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5 Reasons Estate Planning Matters

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What You Need to Know

  • Even a college student needs a health care proxy.
  • Parents of young children should think about guardianship.
  • People with substantial assets should consider the possibility of setting up a trust.

About 50% to 60% of Americans recently surveyed by LegalZoom said they don’t have a will, which is unfortunate, because 100% of the respondents queried for the data will, at one point, die. Death is an uncomfortable subject to talk about, and making plans that will never include you can be a surreal experience, but these are conversations that need to happen.

As a financial professional who helps clients with life insurance, you understand that better than almost anyone else who’s still alive.

You know that the best place to start is for your clients to do their estate planning while they’re healthy, fit, and in the right state of mind.

Your clients can ease the tragic and awful experience of losing a loved one for those they care about by having documents in place that stipulate how they want to be cared for in their last moments, how they want things done, and who gets what.

From a medical perspective, proper documentation gives family members peace of mind about the wishes of their loved ones, so there’s no guesswork around the treatment they would want if they enter a state where they are unable to make decisions for themselves.

Obviously, you should be encouraging your clients to seek advice about this topic from their legal advisors.

What else can you tell them when they object to the idea of caring about this topic?

Here are five ideas about what to say.

1. Even for young people, it’s essential to have some estate planning documents after you turn 18

If clients are young and you experience some sort of catastrophic accident, medical professionals will try to keep them alive for as long as possible. Take, for instance, the case of Hisashi Ouchi, a Japanese nuclear plant worker who received a dose of 17 sieverts of radiation, nearly three times the amount of those recorded in workers killed by the Chernobyl nuclear disaster.

Ouchi’s skin and eyelids fell off, the lining of his intestines and all of his white blood cells died, and he suffered three heart attacks before finally succumbing to multiple organ failure 86 days after admission into the University of Tokyo hospital. While he could still speak, Ouchi reportedly said to his doctors, “I can’t take it anymore… I’m not a guinea pig.”

In a less severe but unfortunately more common situation, if a young person is involved in a serious car accident and they end up in a coma, their mother cannot tell the doctor what treatment they want, even if she claims their son or daughter might have told her what they wanted doctors to do in the past.

Because the child is over 18 years old and technically an adult, the courts get to decide.

Or, if it’s a college student involved in the same situation, their university may continue taking automatic tuition payments out of their account even if they are comatose. It’s evident that the student is not going back to school anytime soon, and they might need that money to cover treatment costs.

Still, without a power of attorney and proper documentation in place, there’s nothing the student’s family can do about it.

College students need to be made aware that their parents cannot make decisions for them, even if they are listed as emergency contacts unless they are given power of attorney or appointed as health care proxy. Young people might not be married, and they might not have very many resources.

Nonetheless, their designated agent or health care surrogate is almost more important than the fact that they have health care, because doctors will do whatever they can to keep a young person alive.

Young people also need to have something in place to allow loved ones access to funds (student loans or bank accounts) in the event that the worst-case scenario occurs because, by the time their family members have gone through the courts to stop tuition payments to the university, their comatose student’s limited bank account could be empty.

2. Retirees obviously need to keep their wills up to date.

For your retired clients, estate planning is not just about financial planning and retirement planning. It’s also about putting in place documents to secure retired clients’ quality of life and maintain relationships after they pass.

More on this topic

Financial professionals can help their retired clients by keeping them informed about what these documents are. For example, by establishing a living will and HIPAA authorization, their clients can stipulate the kinds of treatments they want: Whether it be life-sustaining treatments or a do-not-resuscitate order.

Younger retirees might want a life-sustaining treatment in place, but older people might want a document stating their desire to have some treatments withheld if they suffer a stroke or other sudden catastrophic ailment.

With these plans in place, family members don’t have to try to navigate the courts to get treatment approved during a stressful time. This process can be very laborious and prolonged, and can bring additional pain to the affected person and their family.

Needless to say, the last thing anyone wants to do is talk to a lawyer when experiencing such desperate times — they want to be with their loved one.

3. People with children should name guardians.

Financial professionals should explain to their clients with children that in cases where both parents pass away and don’t name a guardian for their minor child, the courts will put the child under the guardianship of their closest living family (aunts, uncles, or other relatives) whether or not they want their child to go and live with them.

For instance, my friend Emily and her husband are listed as guardians for their friends’ minor children. While their friends both have siblings and living parents — the kids’ grandparents — Emily’s friends would prefer she and her husband raise the kids if they both passed away because their family doesn’t share the same values. You clients can’t choose their family, but you can choose your friends.

4. People with a larger estate might consider a trust because, in most cases, it can avoid a probate process that is required for a will.

Financial professionals should inform their clients with large estates that setting up a revocable living trust may be preferable to depending on a will. When clients depend on a will, they own their assets until they die. In contrast, a trust lets clients transfer ownership of the asset to the trust, which offers a few benefits when the client’s estate is larger and more complex than the average person’s estate.

In most cases, your clients will name themselves as the primary trustees of their estates, so that your clients continue to control their estates’ assets until they pass away, and then their successor trustees take over after that.

The trustees control the assets, but they technically don’t own the assets, because the trusts do — that’s how the assets transfer to the beneficiaries more quickly. A trust doesn’t die with its founder — it stays open.

When a client sets up a trust, beneficiaries have more immediate access to assets after the trustee passes, and the process is more private than if the client had used a will. This is because a will must always go through the probate process, where the will is made a matter of public record and the court validates the will and appoints the named executor or personal representative.

5. Everyone should always make sure their documents are accessible.

Even if clients have estate planning documents in place, many people store these essential records in a physical safe deposit box or filing cabinet, which means the documents are not always immediately accessible in an emergency.

Clients’ loved ones may even know where the documents are, but, when the documents are stored in these types of locations, the clients may not have the access or authority to access the documents.

Cloud technology has transformed virtually every industry, and estate planning is now following suit. If a person’s health care proxy is stipulated to be on a printed document in one state, family members cannot access the document unless they physically travel to get it.

If documents are digital and stored in a secure cloud, family members and their financial professionals can coordinate care from wherever the family members or financial professionals are physically located.

The Facts

It’s tragic to consider, but the fact is, we will all die at some point. No matter how old or how young your clients are, they need to be aware of their estate planning needs and options.

What’s more, it’s vital that your clients express their wishes legally, with estate planning documents. Although it’s sad to consider the fact that we all will die, the process of planning for the inevitable can make death less painful for those we ultimately leave behind.

There’s also no guarantee that clients won’t experience undue medical complications in the lead-up to their passing— at any age. The stress from coping with those complications, and expenses, can tear a client’s family apart unless the client has a plan in place.


Renee FryRenee Fry is the founder and CEO of Gentreo, an online estate planning company.

(Image: Shutterstock)