Estate Planning Is On My Mind

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estate planning in preparation for difficult times and loss of mortality
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Thinking about your own mortality is no fun. Personally, it’s not something I often consider. I'm usually too busy trying to figure out how to live the most extraordinary life possible.

However, estate planning has been on my mind. Honestly, I’ve been thinking about it a lot more these past few weeks.

Of course, even before everything that has happened with the coronavirus, one of my big goals for this year was to get all of my estate planning in order. Still, it’s safe to say that recent world events have maybe bumped the priority up a couple of notches.

Now, don’t get me wrong – I expect to live a long life. I’ve taken certain steps to improve my own health. I exercise and have begun to eat better so that I’m around for my family as long as possible. I can’t control everything, but the things I can control, I’m making the best of.

My efforts at living a longer, healthier life, however, have brought to light the inevitability of death. I’m in my 40s now, and sadly, I’m starting to see friends from school starting to deal with major health issues or involved in serious accidents. I don’t know if that feels like it’s happening more and more to you, but I’ve certainly noticed it.

The old adage holds true, though: death is simply a part of life. Having fear or anxiety about death may not be healthy, but I’ve certainly seen what happens when families aren’t prepared for that moment.

So, I vowed not to let those same things happen to my family.

My goal is to get everything in order just in case something happens to me. That way, I can rest assured that even if the worst happens, I know my family will be taken care of. If you share that goal, you might be interested in some of the major considerations I’ve been tackling.

Living Trust

A living trust is simply a set of instructions for what happens to your assets after you pass.

I always thought that a living trust and will were synonymous but as it turns out, they’re pretty different.

A trust allows you to assign a trustee, or someone who will handle your assets on behalf of your beneficiaries. You do still give instructions for how those assets are distributed, though, much like a will.

However, a trust has three main advantages:

First, it allows you to avoid probate court. With a will, the court still needs to go through the process of transferring your assets to your beneficiaries. However, with a trust, even though you’ve passed, your trustee can facilitate the distribution of assets. Probate court can take a while and is notoriously expensive (sometimes up to 2-3% of your assets are paid in fees!).

Second, with a living trust, your assets can be transferred privately after your death. Contrast this to a will, which is a public document, and all transactions are public as well.

Third, a trust can take effect in situations other than death. For example, if you’re mentally incapacitated, your trustee can be the one to take over, rather than someone the court appoints.

A will, however, is useful for assigning guardianship of your children in case something happens to you. Without a will, guardianship would have to be court appointed.

Ultimately, of course, choosing to go with a trust or a will (or both) should be decided with the help of an estate lawyer.

I had a revocable living trust created a few years back but in reviewing things, I realized that I hadn't moved all of my assets into the trust. I've since bought some rental properties and made some investments. 

So I'm currently working on cleaning things up and making sure everything is housed properly under the trust. 

Advance Directives & Medical Power of Attorney

As physicians, we know this area all too well. I’m sure all of us have had to address this issue with a patient at some point in our journey, whether it was back in medical school or residency.

It turns out that completing one for myself was pretty easy; I simply filled out a form that expressed my wishes. Did it once and since nothing's changed in terms of my marriage, it's all still the same.

Organization of Documents

Do you know the location of all of your important documents? Things like deeds, certificates, forms, titles… If you’re like me, I knew where maybe one or two of those were in my home.

I realized that this wasn’t ideal, so lately, I’ve been working on organizing my important documents and making sure they’re stored in a secure location. I don’t know about you, but I often have a hard time finding everything when I need them, so this has been very beneficial.

One thing that has really helped me organize things is the In Case of Emergency (ICE) Binder. It's a simple set of documents that makes sure my loved ones know have all the information they need if something happens to me. Super easy to fill out and is a checklist of things so I know I'm not forgetting anything. (40% discount right now through April 15th).

But then, I decided to take it a step further and began looking for an online vault that allows me to store all this information. If you have a financial advisor, they will often have that sort of thing available to you.

For some extra peace of mind, it’s certainly worth asking for.

Passwords

In the event of your passing, have you considered how your family is supposed to get access to all of your files and documents? After all, most of us don’t share our passwords with anyone (and rightly so).

This could make it difficult for your family to have access to important documents, cloud storage, and accounts.

I like to use a password keeper like LastPass and One Password. Software like these help you to create secure, unique passwords. All of your passwords are locked behind one master password. If you share this single password with a trusted family member (or a trustee), they’ll be able to gain access to all of your stored usernames and passwords.

Of course, there’s always the fear that someone can crack that one password and have access to everything. On the other hand, if you’re like me, the only other option is to make all your passwords so similar (read: easy to remember) that they provide little-to-no security anyway. 

Organization of Investments

I like to invest in multiple different types of investments. I have stock accounts, retirement accounts, 529s, crowdfunded investments, syndications, funds, and angel investments. It can be a lot to track. So how do I keep all these documents in order?

Well, that can be a job in and of itself.

Those go in the ICE Binder as well, but I also have a simple Excel spreadsheet that outlines what the different investments are, and I update this list every time I make an investment. It’s kind of like a treasure map in case something happens to me. 

Life Insurance

One of the best ways to ensure your family’s well-being in the event of your death is, of course, life insurance.

I bought my first policy ($2 million, 20 year term) when my wife and I bought our first home, and then I purchased more term life insurance ($2 million, 20 year term) the moment I had my first child.

I simply called my agent to review the terms of my policies and to make sure I was adequately covered. He said I was.

Disability Insurance

Of course, there are other things to consider besides death. If I were in an accident and permanently or temporarily disabled, for example, my family could still be in a bad situation. I made sure to plan for that contingency.

Fortunately, even if something happened and I could no longer put an epidural in, I could still (hopefully) run some of my businesses, which would provide most, if not all, of the income we would need.

Still, I consider it a very good idea to have specialty-specific disability insurance. It could make all the difference in this event. Make sure to contact an independent agent who can shop multiple policies on your behalf. 

Thoughts on Estate Planning

Making a plan for what happens after you die is, admittedly, an unpleasant undertaking. However, it’s also extremely important – not just for your family’s well-being in a worst-case scenario, but also for your peace of mind.

Since I began taking these steps, I can say that if I were to pass on my family would be taken care of financially because I made estate planning a priority, and I hope to have made their difficult time just a little bit easier.

It's funny, making sure that all my bases are covered helps relieve the worry of dying so I can actually enjoy life a lot more. 

Anything else I’m missing that I should be thinking about when it comes to estate planning? Have you made estate planning a priority?


1 COMMENT

  1. My wife and I revamped our estate plan recently. A few years before I had been executor of my dad’s seven figure estate so my opinion of Trusts is based on those two events. We do not have a trust, we have a multimillion dollar estate but it is still below the estate tax minimum so we do not feel we need one. Our kids are grown and most of our assets are in accounts where we have already named our three kids as equal contingent beneficiaries. That means all those assets will avoid probate and go directly to them without involving the will or any courts. The only things that would go through probate if we died tomorrow would be the house and personal property. Those are insignificant parts of our estate and most likely we will sell those if we end up in assisted living like my parents. In that situation where almost every dollar we own will pass to our kids through their being beneficiaries on our accounts a trust doesn’t add much value and it adds a lot of complexity to daily life. My dad had a trust which we dissolved immediately upon his death. It neither complicated nor expedited settling the estate in any way. What we were able to do was keep all of the estate that didn’t go directly to me or my brother at a total of under $100,000. That way we could use an expedited probate process that cost basically nothing. But if the estate is big enough or if there are minor children involved then trusts do have their place. But if everyone is grown, there are no divorce issues or blended families then I don’t think a trust is worth the trouble for my situation.

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