Estate planning is generally a deliberate and well-thought-out process that is carried out throughout the life of the person doing the planning. You may think about who gets your prized art collection in the event of their death, who is going to make medical decisions in the event of your incapacitation, and who is ultimately going to take care of your financial affairs. But what happens when death or incapacitation hits before you have had time to think about these things? What do you do when you have not done any planning and an emergency situation arises?
If disaster strikes and you are unprepared, here are some quick things that you can do to establish a makeshift estate plan that will help to settle your affairs in the event of an untimely death (this only works if you have legal capacity, mental capacity, and testamentary intent):
Many states allow handwritten wills called holographic wills. In the event of a holographic will, you would write your final wishes in your own handwriting and sign and date the document. Check your state to make sure that it recognizes holographic wills and see if there are any specific nuances that you need to follow in order for it to be valid. If your state allows holographic wills, there are a few general requirements:
It must be written entirely in the testator’s handwriting, or the material provisions must be in the testator’s handwriting (depending on the state)
It must indicate the testator’s intent to make a will
It must clearly describe the property and identify the beneficiaries to whom the property is to be distributed
It must be signed by the testator (some states also require that it be dated)
Another option if you have time and the ability to get a notary, is to purchase a will using an online program. Just make sure that it is specific to your state. www.mamabearlegal.com is a great resource where you can get a will that is standardized to your state for a low price.
An even better option again if you have the time and financial resources, is to hire a lawyer licensed in your state to draft and execute a will and other directives on your behalf.
Appoint someone whom you really trust to serve as your Power of Attorney. This person can act on your behalf and take care of your financial affairs only while you are alive. They can pay your bills, make buys and sells in your investment accounts, and handle your overall financial management.
If you are able, it is good to add beneficiaries to any accounts where you are the sole owner. That way if you pass away, the funds can go directly to your beneficiaries without going through the probate court.
Another option if you are able, is to add someone whom you really trust as a joint account holder with rights of survivorship. If you pass away, those funds would go directly to the joint account holder again without going through the probate court. Many married couples use this method to transfer assets between themselves at death. They then add their children as either beneficiaries or joint account holders when one of the spouses dies.
Appoint someone as your Healthcare Power of Attorney and make your resuscitation wishes known. If you do not want life-saving treatment or to be kept alive on a ventilator after a certain period of time, be sure to write those things out.
It is important to take care of anything from the list above while the person is still alive. Once a person has passed on or has become mentally incompetent the list of options shrinks significantly. If the person passes away suddenly and has not done any planning, here is what to expect:
All of the accounts that are in the deceased’s individual name with no joint account holder or named beneficiaries will be frozen. Those accounts must go through the probate court in order to determine the final disposition. If there was a joint account holder on the account, they can continue using the account, but just need to produce a death certificate to the financial institution to remove the deceased account holder’s name. If there were beneficiaries named on the account, they will need to contact the financial institution and produce a death certificate and their identification to claim the assets. Check with the financial institution to make sure they do not have any other forms or requirements to claim assets.
If the deceased had a will, the will would have to be submitted to the probate court in order to determine how their affairs will be finalized. The will should have a named Executor who will carry out the deceased’s wishes and insure that everything is handled properly.
If the deceased had a trust, it does not have to go through the probate court. The instructions of the trust can be carried out per the deceased’s wishes.
If the deceased had no will or trust, a probate case would have to be filed under the laws of intestacy. This is where the court basically creates a will for the deceased’s assets based on the statutory laws of the state. This is the least ideal scenario since the deceased will have no say in how their assets are distributed.
Dying can be complicated and extremely expensive. In addition to the short list above, there is a barrage of other things that will need to be handled. Funeral arrangements, family disagreements, long lost relatives showing up, and protecting any of the deceased’s real and personal property from theft or mishandling to name a few. If you or someone you love need help making an estate plan, reach out with your questions to raina@reflectionslifeplanning.com.
This article is a service of Reflections Life Planning LLC. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.