Future Planning: Watch Out for Curve Balls!

When not working with clients, The Practical Sort has been out and about meeting the most fascinating people.  Occasionally when I come across women-owned businesses offering complementary services that I believe could benefit my clients, these solopreneurs will be featured in "Organizing & Beyond: Practical Perspectives/Simple Solutions."  

Feel free to drop me a note at sherri@thepracticalsort.com to let me know if you find this series helpful or wish to propose an organizing or related topic to explore.

This is by far the most important blog I have published to date so please take some time to read and understand the ramifications.

You’re young, healthy, immersed in the day to day when life smacks you upside the head.  Are you ready?


Strike #1

You receive a phone call from a hospital near your son’s university campus. There was an accident, and he was brought to the emergency room. But the staff will not give you any details until you can produce a signed HIPAA waiver. What’s that? Did he sign a HIPPA waiver before venturing to college? He’s your son. You have a right to know how he is, don’t you? Think again.


Strike #2

Your ex-spouse’s new partner claims to have rights to all property left in the estate after his demise. You know that he clearly intended to pay for your children’s well-being and college educations. But how do you prove that? It’s her word against yours.


Strike #3

You and your spouse are enjoying a brilliant day in wine country. The kids gleefully play at their grandparent's farm. A tipsy driver broadsides your car. Tragically, there are no survivors. Who will raise your children? Pay for their education? What will happen to your estate? Your home? Your possessions? Your bills? Who is responsible for all of that and where do they start?


Strike #4

Your mom is showing signs of advancing memory loss. Living independently is no longer realistic. Paying bills, securing medical services, maintaining her home, these are things beyond her abilities. Are the mechanisms in place for you to legally, financially, and medically assist?

Mitigating the surprises and having processes in place to enable measures to occur when things go awry will help make life a little less stressful if your catcher’s mitt is ready for the curve balls. 

Estate Attorney Elin Severson of Severson Law helps individuals and families prepare for future contingencies in harmony with their values and goals.   

Elin and I attempted to simplify the language and concepts in this blog as much as we could, but after reading you may very likely have unresolved questions or concerns.  If so, please feel free to connect with Elin for further guidance.  You will find her contact information at the end.

Game On: Planning for the Future

What is Estate Planning and where do we start?  Let’s see how Elin can break it down for us.

Practical Sort (PS): Elin, how do you define estate planning? 

Elin Severson (ES):   Hi Sherri, thanks for inviting me to participate in your blog and for facilitating this important discussion about being prepared.

Estate planning creates a guide for your friends and family to follow in case of your death or incapacity.  It is drafted based on your current life circumstances with flexibility built in to take care of future unknowns.  An estate plan allows you to leave detailed instructions about what your wishes are, giving you peace of mind that your affairs are in order, and providing support and guidance for your family.

Curve Balls & The Risks of Being Ill-Prepared

PS:  Personal and professional demands leave us with little bandwidth to deal with much beyond our daily activities.  Why is future planning crucial and what is at stake if we neglect to prepare? 

ES:  Despite your best intentions, neglecting proper planning and without critical signed legal documents can lead to unintended and potentially disastrous consequences.  For example, if you were in a car accident that left you in a coma, without a HIPAA waiver, your family will be kept in the dark about your condition.  Most likely the doctors will not answer any questions or provide a prognosis.

Lacking a Power of Attorney or Advance Directive no one has the legal right to make health care or financial decisions for you.  Instead, someone from your family would have to go to court to ask a judge to appoint them as guardian of your healthcare, or conservator of your finances.  This court process takes a lot of time and money.  Unfortunately, by the time arrangements are settled, it could be too late.

Image by kalhh from Pixabay

Image by kalhh from Pixabay

If you die without a Will or Trust, by default, you are choosing the plan laid out in our state laws.  A court process, called a probate, will have to be initiated in order to pass your assets to your family.   

State law assumes you want your assets to remain in your family, which may be the result you want, but what if it’s not?  What if you are in a committed relationship but are not married?  In this instance, your parents, if alive, would receive your assets and your partner would receive nothing. 

If you have minor children, without naming a guardian (the person who you want to raise your children), the door is open for ambiguity and conflict within your family if they don’t agree who should serve in this role.  Additionally, your minor children cannot receive an inheritance outright. Without naming a trustee or custodian in a Will or Trust, another court proceeding would have to happen to set up a conservatorship to manage the assets for your minor children until they turn 18.  And will your children be mature enough to receive their full inheritance at 18? 

With an estate plan, you get to choose:

·        Who you want to serve in important roles (such as guardian of minor children and the personal representative of your estate)

·        What you want to happen with your care and your assets  

·        How you wish to accomplish your unique goals 

You spend a lifetime taking care of yourself, your family, and your assets, so why drop the ball and leave these important decisions up to the default laws of your state?  Be proactive.  Consult with an estate planning attorney so you know what will happen in all of these different scenarios and can choose the best option for yourself and your family.

It’s Never Too Early to Be On Top of Your Game

Image by Анастасия Гепп from Pixabay.com

Image by Анастасия Гепп from Pixabay.com

PS:  “I’m young and in good health, why should I begin planning for my demise?”  Elin, I bet you’ve heard that before.  At what age should life event planning begin or do wealth and assets dictate timing?

ES:  Begin right away if you haven’t already. 

At the very least, if you have children, once your child is 18 years old, she or he should sign a HIPAA waiver granting permission for health practitioners to relay information about their medical condition during emergency situations. Without a HIPAA waiver, you could be left in the dark.

Taking this a step further, every adult needs a power of attorney and an advance directive.  What many people don’t realize is that when you turn 18, no one else has the legal authority to manage your healthcare or finances if you are unable to do so.  In other words, your parents cannot automatically talk to your doctors and direct your care if you are in a car wreck.  A power of attorney and an advance directive give the person you name the legal authority to make healthcare or financial decisions for you.  The only alternative is a costly court process where a judge appoints a health or financial decision maker for you. 

Best practice is to start estate planning as soon as you turn 18 then continually update your plan as your life and circumstances change (marriage, births, divorce, income fluctuations, inheritances, etc.).   

While you are young and healthy, estate planning may be the furthest thing from your mind, but we don’t have a crystal ball and you never know what’s ahead.  A truck driver can fall asleep and cross the median or a catastrophic fall on a hike. 

Estate plans are important at every age, regardless of your net worth.  They provide clear instructions about your wishes.  Think of it as your gift of guidance and support to your family and friends reducing the likelihood of stress and conflict. 

The Essentials of Future Planning 

PS: Elin, there’s so much to digest here.  Let’s try to break it down with the basics.  What are the most essential documents and why?

ES: The most essential documents everyone needs are: (1) HIPAA Waiver, (2) Power of Attorney, (3) an Advance Directive, and (4) Will and/or Trust.   

  1. HIPAA Waiver:   is a legal document where you authorize the disclosure of your protected health information to third parties.  HIPAA stands for the Health Insurance Portability and Accountability Act of 1996.

2. A Power of Attorney is the legal document where you appoint an “agent” to step into your shoes to manage your finances and assets if you can’t do so yourself. 

3. An Advance Directive will appoint someone to direct your healthcare if you are unable to do so. 

Image by Gerd Altmann from Pixabay

Image by Gerd Altmann from Pixabay

4. A Will and/or Trust will direct what happens to your assets after you pass away. Once you start to accumulate some assets, a Will is vital to direct what should happen to those assets when you pass away.  Additionally, if you have minor children, it is imperative to have a Will so you can name a guardian to care for them, and a trustee or custodian to manage any assets until they are grown.

A Trust can accomplish many of the same things a Will can with the added benefits of:

·        More sophisticated tax planning to minimize estate transfer taxes

·        Preserving your assets for your children in a blended family situation

·        More detailed incapacity planning

·        Avoiding having to go to court for your assets to pass to your family which saves time, money, and inconvenience 

Choosing between a Will and a Trust is really a personal decision.  Speaking with an estate planning attorney will help aide you in the thought processes to determine which route is best for your situation.

PS:  How often should the documents be reviewed?

ES:  Best practice is to review your estate planning documents every 2-3 years, but I recommend every year because that’s an easier habit to remember.  Pick a memorable date, such as your birthday, or New Year’s Day, grab a cup of coffee and your estate plan, then plunk down in a comfy chair and read through your documents.   

Pay attention to whether your named agents, Trustees, or personal representatives have moved, or whether your relationship with them has changed.  Is your plan for your assets when you pass away is still accurate, or have your goals changed? Make sure you understand what each document does and how they work together.  If you have any questions at all, call an estate planning attorney.

Additionally, when you have a major life change, you should speak with an estate planning attorney.  Events such as marriage, the birth of a child, divorce, retirement, moving to assisted living facility, winning the lottery, etc., can all affect your needs and goals for your life and legacy. 

Changes over time can have surprising consequences for estate plans that were drafted several decades ago.  By proactively reviewing and updating your estate planning documents when necessary, you can ensure that these documents grow, evolve, and change as you grow, evolve, and change over time so they will take care of you and your family in the manner you choose! 

Image by  francodelgrando  from  Pixabay

Image by francodelgrando from Pixabay

PS:  Legalese is frustrating and intimidating for many people including myself.  Can you explain why legal documents such as Wills and Trusts are not written in simple English?

ES:  Thankfully, drafting legal documents in plain English is gaining momentum.  I aim to draft all my documents in simple English so that my clients can read their documents and understand them on their own.  

However, there are certain terms of art that help to keep a legal document concise.  For example, “by right of representation” means that if you are leaving a portion of your estate to your child, but that child dies before you, his or her share will be divided equally among his or her children.  Without some of these shortcut terms, these documents would be much longer. 

Finding the Right Team Members

PS:  The responsibilities of Executors, Trustees, Power of Attorneys can be vast and frankly overwhelming.  What considerations should be made before appointing someone to fill each role?

Image by  rawpixel  from  Pixabay

Image by rawpixel from Pixabay

ES:  Thanks for bringing this up!  These roles bring with them immense responsibilities, power, and discretion.    

Before appointing anyone to act on your behalf, I recommend that you speak with the people about role duties and responsibilities.  This serves several important functions:  

·        These individuals will have a heads up that they are responsible for taking action upon a future event

·        This gives you an opportunity to discuss your wishes with them so they understand what you want, and determine if the fit is right

·        This allows them an opportunity to ask questions or to even possibly decline if they do not feel up to the tasks at hand   

A few things to consider:  

·         The time it will take to perform the role and whether the appointee has time to fulfill the obligations

·         The skills and personality traits necessary to adequately perform required duties. For example, if you have a child who is financially savvy, he or she may be the most appropriate to serve as successor Trustee or agent under Power of Attorney. 

·         Practicalities, such as location.  It could be easier for an individual who lives nearby to direct your healthcare because they can visit with you to check on your state of health and converse with your doctors in person to ensure your needs are being met.

·         Family dynamics and whether any conflict is created or exacerbated

·         Whether appointing a professional and/or unbiased person may be advantageous to avoid acrimony or when no other options are available.

 Importantly, they need to know where to find your estate planning documents so they can access them if and when necessary.   

PS:  Professionally executed vs DIY estate planning, what are the pros and cons? 

contract-945619_640 Image by Susan Sewert from Pixabay wills trusts poa.jpg

ES: I get this question a lot:  Why don’t I just do my own Will from an online “kit”?  Online kits are often not state-specific and are not as comprehensive.  They are a one-size-fits-all approach when in reality everyone’s situation is unique.

To avoid costly mistakes and unfavorable outcomes, work with an estate planning attorney to ensure that your specific goals and needs are given thoughtful consideration so that nothing gets missed.  

PS:  What recommendations do you have for selecting a lawyer (i.e., certifications, etc.), and is it advisable to choose a generalist or have an assortment of specialists in your address book?

ES:  Selecting a lawyer is a very personal process and it really boils down to with whom do you feel comfortable working?  Your attorney should: 

·        listen to you

·        communicate clearly and regularly

·        create a comfortable environment for you to ask questions and ensure your needs are met  

Image by CUsai from Pixabay

Image by CUsai from Pixabay

To best fulfill your needs, find an attorney that specializes in that specific area of law.  He or she will have a more in-depth knowledge to better serve you.   When trying to find an attorney, a good place to start is with a recommendation from a trusted family member or friend.  When it comes to choosing an attorney, pay attention to how they make you feel, read their reviews, do you feel a personal connection, do they listen to you, do you like their personality and communication style?   

Once you have some names of prospective attorneys, give them a call.  Many attorneys, myself included, offer a free phone consultation.  This is an ideal opportunity to establish a rapport and get a sense of their expertise.   

PS:  Elin, there is so much juicy information here that we’d rather not think about but it behooves us to dig in, start the process, reduce stress by clearly stating intentions, and ensure wishes are carried out as desired.

I am truly grateful for your willingness to share your knowledge and guidance to help us navigate these basic and substantive steps to future planning.  

For more information or assistance planning for your future and estate, please contact: 


Elin Severson
1500 NW Bethany Blvd., Suite 200
Beaverton, OR 97006
(503) 819-3065

All views and opinions expressed by the guest are those solely of the guest not necessarily The Practical Sort.  Please exercise due diligence before acting upon or engaging professional assistance.