What My Late Wife’s Death Has Taught Me About Estate Planning.

Like a doctor who forgets his flu shot, I am a lawyer who has procrastinated over doing my will.  But the first month of solo private practice provided a good time to get the job done.

            After my late wife Holly’s death, the last thing I wanted to do was to contemplate my own demise.  But it is coming, and since I love my new wife Susie and her family and Holly’s family and my own family, I needed to get off my behind, even if I won’t leave much behind.

            Here are a few things I learned during the process.

Don’t leave them guessing  –  Durable Health Care Powers of Attorney and Health Care Directives.

            One of the worst things about Holly’s death was that it was difficult for her to communicate.  She was almost continuously intubated so she couldn’t speak.  In fact, she made most her medical decisions with a pen and paper

            But at least she made the decisions.  After her death, I was wracked by guilt.  But at least there wasn’t guilt (or much guilt) over her medical choices.

            Holly and I may not have done our Wills, but I know we did our health care powers of attorney (HCPOA) and a health care directives (HCD). An HCPOA is your designation of the agent to make your health care decisions when you can’t. An HCD is a statement of what your health care decisions would be if no one can find your agent.

            I know we did them.  But I’ll be damned if I could find them.  And the last thing I wanted to do with Holly in the hospital was ransack the house looking for ancient papers.  So they weren’t worth the paper I am certain they were written on.

            Suppose Holly was unable to make the decisions.  Would I make the decisions?  Or would her brother Eddie?  I love Eddie dearly, but his views on the life to come are different than mine.  I can’t imagine how terrible it would have been for Eddie and I to argue about Holly in her final days.

              I am sure Holly designated me and I designated Holly on the forms I couldn’t find.  But I suspect we didn’t designate alternate agents – someone to stand in if our first pick isn’t available.  That was shortsighted. 

             I know a few couples with motorcycles and children.  Most of them won’t get on the same motorcycle together for fear the crash will kill them both and leave their children without any parent.   That’s the same reason I now have an alternate agent. 

            In violation of the first rule of a new attorney in solo practice, I will tell you that you don’t need a lawyer to complete your HCPOA and HCD. Forms are available at the Missouri Bar website – www.mobar.org.  But you may want a lawyer to answer your questions and make sure the forms are completed correctly.

Stay Out of Court – Beneficiary Deeds, “Take on Death” and “Pay on Death”, and Life Insurance.

            Holly and I had our real property titled in both our names, including our home.  When I sold our house, all I had to do was file her death certificate with the recorder of deeds and then sign the deed to the new owner.  But what if she and I were the proverbial couple on motorcycles who died in the same crash.  Who gets the house then?  What if there’s no will?

            These situations are the bread and butter of probate attorneys.  But if you’d rather leave your bread and butter to those you love than your lawyer, consider a beneficiary deed.    A beneficiary deed basically says “I give my house to this loved one, but this deed won’t kick in until I die, and I can revoke this deed any time (like when someone wants to buy my house for a million dollars.)”

            My new wife Susie and I have done beneficiary deeds on all our properties.  Susie will get them if I die first.  When the last of us dies, then they will go to family members.  Again, all the family members have to do is file the death certificates. And we can still sell the properties to the million dollar purchaser. 

            Susie and I also did the same sort of approach with our cars and bank accounts.  Her car title has a “take on death” provision so I can’t sell her fancy ride out from under her but I’ll  get it right away if she dies before me. All I have to do is take the death certificate to the drivers’ license bureau.  The same goes for your bank and retirement accounts.  Make sure they have a “pay on death” provision.

            Let me now gripe about my life insurance company.  I have a small whole life insurance policy with Insurance Company X.  Holly was the beneficiary under the policy.  After I married Susie, I wanted her to be my beneficiary.  This should be simple.  I should be able to sign a form (in front of a notary public so Insurance Company X knows it’s me) to change the beneficiary.  But Insurance Company X is requiring me to get a “medallion guarantee”.  This is a guarantee by a bank that it’s me.  The bank is on the hook to the insurance company if it’s not me.  Most banks don’t provide “medallion guarantees”.  Even those that do require that you have a bank account with them.  The nearest bank that will do a “medallion guarantee” is in St. Louis.  So I would have drive up there, open a bank account, and pay my new bank the “medallion guarantee” fee.  What is so crazy is that I could surrender my whole life policy for a fraction of what it would pay out upon my death just by completing a form in front of a notary public.  So Insurance Company X doesn’t care so much if it’s me signing the form so long as they no longer have to pay out the full amount on my death.

            The moral here is to make sure your life insurance policies have alternate beneficiaries.

Get Out of Court Quickly – Independent Administration, Pour-Over Wills, and Revocable Trusts.

            If I die now, my beneficiary deeds, “take on death” titles, and “pay on death” accounts will transfer practically all of my wealth easily.  But as I learned when I looked for papers for Holly, I can be a fool.  I may sell some property, buy some new property, and not do a new beneficiary deed.  I may buy a car and not have a TOD title.  I may buy the winning Powerball ticket and then have a heart attack before I can deposit my winnings.  That’s why I finally got around to preparing wills for myself and Susie.

            Our wills are mirror images of each other.  I leave all to Susie, she leaves all to me, and if we both die at the same time we leave all to the same people.  We both have the same personal representative – that’s the person charged with seeing that the provisions of our will are carried out.  She’s mine and I’m hers.  We have the same alternate personal representatives if we both die at the same time or she or I am unable or unwilling to serve.

            Our wills provide that the personal representative can operate under “independent administration”.  In the bad old days (in the 1970s), there was no such thing as independent administration.  A probate court micro-managed every action by the personal representative.  This meant court costs and attorney fees soared.  Now, with independent administration, the probate court has a much more limited role.  A personal representative will need to file an inventory of the estate and a final settlement, but he or she can manage and sell the assets of the estate without the court’s blessing.  The court is still there if disputes arise, but otherwise the court has a much smaller role.  This should keep the lawyer fees down.

            Because independent administration involves less supervision, I suppose our personal representative could do more mischief.  But we trust the people we named (otherwise we wouldn’t have named them.) 

            Initially, we were going to do pour-over wills.  Neither Susie nor I have children but we have nieces and nephews and parents we want to provide for.  The nieces and nephews are too young to handle anything we leave them right now, so we want to leave the property to them in trust until they are old enough.  We picked that age of 25, since we both remember how intelligent we were at that point.  Our first plan was to have the will leave their shares to a revocable trust until they reach the magic age.  The will was going to “pour over” the property into the revocable trust.  The trust document would be separate from the will.  This means it wouldn’t be filed with the court and prying eyes wouldn’t be able to see it.

            But the problem was that our nieces and nephews have different sets of parents.  The parents are going to be their trustees until they reach their magic age.  So we would have to set up a bunch of trusts that would be identical, except for the names of the children and parents.  So instead we opted for having the terms of the trust in the will directly.

            That means after I die and my will gets filed by my personal representative with the court anybody who cares enough can see who I left what under what conditions.

            Susie and I just aren’t that worried about prying eyes.  If we were concerned, I wouldn’t have written this blog.

Think About Tomorrow.

            I am glad I’ve taken care of our HCPOAs, HCDs, beneficiary deeds, TODs, PODs, life insurance (sort of) and wills.  They don’t cover all possibilities but I think they cover most reasonable possibilities. 

            It is not pleasant to contemplate death, but it allows one to focus on living.

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