Project Will (Trust & Advanced Directive)
September 15, 2009
It feels like I’ve been talking about doing this forever. I’ve certainly been thinking about it for the past 2.5 years. So why haven’t I gotten my butt in gear?? Figure out who gets what, who gets how much, and get it notarized.
The truth is even when you don’t have much, settling a will is a little more complicated. And in my household, nothing’s quite that simple. Leaving aside the personal dynamics, my parents are my financial dependents. Mom can’t be left alone anymore, it’s a long story I don’t have the heart to get into right now, but she simply cannot be left to her own devices. If she doesn’t get hurt, someone else will. That means Dad is tied down as her caretaker since we can’t afford to pay a fulltime caretaker – never mind the question of finding a good reliable one – unless he somehow finds a job that pays much more than I was making.
What all that means is that if anything were to happen to me or my dad, we’d be in a lot of trouble. The only thing I can do is insure myself and do the best I can by both of them.
For me, that meant life insurance. Like an idiot, I waited too long to start the life insurance application process, and then tried to do it while dealing with an awful work situation (pending layoff). That wasn’t so smart. Burnt out, I resorted to expanding the employer-sponsored plan and just ported it to a personal policy at an exhorbitant rate. I’m paying $600/year for a piddlin’ $200k policy. Mere peanuts for the price. But that and my other assets would get them both through about ten years of bare bones living.
For my dad, that meant long-term care insurance. Unfortunately (is this becoming a theme?), my dad refuses to quit smoking which was one huge factor in obtaining that policy.
Next, because I can’t trust anyone in my family to properly manage money, (else why would I be doing it all?) I have to find two executors I can trust to manage my affairs as indicated, and would not be overly emotional about the whole thing. ie: They need to love me enough to do this for me, and be highly capable and competent. I don’t employ an attorney or anyone in a professional capacity that I’d trust to handle my money.
I wish I could say that if something were to happen to me, my brother would step up, take care of the arrangements and make sure that my parents were well cared for. That’s not gonna happen.
This step took way too long. Frankly, none of my good friends/peers are such good money managers that I’d trust them to administer to my family. That leaves me with the older generation, parents of friends. I have two sets of adults in mind, but now I have to make my wishes clear and as easy to execute as possible.
The last few months have been full of simplifying my finances and creating a document that summarizes everything I own in the way of accounts. Both Mrs. Micah and Funny About Money have blogged about that very thing recently:
Funny about Money: Preparing for the worst
Mrs. Micah: How to Save and Store Critical Financial Information for your Family
I still haven’t decided if it’s best to go with a trust instead of a will just yet, I’m not sure of the tax/benefit implications for my parents. My mom receives a very small disability stipend which doesn’t cover more than a quarter of her living expenses, if that much, if my estate would derail that disability I’d need to know and budget for it. Also, I have to consider whether or not having an income from my estate would cost her health coverage, minimal though it is. She simply cannot be without health care.
In the meantime, Project Declutter continues apace. In theory, my material belongings should be pared down enough that most would be distributed as per my stated wishes in the will/trust, and the rest, like clothes, can be donated.
As for the advanced directive, it’s probably the most straightforward thing of this whole process. I’ve got one friend who knows exactly what my wishes are AND will comply with them. He’s going to have Power of Attorney for Health Care. That document just needs to be initialed, signed by two witnesses and notarized.
Has anyone fully completed their will/advanced directives yet? Was it simple or difficult for you to organize?
One important thing to consider when coming up with folks/agencies to handle your parents’ inheritance in the event of your death, is to make sure that any individuals you appoint have a good income themselves so that they won’t be tempted to help themselves to your money. Also, while it is tempting, do NOT state that they can serve without a bond. The bond protects the assets, comes out of the estate, and is well worth the money. I didn’t have to deal with this for my parents, but when my children were still minors, I had different folks that I wanted to be guardians of my children and to handle the money. I put my rich sister in charge of the latter, though I wouldn’t have left a goldfish to her personal care! (She fully understood–it’s why she never had kids!)
I’m sorry that you’ve got such a complicated family situation. Like you, I don’t know what I’d do without my dad to take care of Mom, though her problem is simply that her treatments periodically leave her too weak to care for herself.
One thing I haven’t done is written an actual will. Since Micah has so much debt, I want all our money to go to him, should something happen to me. And I set him up as my life insurance beneficiary, also as my bank account trustee (at ING anyway). But there’s no formal will. I think he has some idea of who I want my personal mementos to go to–but we should really spell this out. One thing about being young marrieds w/o kids is that we don’t feel that same responsibility to make sure every eventuality is covered that we probably should. I suppose it’s similar for young singles.
We don’t have wills/trusts etc yet, I’m waiting till we have kids. Otherwise they’d have to be completely redone when we did have kids, I’d rather wait. Since you already have dependents (just not the diapered variety) it sounds like this is an important step you need to take. I’m sorry your parents and family have put you in this situation, it isn’t fair.
Have you talked to a lawyer about this stuff? You may be able to find an estate-planning lawyer who won’t take you to the cleaners…and it sounds like you need the advice of someone who knows the answers to the many complicated questions you’re facing.
My will leaves everything to an entity called The Estate of [Me]. My son is the beneficiary. This is supposed to provide fairly fast access to my assets. But now that you mention it, I haven’t reviewed this in a while and probably should.
My “living will” is a medical power of attorney assigned to my son. This specifies my wishes in the event of a dire medical condition. You need a MEDICAL power of attorney (sometimes called a power of attorney for health care) and also a DURABLE power of attorney. These are two different instruments. The durable p of a grants the holder the right to get into your bank accounts, safety deposit box, home, etc. The person who is to take over your financial affairs needs to have one of these.
If your parents are not your legal dependents, they may need to sign medical and durable powers of attorney, also–one for you and one for someone that you designate to take over should anything happen to you. This will obviate any questions should they both be incapacitated. Even though you’re handling their money now, unless you have a piece of paper authorizing you as their agent, the bank may not recognize that if something happens to your dad.
My heart goes out to you and your family, seeing your mom deteriorate has to be incredibly tough. Good on you for taking care of her both now and in the future!
I’ve been thinking a lot lately, too, about life, long-term care, and disability insurance. I need to get on that, because I’d rather lock in a good rate as a 31-year old. My only hiccup is that I’m honestly not sure if the policies transcend country borders? Can I buy a US policy if I’m in NZ? or vice versa? Would a US policy pay out if I died or became disabled in NZ?
My mom refuses to look at long-term healthcare or disablity insurance for herself, she says it’s too late and too expensive. I told her that it will only get more expensive if she waits…I may just buy them for her if I can find the cash. I’d rather have the peace of mind.
Grace: Great point about selecting financially stable executors, that was one of the criterion at the foremost of my mind. Unfortunately, the friend’s dad who passed was one such reliable, stable, trustworthy individual. One of a very few … back to the drawing board.
I did not know about the bond issue, thanks for bringing that up, I’ll have to look further into it.
Mrs. Micah: You probably just need to make it clear who gets what in the way of mementos if anything is of particular significance.
The will would be good in a what-if-something-happened-to-both-of-you scenario. I believe in covering as many bases as possible.
Miss M: But what about the dogs?? š
Funny About Money: I do need the expertise but … to talk to a lawyer, I’d need to find someone I trust. š That’s been a challenge. There are so few people I can get personal recommendations from.
That is a good point about my parents and having a legal piece of paper signed. I haven’t done anything in that arena because for most intents and purposes, they really don’t HAVE any money.
Sense: Good questions, all. I think that buying a policy for yourself from a US co while in NZ could pose a problem. One of the screening questions I had to answer was about whether or not I planned to travel in the next five years out of the country.
For your mom, though, it’d be worth looking into some quotes. OR setting up your own savings account, though of course that’s minimal next to the benefits of an insurance policy.