardians to care for your children while they are still minors. Your favorite piano, that chair you love, bank accounts, your favorite pet, and anything else you value. Think of it as a chance to leave what is important to you to the people who are important to you. It will also name an executor (usually a person or trust) that is in charge of making sure your wishes are carried out. It is VERY IMPORTANT that you keep the original version of your will. Depending on your state, you may have to go through a few more steps if you do not have the ORIGINAL VERSION.

DPOAs

The second important document to have is a Durable Power of Attorney (DPOA). A DPOA allows someone to act on your behalf, should you not be able to act because of incapacity, mental decline, or some reason that keeps you from speaking for yourself. Think of an automobile accident or the late stages of a disease like Alzheimer’s. Think of the care for your children, should the occasion arise. DPOAs are a lot like umbrellas: you may not use them very often, but they are great when you need them.

HCPOAs

The third important document is a Health Care Power of Attorney (sometimes referred to an Advance Care Directive). These are occasionally included in a DPOA, though sometimes they are stand alone documents. It allows you the opportunity to name someone that can speak on your behalf when it comes to medical emergencies or you become too ill to speak for yourself. This is very important and overlooked many times because we don’t want to think of ourselves in this type of situation where we would need one. Talk with your family if you want to be an organ donor or if you don’t want certain procedures preformed on you. Deciding to take a family member off of life support is never easy, but can be made a little easier if you have had a conversation about this before you are in that situation.

What Else?

What else is there to consider? How do you want your funeral to go: passages to be read, songs to be sung, burial or cremation, flowers or donation to a local charity you like, meals to be served or not served. This takes a lot of uncertainty off of your family when they are going through one of the hardest times of their lives, your death.

How about your beneficiaries on life insurance or retirement accounts? Are they up to date? Is your ex-wife or ex-husband the beneficiary and your new spouse is not? Unfortunately, there are too many stories of a former spouse getting an inheritance because beneficiaries were not updated. Did you give money to a charity that really matters to you? Is your money going to go where you currently want it to go?

How about your checking and savings accounts? Do you have named beneficiaries for those accounts? Most banks and brokerage houses allow for a Transfer on Death (TOD) or Payable on Death (POD) designation that allows you to name beneficiaries. This allows the money to go straight to your beneficiaries and avoid the lengthy probate process the same way it would for a life insurance or retirement account.

Action Items

So, if you have a will and your estate is in order, fantastic! If not, I would suggest taking 30 minutes to an hour with your favorite beverage and start the process by writing down who you want to get what when you pass away. Talk to the people that matter to you, and after you have thought this out, tell them your intentions. I think you will find that most people will be relived that you have taken this burden off of their plates. I would than talk with a great Estate Attorney about setting up the proper estate documents that you need. Cost tends to vary greatly by location and level of work that needs to be done. Most attorneys, though, will tell you upfront what their costs are for this type of work.

Although only an attorney can write estate documents for you, I would be happy to answer any questions you may have. Feel free to contact our office at helpinghand@voyagefp.com or 843-285-7076.

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