Who gets to decide what happens to you, and your stuff, when you can’t make that decision anymore? Is it important to you to die at home? Do you want to make sure that your favorite charity benefits from a monetary gift after you die? You can make a plan to address all of these issues, and you should! Your future-self who is unable to make their own health care or financial decisions will thank your current-self for having the courage to sit down and make such a plan. Your loved ones and community will appreciate that you have provided that plan to carry them through a stressful time when they may not know what to do next.
Joining me today for this conversation is my friend Melissa. Melissa is an attorney licensed in Nevada, and she has volunteered many hours at a legal clinic helping veterans put together basic estate plans. This post is intended to provide general information about estate planning and does not constitute legal advice. Please consult with a licensed attorney in your state or country about your unique situation.
Cynthia: It's so baffling to hear about über-wealthy celebrities dying without so much as a simple will. But, too many people think that the choice lies between spending thousands of dollars or doing a Legal Zoom will. Not so. My husband and I did our trust about 30-plus years ago, and it was maybe $500 then. We've gone in and updated it over the years, for a few hundred dollars per. It's not pocket change for some, but it's certainly not exorbitant either - especially if you have any sized estate at all. When my mother passed at age 95, her modest estate passed seamlessly to me - the Trustee of our Trust. No drama.
My mother passed away a few months after this photo was taken. She had a small estate - mostly her home and a few investments. Because we had a Trust, and Advanced Directives in place, I was able to devote my time and energies toward her daily care. That's not to say that all the necessary 'conversations' to get to those legal instruments were without uncomfortable and sometimes contentious moments , but we both understood that it simply needed to be done. -- Cynthia Ryan
Melissa: A meeting with an attorney in Northern Nevada for a trust will cost in the $2,000- 2,500 range now, but if you believe you have a situation where you want to discuss the protections or benefits of a trust then I encourage you to consult with an attorney of your choice. The two main reasons I hear for wanting to create a trust are: to avoid estate taxes, and to avoid probate. The threshold for estate taxes exemptions right now is $11.7 million dollars per person. Those with an estate that size have likely already done their tax planning.
As far as avoiding probate, there are some things you can do now to ensure that your assets can get to the people that need them rather than being tied up on a court’s calendar.
1. Make sure the beneficiaries are up to date on your life insurance and bank accounts. Financial institutions will also let you designate the recipient of your account holdings by completing a “payable on death” or “transfer on death” form. In most cases, the person designated would only need to come in with the death certificate and proof of their identity. This could be important for paying end of life expenses that aren’t otherwise covered or pre-payed (more on that later). Life insurance is paid automatically to the beneficiary identified without needing to go to court. This can even be a charity that you would like to support with a monetary gift upon your death.
Cynthia: This is so important! The payout from a small life insurance policy that my mother had from the newspaper that she retired from two decades earlier actually covered her funeral expenses.
2. Prepare registered vehicles for transfer outside of probate. In Nevada, the DMV form is called the “Transfer on Death Application,” and it can be used on any vehicle titled in Nevada without a lienholder, including RVs, mobile homes, and motorcycles. This sets up an immediate transfer of ownership after the owner’s death and can facilitate the easy disposal of this property without waiting for a court order.
3. Give your personal property away before your death. One of the saddest things to see in probate court is family fighting over who was supposed to have Grandma’s Hummel figurines or pointing fingers at who took off with Dad’s hunting rifle. If it is important to you that a certain family member keep jewelry or other personal effects like furniture, artwork, or the family bible, please consider making that gift before your death. Otherwise, labeling items discreetly with a post-it note or painter’s tape would work too so that those going through your personal belongings after your death are aware of your wishes. If you do make a will, these gifts can also be recorded in a “personal property memorandum” that is attached and incorporated in to your will, and can typically be updated on your own time.
4. Use tools to have real estate ownership transfer outside of probate. In Nevada you can record a “Deed Transferable on Death,” that will allow ownership of real property to be transferred without going through probate. There are some nuances to this process, so you would need to consult with an attorney regarding these tools.
5. Pre-pay for your funeral and burial expenses. Although it is often difficult to think about the financial eventualities of your death, it will be even harder for your loved ones to navigate this additional step while mourning. It is possible to contract and pay in advance for caskets, burial plots, or even cremation. By pre-paying you are able to lock in the expenses per the contract that you enter into with the funeral service provider. Doing this in advance also relieves possible financial burden on your survivors who would otherwise need to pay these expenses regardless of their ability.
Even if you do these five things to avoid probate, a will works hand-in-hand with your other plans to provide for the distribution of all of the rest of your property. To help you create the right estate plan for you and your specific situation, please consult with a licensed attorney in your area. There may also be no or low-cost services available in your area such as Senior Law programs, Legal Aid centers and Pro Bono services that can be found through local and state Bar Associations. I volunteer with the Nevada Attorney General’s Office of Military Legal Assistance, and assist at a Veteran’s Legal Aid Clinic doing wills and powers of attorney. (These events are currently on hold due to coronavirus, but they expect to resume in November 2021.)
Cynthia: But, another thing that people hate to discuss is a Living Will, which, when combined (in states where it is allowed) with a Durable Power of Attorney, can ensure that a person's wishes at end of life, or in the case of incapacity, are adhered to. Nevada provides a wonderful service called a Lockbox. I've put digital copies of our Durable Power of Attorney into the Nevada Secretary of State's Lockbox. A medical provider can access the necessary documents should either my husband or I become incapacitated. We don't have to worry about where it is, and if the documents can be accessed when needed.
Certainly, important documents need to be available in the event of an emergency. Keeping them in a bank safe deposit box is a good idea. But, what if the emergency happens, and your designated 'agent' is in another state? I keep some of my documents, in digital form, encrypted, in 'the cloud'. The person who would need to access them has been briefed where to go and how to access them. And, I revisit this on an annual basis.
Melissa: In whatever manner you keep your documents, make sure multiple people know where to look, and it may also help for people to know what it says. Even though it’s a common plot line in movies and television, the reality is that surprise property distributions sprung on your heirs when they gather to read your will is only going to benefit the lawyers your family hire to contest the will.
I would normally discourage people from keeping important documents in a bank safe deposit box because there could be issues gaining access to the box if documents are needed urgently. A fire box is a good alternative that can be kept in your closet, and it should be rated to preserve paper inside in case of a fire. I have one like this with a grab handle: Fire-rated safe.
Similarly, only keeping the documents in the cloud or electronically may make them inaccessible in an emergency. I encourage you to keep paper copies- on most documents, a photocopy is legally sufficient- and to provide those to the agents of your powers of attorney or living will, and the personal representative (formally, the executor or executrix) identified in your will.
In closing, Melissa and I encourage you to take these steps - as they apply to your situation. Personally, I've lost too many friends this last year. One of them - who passed suddenly and unexpectedly from an undiagnosed cancer - had refused to get his affairs in order. His wife didn't ask the necessary questions. The adult children can't afford to pick up the mortgage on the parent's house. The widow hasn't got enough income to keep it going. It's a hot mess. Nobody could afford the funeral expenses. Friends were able to come to the rescue on that amount. I was able to get pro-bono help - both legal and financial - for them to tide things over until they can get their feet under them. Sorta. Kinda.
It doesn't have to end like that. Having a plan in place empowers you. It gives the entire family enormous peace of mind, knowing that if/when the worst happens, they're not being hung out to dry.
Start today. One step at a time. Make a timetable if necessary. Have those conversations. Now.