Father’s Day is upon us and it always gets us thinking...
Sure, Father’s Day is about celebrating and appreciating the father figures in our lives. After all, many of us wouldn’t be who we are today without them.
But it can also be a day to consider the future, talk, plan, and prepare.
- What happens if dad gets ill or has an accident?
- Does he have an estate plan?
- Is our family prepared to make the decisions that come with aging, illness and the end of life?
Even though it doesn’t exactly sound like a party, it IS important. Retirement and estate planning should be a family affair. We’ve seen first-hand what can happen when families don’t make these plans together; fights ensue, last wishes go unfulfilled, money is lost and time is wasted.
Ok, fine. You don’t have to scare dad on his special day (but if he hasn’t made plans he should be scared!!!!), but pondering "what would I do without my dad?" makes sense on Father's Day, doesn't it? And even though it SUCKS to consider life without him, it is going to happen.
After the cards, gifts and dinner, you might want to have ‘the talk’ with dad. Ease into the conversation and use this blog as your guide.
Estate Planning 101 – learn the facts first!
Advance Health Care Directive– Not just dad, but everyone who is over the age of 18 needs an Advance Health Care Directive(AHCD). It has nothing to do with having money. Once we turn 18, no one can make healthcare decisions for us without an AHCD. This means you can’t for your 18 year old kid, you can’t for your spouse or significant other, you can’t for your aging parent, period. Your AHCD must include a HIPAA waiver too. This is the privacy act that prevents a doctor or nurse from speaking to anyone other than the patient, without his/her express permission. If the patient is enduring a medical crisis, unconscious or mentally not all there, he/she cannot provide that permission. Be certain your AHCD includes a HIPAA waiver so your Health Care Agent can make informed decisions on your behalf!
Durable Power of Attorney for Finance– The DPOA allows your dad to name who will be able make financial and legal decisions for him should he become incapacitated. Who will pay dad’s bills if he loses the ability to manage his own finances? Who will have the power to speak with an attorney, insurance company, the IRS, Social Security, etc. on his behalf?
Without the AHCD and DPOA, a judge will have to decide who can make these decisions for dad. The process of a conservatorship is very invasive and expensive. Remember that you CANNOT create these documents once you lose mental capacity so they really should be created today! Accidents and acute illnesses happen every day. They are sad and difficult for families where an estate plan is not in order but they are devastating without one.
Trust/Living Trust/Revocable Trust– Are all the same thing! A Trust basically says who gets your stuff when you die. If done correctly, it will avoid probate (which is SUPER expensive and protracted in CA), be fairly easy for your successor trustee to honor your wishes. It should be very customized to the needs of your family. Does everything go to the spouse? Are there specific gifts to kids, grandkids, friends or charities? Do you want to sprinkle assets over time (young beneficiaries cannot receive and manage money wisely)? Should there be different rules for different beneficiaries considering financial savvy, spendthrift issues or special needs concerns? The list goes on and on.
Will– Like a Trust, a Will can govern who gets what when you die. However, all Wills go through probate. In CA, our probate process is SO expensive and time-consuming, we avoid it at all costs. If you have very few assets and no kids, a Willmight be perfect. But if you have a bit more and kids, a Trustis ideal. Therefore, in most of our estate plans, the Will primarily names guardians for minor kids and acts as a safety net to the Trust.
Our rule of thumb is that your estate plan should be reviewed for updates every 5 years or sooner with any major life change (marriage, births, deaths, family feuds, etc.).
Conversation with Dad
Now that you know the facts, how will you possibly talk about it with dad so he doesn’t feel like you are overstepping your bounds? The answer to that depends upon your relationship, his age and your experience. But in general, we find that a compassionate discussion that recognizes this is a difficult topic for everyone is best. Below are some bullet points that may help.
- You read this blog and it got you thinking;
- You realize you need some estate planning (even if it’s just a baby estate plan with your Advance Health Care Directive and Power of Attorney for Finance);
- You love dad and want to be there for him when he needs you (reference experiences with grandparents or anyone who had a sudden accident/illness)
- Imagine if something happened to him tomorrow … can you legally make medical decisions, pay his mortgage or utility bills, check him into a rehab after the hospital, check his email, deal with social security or the IRS at tax time, etc.? Without the Advance Directive and Power of Attorney, you’re headed to conservatorship. Awful.
- Instead of an accident or illness, what if he died? Is his trust in order? Has he retitled all the assets into the trust to make it a simple administration? Is the right trustee named or is it out of date?
- Essentially, the best gift you can give to your dad is an up to date estate plan! Start talking about the issues now, while you can!
And remember, if your dad hasn’t done much planning, or is reluctant to engage in the conversation, he’s not alone. Most American’s would rather get a root canal than talk about their estate plan. The best thing you can do is reassure him that you just want what’s best and offer to help him get started. Having his final decisions made by a judge is something that will have a huge financial and emotional impact on his family. And we know your sweet pops would never want that!
For advice and planning, give us a call. We’ll review dad’s estate, help him decide what’s best, and give him (and your family) invaluable peace of mind.