Alright, I could think of many other topics to discuss with you that are more positive than this one, but this subject is an important one. We all may face a serious illness at one point or another in our life, and certainly our life will end eventually. But if a loved one faces an illness that may be fatal, there are a number of action steps, as family member or friend, to help to get the important things in good order.
The documents and action items I discuss in this article, are part of good overall preparation.
1. Legal Documents
a. A Revocable Trust. For many reasons, a Revocable Living Trust is highly recommended over a stand-alone Will. Revocable trusts help with (1) transfers of assets at death, (2) more cost effective compared to probate, (3) more private than probate, (4) allows continuous management of assets through a successor trustee in case of incapacity, and (5) makes it easy to set forth long-term wishes and potentially secure tax savings. The tax savings can occur when there is a married couple involved. A Revocable Living Trust can be written to include a “Survivor Trust and a Trust for the decedent, known as a Marital Trust.” This can provide the estate tax exclusion to double for the estate. It also can provide further asset protection if the surviving spouse remarries. The revocable trust document will govern all assets transferred to the trust. The Will still governs all non-trust assets, though for clients with revocable trusts, the Will becomes of lesser importance since it will essentially transfer all non-trusts assets to the trust at death, known as a “Pour-Over Will.” All estate owners, whether they have a revocable trust or not, should have a Will. These owners should also have a durable power of attorney and Advance Health Care Directive to appoint an agent to handle financial, legal, and health care decisions in case of incapacity. But also note, if you have a Revocable Living Trust in place, the trust will include all three of these documents. If a Living Trust is already in place, make sure that this trust is up to date. An Estate Planning Attorney can help with all of this.
b. An Ethical Will – This document is relatively unknown. I wrote an extensive article on “Ethical Wills” in a past Blog post. Please refer to (https://family-fortunes.com/2019/11/creating-an-ethical-will/).
An “Ethical Will” is a gift in writing that shares great memories, important lessons, blessings, spiritual beliefs, values of the family, wishes or hopes for the future, and proud traditions to be passed onto the next generation. Often times, members of families not only have wonderful memories and lessons to pass onto loved ones and future generations, but then find it to be it too late to do so because our lives have come to pass or our health has failed and we are no longer able to take the time to record these lessons and memories. So, this document should be written right away and can be passed onto loved ones after a family member passes.
c. Managing Digital Assets – Our world has drastically changed compared to 20 years ago. A big change is the digital world we now live in. From social media to online bank and investment accounts, most of us have these accounts with user names and passwords. To help put this into perspective, specific examples of digital assets are Facebook, Google, Instagram, Twitter, email accounts, GoDaddy accounts that hosts domains, computer servers, Apple accounts, Amazon, QuickBooks, and electronic access to investment accounts, bank accounts, credit card accounts, subscriptions, etc. Many of these accounts have contractual agreements and have rules and restrictions within them, and are different for each account.
As a result, almost every state in our country has passed legislation to address the authorized access to a loved one’s digital assets. This law is commonly known as “The Revised Uniform Fiduciary Access to Digital Assets Act” (RUFADAA). The general purpose of this legislation is to provide guidelines in managing another person’s digital assets under an enforceable directive, such as a “Power of Attorney” or a trust document. In other words, if a person has one of these directives in place, and grants fiduciary powers, then that directive supersedes the terms of the service agreement, provided the owner does not direct the fiduciary to do something the client could not do otherwise under the terms of the service agreement. Under the RUFADAA, the law also grants written directives the power to handle the owner’s electronic communication via handling emails and texts (e.g.; delete my emails and texts). The bottom line is, the owner of digital assets, whose health may be failing, should have one of these directives in place, in detail.
One more comment regarding this type of planning, it is recommended that the owner have a password aggregated system in place, such as “LastPass Password Manager.” This gives the owner one very secured password that is applied to all accounts, so writing down many different passwords are no longer required.
2. Inventory All Investments and Assets – If the owner is currently working with a good financial advisor, they should have already had a compilation of all of the separate investments, insurance policies, and other assets, in the form of a detailed net worth statement. Also, make sure any safety deposit boxes are listed. This is so the executor or successor trustee has a detailed list of assets that the owner has. Our firm offers our clients the ability to utilize our “Wealth Vault”, which is a protected digital portal that provides account aggregation and itemization of every investment, banking, and savings account they may own, plus a listing of real estate properties, etc., they may own. All of these assets have their values updated daily. Furthermore, they can safely store scanned documents such as life insurance policies, annuities, tax returns, etc. The point is, an executor could then access this portal to more easily and readily take inventory of all of the assets, and their current values.
3. Organ Donor Designation – If a loved one wishes to donate their organs, they can sign up for the National Organ Donor Registry at organdonor.gov. Registering that way is more thorough than checking an organ donor box on a Driver’s License.
4. Valuation on Collectables – Getting a valuation on collectables, ahead of time would save a lot of work for the successor trustees.
5. Electronic Access to Social Security – Establish online access to their Social Security benefits (ssa.gov/ ).
6. HIPAA Privacy Rights Request Form – Depending on the State you live in, it may already be addressed in the “Health Care Powers Act” or the “Durable Power of Attorney”, but this form will authorize the release of your medical information to a designated person.
7. Review the Durable Power of Attorney for Health Care – Make sure this document is up to date.
8. Wishes for celebration of Life/Funeral – Self explanatory.
These areas are a good place to start for a solid exercise of “end of life” planning. Many of these areas are not only pertinent to an end-of-life scenario, but also should be addressed even if we are healthy. It makes good planning sense. You never know what may happen.
If you have any further questions regarding this planning, feel free to contact me by email at email@example.com.
“This material is not intended to replace the advice of a qualified tax advisor, attorney, or accountant. Consultation with the appropriate professional should be done before any financial commitments regarding the issues related to the situations above are made.”
Steven E. Zeller
Steven Zeller is a CERTIFIED FINANCIAL PLANNER™ professional, Accredited Investment Fiduciary®, Certified Exit Planner, practicing Wealth Advisor, and serves clients nationwide. He has over 24 years of experience within his profession. READ MORE
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