Life Stages of Estate Planning

1.  Young and single.

2.  Single, but committed.

3.  Just married.

4.  Parents.

5.  Divorced.

6.  The middle years.

7.  The golden years.

YOUNG AND SINGLE.  When you're a child, your parents make financial and medical decisions for you, but when you turn eighteen, they no longer have that legal right. If anything were to happen to you, you would probably want your parents to control your health care and financial decisions. You would likely also want them to be able to talk to your medical providers and have those providers respect your parents' right to make health care decisions, including discontinuing treatment if necessary.

So, if you are over eighteen and unmarried, execute four documents to make sure your loved ones can carry out your wishes:

1. A general durable power of attorney enables you to designate who will control your finances if you become incapacitated, whether it's your parents or another loved one.

2. A health care proxy allows you to designate who will make medical decisions on your behalf in the same situation.

3. A living will lets you lay out your wishes regarding life-sustaining medical treatment.

4. Finally, a Health Insurance Portability and Accountability Act, or HIPAA, release allows your designated agent to discuss your medical condition without violating patient privacy laws. This HIPAA release can also be incorporated into your Health Care Proxy. Without those documents, your loved ones may be forced to go to court to seek guardianship over you to assert those controls. 

SINGLE, BUT COMMITTED.  If you are in a long-term relationship but unmarried, create a will or trust if you want your life partner to inherit your possessions. Otherwise, your estate will go to your closest relatives according to your state's intestacy law.

JUST MARRIED.  Revise your durable power of attorney, health care proxy and HIPAA release if you want there to be no question that your spouse should control your financial and medical decisions if you become incapacitated. Think of Terri Schiavo, the woman whose parents and husband battled publicly for seven years over the right to make health care decisions on her behalf after she became incapacitated. She did not have a health care proxy.

Without a revised durable power of attorney, your spouse also cannot administer property owned solely in your name or property you own jointly with your spouse. Also specify the person you would like to make financial and medical decisions on your behalf if an accident incapacitates you and your spouse.

If you do not already have one, this is also the time to create a will. In many states, if you die without a will and have a spouse but no children, your spouse will inherit some of what you own, but your parents will also inherit. Rather than risk a fight between your spouse and parents over who should inherit, make a will that definitively states who you want to receive your assets. Also, if you own a home, purchase life insurance that will pay off your mortgage if one spouse dies.

Finally, change your beneficiary designations on things such as health insurance and investment plans so they pass to your spouse. A lot of people think when they get married, those things change on their own, but they don't. Go to your human resources department and ask which documents include a beneficiary. Health savings accounts and flexible spending accounts sometimes have a beneficiary, as do bank accounts payable on death.

PARENTS.  If you have children, update your will to nominate a guardian to step in if you and your spouse pass away. Also include provisions in your will or a separate revocable trust so that your child doesn't inherit everything at the age of 18.

A revocable trust allows you to appoint a trustee to handle any money your child inherits. The trustee can use it to support your child as the child grows up, and you can specify at what age your child can receive the money, along with any reasons your child should get it before that age, such as starting a business or buying a house. You can also specify that the trustee can withhold money in certain circumstances, such as if your child has a gambling problem, is in the midst of a divorce, or there's another situation that makes it inappropriate to inherit.

You'll also need a separate guardianship nomination -- sometimes called an emergency guardianship proxy -- that nominates a guardian to care for your child if both parents are incapacitated. You can also execute an emergency guardianship proxy in simpler situations as well, such as when both parents take a vacation and a child needs emergency medical treatment.

Each time you have another child, be sure your estate planning documents address all of your children, and don't forget to increase your life insurance. You typically need about $1 million to care for a child from birth to college. Also, if you have a special-needs child, set up a special-needs trust, which allows you to provide for your child without disqualifying the child from government benefits.

DIVORCED.  Unfortunately, some marriages end in divorce. If you're separating or divorcing, you probably don't want your spouse to still have all the authority to make decisions on your behalf and access your medical and financial information. In situations of divorce, you should revoke those documents, including beneficiary designations, or sign new ones. A divorce decree doesn't magically change those things.

If you remarry, revise your will and trust documents to reflect the proper beneficiaries. Most people want to share with their new spouse but also want to provide for their separate children at their death. It is important to determine in advance which assets you want to leave to your spouse and which to leave to your children.

THE MIDDLE AGES.  As you reach your 40s and 50s, consider purchasing long-term care insurance, which covers the cost of long-term care or a nursing home. This is also a good time to revise your will and trust documents to account for changes to your estate and ensure for the maximum protection of your assets.

THE GOLDEN YEARS.  Review your life insurance to determine whether you can reduce it if your children are grown. Also review designations on your durable power of attorney, health care proxy, and HIPAA release to be sure the people you've named are still in your life and willing and able to serve in that role. A lot of people at this stage also start planning their funeral to make sure that is in order.

For more information, please contact Lamkin Law Group, LLP at (617) 512-1159 or via email at jlamkin@lamkinlawgroup.com.

You may also visit our website at www.lamkinlawgroup.com.

The information contained herein is designed to provide general information only and should not be construed as legal advice, or legal opinion on any specific facts or circumstances. The information presented herein should not be construed as the formation of a lawyer/client relationship.