Have You Ever Wondered..
If you died tomorrow, who would inherit all your stuff? What about your social media and email accounts – how would those be handled? What about your bank accounts and loans?
If you’re a parent with young children, who would step in as their guardian if you passed away unexpectedly?
If you had a bad accident and became incapacitated, who would be in charge of making all the extremely important decisions that would follow?
If you have addressed the points above, then you would be in the minority – most people haven’t taken the time to answer these critical questions. In fact, according to a RocketLawyer.com 2014 survey, 80% of Americans aged 35-44 do not have a will. 83% of single Americans with children do not have a will. Overall, 64% of Americans do not have a will.
The overwhelming majority of Americans agree that basic estate planning is very important, yet the stats suggest people aren’t actually doing anything about it.. so what’s going on here?
Let’s Talk With The Expert:
Today we will take some time to talk about this issue with Tim Dunn, an attorney with Bingham Greenebaum Doll LLP. Tim has tons of experience in this area and also happens to be a good friend of mine. We do not have a financial relationship, although we occasionally refer each other business. His practice is concentrated in the areas of estate planning, small business planning, asset protection planning, and estate and trust administration. Many of our mutual clients are young professionals just getting started in their financial journey. Tim received his undergraduate degree (B.A., Economics, 2005, summa cum laude) from Eastern Kentucky University and went on to law school at the University of Kentucky (J.D., 2008, cum laude – aka he is a really smart dude).
Q: So Tim, why is it that most people think basic estate planning is important, yet very few actually do anything about it?
A: Well, it’s 3 things:
- 1) A will forces people to contemplate death, and nobody likes to do that.
- 2) When we do take the time to contemplate death, we think it’s going to happen a long time from now.. so we delay setting up an estate plan.
- 3) Most are under the impression that when they die, everything goes to the spouse – but that’s not really the case (at least in KY).
Many of the people that get it done have experienced some type of life event that prompted them to think about it and question their own mortality.
Q: What is the #1 reason everyone with children should have wills created ASAP?
A: Do this to avoid World War 3 with the in laws in the event of a death. Nobody gives here – all will file an application to take over caring for your children and the court then must use it’s own best judgement to appoint a guardian. This means both of sets of grandparents are having to produce evidence proving they are the best suited. Then lots of drama ensues… and the judge eventually decides.
Q: What about people without children?
A: If married, under KY law, if you pass away without a will 50% of your stuff goes to your spouse and 50% goes to your parents.. then siblings.. then siblings’ descendants.. then back to your spouse. In KY you must have a will if you desire to pass 100% to your spouse.
Q: What about all the other documents in addition to the will? Can you hit on the most important ones that everyone should have and briefly explain what they are?
- Will – Names a guardian for children and directs how property will be divided. It also names the person that organizes and directs your finances (based on your will).
- Revocable Trust – Keeps how you divide your property private. If you have children, you can specify when they receive assets based on terms you outline. You can structure the trust to protect the assets from a child’s divorcing spouse or creditors.
- Durable Power Of Attorney – Names someone that handles your finances if you become incapacitated.
- Healthcare Power Of Attorney – Names someone that makes medical decisions for you if you become incapacitated.
- Living Will Directive – Outlines end of life decisions regarding the continuation of your care – aka “pull the plug or don’t”
Note: Make sure Beneficiary Designations (for retirement accounts and life insurance policies) are consistent with your estate planning goals and documents. If you want assets held in a trust for your children when you pass away, make sure your beneficiary designations say that. A ton of people do great estate plans and then DON’T DO THIS.
Why is this? Because the client leaves the attorney’s office thinking everything is finished or they never get around to it or maybe they think the attorney is handling it. The attorney thinks it’s the clients responsibility and assumes they will take care of it. So it doesn’t get done. There needs to be a very clear understanding of who will take care of this!
Q: When should people create their first basic estate plan?
A: Every adult should have a Will, Durable POA, Healthcare POA, and Living Will.
Q:What if someone has limited financial resources and a fairly basic situation (like a medical resident)? What’s the best route for them?4
A: I would suggest at least talking with an attorney to figure out the most cost effective way to meet their current estate planning needs. For example, if somebody met with me and they said they couldn’t afford a trust – I would say, ok let’s look at a lesser estate plan – maybe the basic documents only. If they could not afford this either, I would then refer to another attorney who may be more appropriate for their needs.
Q:How do people find qualified attorneys?
A: Seek referrals from other professionals (like CPA’s or Financial Planners) or other individuals who have gone through the process.
Q:How should people prepare before meeting with an attorney?
A: I would recommend you organize your assets & liabilities – prepare your financial statement. This provides the financial information in an efficient manner and it also helps to familiarize people with their own situation. This ultimately will save time (and most attorneys charge by the hour).
Q: What are good questions to ask an attorney in a first visit (or before) to measure their competency?
A: What happens if I don’t have an estate plan? What happens to my assets and my kids if I don’t have one? What are my alternatives for transferring assets to my kids at my death?
Q:How do most your clients find their way to you?
A: Most people find their way to me through other trusted advisors or referrals from other clients. Most referrals come from CPAs, Financial Planners, Insurance Salespeople or Bankers – generally those who are concerned about the client’s overall financial picture.
Q:How do these other professionals convince people to complete their estate plan?
A: Many advisors bring up estate planning issues throughout their course of business and show the client their need for such planning. In these cases, it’s already apparent to the client that some sort of action is needed.
I don’t have to do a lot of convincing, most of the time – it’s more helping them sort through all of their options. Most people I talk with already know they need to get it done, and I just help them choose the best path.
Q: Is there a fee to meet with you?
A: Most people assume the first meeting requires a fee – and if they aren’t sure, they usually don’t want to meet. Most estate planners, including myself, will have a first meeting on risk free basis, though.
Q: Thanks so much for your time, Tim! Where can people find you if they have more questions?
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