By the time you read this it will likely be Groundhog Day, February 2nd, the day each year when a groundhog named Punxsutawney Phil emerges from his burrow in western Pennsylvania and determines, with questionable accuracy, whether we are in for another six weeks of winter. After last weekend’s blizzard, I think it’s safe to say we are all rooting for winter to be over as quickly as possible!
Many of you may also remember the 1993 movie Groundhog Day starring Bill Murray as a TV weatherman who relives the same day over and over as he goes on location to cover Punxsutawney Phil, and famously says: “Well, what if there is no tomorrow? There wasn’t one today.” In honor of Groundhog Day and in the spirit of the movie, I thought I would remind you of five things we talk about over and over and over again when helping our clients plan for the day when there is no tomorrow.
1. Create or Update your Estate Plan
An estate plan is your opportunity to create a roadmap for what happens to you and your assets if you become incapacitated or pass away. It is your chance to decide who makes legal, financial and health care decisions for you if you are sick, who will be in charge of settling your affairs and distributing your assets after your death, and how those assets will be distributed. Estate plans can be simple or complex. They can be designed to save taxes, avoid the involvement of the probate court, create a structure to manage an inheritance for a beneficiary who is young or foolish or both. Whatever your goals, create an estate plan, or update yours if it has been a few years since you did it. Life goes on, things change. As we say to our clients, it’s never too late to plan as long as you are alive and well, until you aren’t.
2. Fund your Trust
If you have created a Trust as part of your estate plan, you have heard us say many times that funding your Trust is one of the most important tasks that you need to do to ensure your plan works as intended. This means re-titling assets so that they are owned by the Trust, and not by you individually, or designating your Trust as the beneficiary of certain assets so that they will pay to the Trust at your death. Funding a Trust ensures the assets owned by the trust will avoid probate at your death. Funding a Trust can also ensure assets will be sheltered from estate tax at the death of the first spouse of a married couple, savings tens of thousands of dollars in taxes for your children or other heirs. Funding a Trust may also allow someone to manage and use those assets for you if you become incapacitated. So, if you have a Trust, don’t forget to fund it, and don’t delay in doing so.
3. Compile Important Information
If you become incapacitated or pass away, there is a lot of important information that your loved ones will need to know – What assets do you own and where are they located? Who prepares your income taxes? Do you have life insurance? Where is your safe deposit box? Where did you hide your stash of gold coins? What is the password to your Shutterfly account? What is the significance of those old candlesticks that occupy a place of honor on your mantle? Consider sitting down and writing a list of things someone would need to know if you were not able to tell them, including a list of your assets, your advisors (legal, financial, tax), and where your estate plan documents are located. Tell someone you trust where to find this information if necessary. And lastly, keep that list updated so that it will be current when it is needed.
4. Name Financial and Health Care Decision-Makers
Much of the fun and games in your estate plan happens after your death – taxes are paid, assets are distributed, beneficiaries divvy up your tangible property and fight over the patio furniture. However, there are two important documents that will directly impact you while you are alive – your Power of Attorney which names a person who will make legal and financial decisions for you and your Health Care Proxy which names someone who will make health care decisions for you if you are not able to make decisions for yourself. Make sure you have control over who is making decisions for you by creating these documents while you are well, and naming people you trust will make good decisions for you. Taking control of the situation and choosing your decision-makers while you are still able to do so will allow you to make the best choice, will allow you to prepare those decision-makers by discussing your wishes with them. Doing so will avoid a situation where no one is named and a judge decides who will serve in these roles rather than you.
5. Name a Guardian for Minors
Parents of young children do not have a lot of free time, and often the last thing on their mind is writing a Will, since the thought of passing away is remote and very scary. However, as a young parent, writing a Will is one of the most important things you can do. A Will is the one opportunity you have to decide who will serve as your child’s guardian if you are not able to do so. A guardian is a person who will be appointed by the Court to have custody of your children, and to make decisions regarding where they live, where they go to school, and their health care. If one parent dies, a child’s surviving parent will be named as the child’s guardian unless that parent is unfit. However, if both of a child’s parents are deceased, an alternate guardian should be named.
Naming a guardian for your minor children is one of the most difficult decisions you will make, but is arguably the most important thing you can do to ensure your child’s well-being if you die before your child is an adult. There is no perfect choice for this role, and often parents need to compromise on their ideal choices. As your children grow and change, a different person may be more appropriate, and your Will can be changed to name a different guardian at a later date. Naming someone is better than naming no one. If you die without naming a guardian for your children, the Court will have to choose among the people who ask to be appointed. And chances are some of those people may not be the people you would have chosen if you had the choice. Unfortunately, without a Will, the Court has no idea who your choice would be.
Long winter weekends, especially when COVID-19 has limited many people’s activities, are a good time to cross things off the To Do List. Put some of the above items on your list and get them done. Here’s hoping you will be around to celebrate many more Groundhog Days to come and fingers crossed for an early spring!
Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the immediate past President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.
© 2022 Samuel, Sayward & Baler LLC