The problem with trying to get clients to do estate planning is lack of urgency. Sometimes an impending trip will help get them off the dime. (What if the plane does down?) Perhaps an upcoming surgery will provide motivation. I’m not above using the coronavirus as an excuse to urge you to consider your mortality and plan for the future. Here are 5 steps you should take to get your estate planning ducks in a row.
1. Execute a will.
If your first thought is 'I wonder which (hopefully free) software I should use?', then let me encourage you to think again. I don't like to pay others for things I can do myself. I am one of the few people in the neighborhood who mows his own lawn. (I am admittedly cheap, but I also need the exercise.) However, unless your assets are modest and you intend to pass everything to your spouse, you will likely benefit from having a professional’s help with estate planning. (And I’m not talking about me.) Consumer Reports did a study in 2011 of three will-writing software products and found them all to be lacking except in the most bare-bones of circumstances. Instead of trying to use off-the-shelf software, they recommend shopping around and getting multiple bids. “Start by getting referrals to lawyers with expertise in estate planning from your accountant or financial planner, or check the websites of the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys for estate-planning specialists in your area.”1
Your need for an estate-planning attorney increases if:
- You have minor children. (You will want to name a guardian.)
- You will owe estate or inheritance taxes. (In PA, non-spouse beneficiaries pay inheritance taxes starting at 4.5%.)
- You own a business. (You will need to arrange for succession or disposition.)
- You have real property in more than one state. (There may be complicated tax issues.)
Often a will uses one or more trusts to provide for the orderly inheritance of assets by minors, minimize taxes, or accomplish other estate-planning objectives. Setting up trusts definitely requires legal expertise.
2. Review your account ownership titling and beneficiary designations.
For many of us, the majority of the wealth that we might pass on to heirs is in financial assets like IRAs, brokerage accounts, and bank accounts. For these, it doesn’t matter what your will says, if you die your assets will be distributed first to any joint owners and then to the named beneficiaries. In the case of married couples, accounts are often titled as “joint tenants with right of survivorship (JTWROS),” which means they pass directly to the joint owner. But in “community property” states, spouses have special protected interests even if they are not named as account owners. Beyond that, the beneficiary designations will rule. Make sure everything is up-to-date and correct. This is particularly important for accounts that you may have established a long time ago, especially in this age of high divorce rates.
3. Leave a letter to your executor(s) and survivors.
The letter (store safely and do not email!) should cover at least the following topics:
- Account numbers, web addresses, IDs and passwords for mutual fund accounts, brokerage accounts, bank accounts, pension plans, insurance policies, etc.
- Names and contact information for your attorney, tax accountant, financial advisor, insurance salesman, etc.
- Location of your vital papers such as your will, powers of attorney, advance medical directives, real estate deeds, mortgages, insurance binders, etc.
- Your desires to pass on items of personal property to particular individuals.
- Your desires about funeral arrangements (who is involved, music, Scripture passages, etc.) and interment.
4. Draw up a durable power of attorney.
A financial power of attorney grants authority to carry on a person’s financial affairs and protect their property by acting on their behalf. This includes the ability to write checks, pay bills, make deposits, purchase or sell assets or sign any tax returns. It is “durable” because it endures even if you become incapacitated or incompetent. Typically, this would be a spouse or trusted close relative but (with their prior agreement of course) you could name a lawyer or a financial institution.2
5. Fill out an advance healthcare directive (in detail).
Sometimes called a “living will” or “medical directive,” this document allows you to name a “medical decision maker” in the event that you are unable to make decisions yourself, and also to state your preferences regarding certain life sustaining medical procedures, such as cardiopulmonary resuscitation, use of artificial respiration (a ventilator), and use of a feeding tube. Like many states, Pennsylvania provides an online form.
However, you do not need to limit your comments to any particular form. That is why I suggest adding some custom detail to your document. This merits careful thought. And discussion with your medical decision maker. Putting things down in writing makes them clear for later when memories have become fuzzy.
In this regard I am preaching to myself. Writing this article inspired me to look at my own “living will” signed nearly a decade ago. Probably like a lot of people, I let my lawyer draw it up using boilerplate language and I signed it without much further thought.
It says that I request that “if my condition is deemed terminal or if I am determined to be permanently unconscious, I be allowed to die and not be kept alive through life support systems.” “Terminal condition” is defined as “an incurable or irreversible medical condition which, without the administration of life support systems, will, in the opinion of my attending physician, result in death within a relatively short time.” “Permanently unconscious” is defined as “a permanent coma or persistent vegetative state which is an irreversible condition in which I am at no time aware of myself or the environment and show no behavioral response to the environment.”
My living will goes on to say that “the life support systems which I do not want include, but are not limited to: Artificial respiration, cardiopulmonary resuscitation and artificial means of providing nutrition and hydration. I do want sufficient pain medication to maintain my physical comfort.”
The next time I sign one of these things, I would like to add a lot more detail and personal commentary. For one thing, that would make it clear that I did not just mindlessly sign some form. Also, it will give me a chance to discuss what gives life value and meaning for me. And it will offer the opportunity to highlight my fears and concerns.
In general, my greatest concern is that the medical community tends to be focused on measurable medical outcomes almost exclusively. There is not as much emphasis on patient comfort, dignity, and control as I would like. Most things in life involve trade-offs. I want to have informed advocates, such as a medical decision maker and other family members, there to tip the scales toward quality of life. After all, despite all the medical talk about "saving lives," all they are really talking about prolonging life.
For example, one thing that I am particularly concerned about is the reluctance of physicians to prescribe adequate pain medication, particularly in these days of opioid crisis. It seems that every time I am close enough to observe it, I find my friends and relatives who are patients having to beg for pain meds. This really bothers me. If I’m ever in need of pain meds for an extended time, I would want to have a pain specialist assigned to my case.
Regarding feeding tubes, I fear that some doctors may be too quick to use them. My perception is that they lower the medical risks. When it comes time to decide between the doctors' liability and reputational risk against my extreme discomfort, I want my written word and my advocates to provide balance that may otherwise be missing.
Along similar lines, I am concerned that some doctors may be too quick to intubate for reasons other than general anesthesia and for prolonged periods. Same deal as above: I want to balance the scales to give a lot of weight to my quality of life. Consider what has happened recently with COVID-19 patients. They were intubating people merely if they had low blood oxygen levels because that is what their medical procedures told them to do. Only later it was learned that patients had far better outcomes (not to mention far greater comfort and quality of life) if they used other less invasive methods.
Despite the fact that this article is already a bit long, I'd like to tell you the story of my mother-in-law's last months and her mistreatment by the health care community as an illustration and warning. Mignon was a sweet, kind, patient person. She never had a harsh word for anyone. She was also an insulin-dependent diabetic ever since her pancreas had been removed during cancer surgery many years ago. Fortunately for Mignon, she had three loving daughters who lived nearby enough to see her most every day. One was a registered nurse. If anyone should have been well cared for in her declining health, it should have been Mignon.
She had been using an automatic insulin monitor and pump for years, closely tended to by her engineer husband. After he died, her daughters moved her into a retirement home. However, in Pennsylvania, only nursing homes are allowed to use insulin monitors and pumps, and she strongly preferred an assisted living facility over a nursing home. (By this time the technology had been around for years.) So it was back to finger pricks and oral insulin. However, she was not always able to keep her blood sugar steady and sometimes, particularly at night, she became dizzy and disoriented when she had to get up to use the bathroom. Before long she had a bad fall. Lesson one: nursing and retirement homes are heavily regulated, and regulators have little incentive to approve the adoption of new technologies. The homes can't risk the liability if they deviate even if it makes common sense and provides better patient care.
Her badly injured leg required skin grafts and a lengthy period of rehabilitation. Since the rehabilitation hospital had full-time nurses on staff, they told us that Mignon could use her insulin monitor and pump and that they would oversee it. Also, we asked them to pull up her bedrails at night in order to keep her from falling out of bed. (When she needed to get up, she could ring the call button.) However, we were told that state regulations forbade the use of bedrails as "inhumane." (See lesson one above.) The next day we were shocked to find her insulin pump and monitor just laying on the floor. It came with her in the ambulance but no one knew what it was. Lesson two: the hand-offs between medical facilities really matter, and they are atrocious. There is no coordination unless you make it happen.
Unsurprisingly, Mignon suffered another bad fall. This time, she hit her head, so they took her to a hospital specializing in trauma. Although she had no trouble breathing, it was routine procedure at this hospital to intubate new patients. So, for no reason anyone could ever adequately explain to us (including my nurse sister-in-law), she suffered with a tube down her throat for about a week. Lesson three: it matters what hospital you are in. Their protocols will rule.
Mignon did not want to return to the same rehab hospital, and in fact, she made it known that she did not want to ever go back inside another hospital. She asked for hospice care. The hospital wanted to discharge her and we had very little time to select a hospice facility for her. The hospital social worker recommended one and after assurances from the head of the facility that they would closely monitor Mignon's insulin we followed the ambulance to the hospice center and got her settled. Later that evening when we visited, she was having cookies, wine, cheese and crackers. Not exactly the best diet for a diabetic. We asked about her insulin care and were told that they did not have any insulin supplies, and that they considered administering insulin to be "extraordinary care" that would not take place in a hospice. Lesson four: do not just trust what senior administrators say will happen. Check with the staff actually doing the work and make sure that it happens.
We knew she couldn't survive long without insulin, so that night we put her back into an ambulance to go back to the same hospital that just discharged her that morning. We had a lengthy wait in the emergency room during the wee hours. We finally got to the admitting desk and only to find out that they had no record of her stay that just ended the day before. The admissions system was not hooked up to the system used on the medical floors. They had no idea what her medications were, who her doctors were, or what her conditions were. Lesson five: keep careful notes on all of the patient's diagnosed conditions, attending physicians, and medications. No one else will.
The trauma hospital did not really want Mignon back so the pressure was on to find another hospice facility for her quickly. Fortunately, my wife was able to spend all day calling hospices on the phone and driving around to visit facilities, and we found a good one that had an opening. They were wonderful. Very caring. Very thorough. Mignon was very happy and comfortable there for several weeks before she passed away peacefully. Lesson six: the best care is likely to be at a facility that you select, not one that is selected for you.
All of this highlights the importance of having loved ones who will be your advocates to the medical system. You will need them. As many as possible and as observant, diligent, and skeptical as possible.
This content is developed from sources believed to be providing accurate information, and provided by Sapient Investments. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.