The good news is that setting things up the right way and doing the right thing by your family can be easy once you know what to do. And the process of getting things set up the right way can be downright enlightening, as it helps you to gain clarity about what’s most important to you and what you really want for your children.
Regardless of the size of your bank account, if you have a child at home who depends on you, you need to have a comprehensive Kids Protection Plan® (KPP) in place to ensure your child’s well-being and care in case you can’t be there.
Let’s start with the bare minimum of what you need to have in place to make life as easy as possible for your kids and the people who will care for them should anything at all happen to you.
Document Set #1: Kids Protection Plan
A KPP begins with naming legal guardians to raise your children if anything happens to you and your spouse. But that’s just the beginning. A comprehensive KPP will also name local friends or family as guardians for the immediate/short-term care of your children so that the authorities never have to take your children out of your home and into the care of strangers. With a KPP in place, you’ll carry an ID card in your wallet listing the names and addresses of your immediate/short-term guardians, as well as provide written instructions to all of the people who care for your children, such as babysitters and schools.
Finally, a KPP will confidentially exclude anyone you know you would never want to serve as guardian of your children to ensure there are no court-room battles over your child’s care, in addition to providing detailed instructions about things like health care, education, discipline and your values, so your children are raised the way you want, no matter what.
If you are not yet working with an attorney to ensure your wishes are properly documented and disseminated to the appropriate recipients, you can get started at www.kidsprotectionplan.com. This site offers a fast and interactive process to help you chose the right people to raise your kids if you can’t, and then easily document your choices… legally. Best of all, this site is totally free, so there’s no excuse not to get things taken care of anymore.
Document Set #2: Financial Durable Power of Attorney
A financial durable power of attorney is something every adult needs, even if you don’t have little kids at home. This document is what will let your family access your bank accounts, pay your bills, and make financial and legal decisions for you if you are hospitalized or otherwise incapacitated.
This story should bring home the importance of having a durable power of attorney in place:
My law firm was contacted by a young woman after her father was hurt at his janitorial job, hospitalized and unable to communicate. This man thought he didn’t need estate planning because his income was very low and he had less than $10,000 in the bank.
Unfortunately though, his failure to plan left his family in a lurch. They needed the little bit of money he had in the bank, but couldn’t access it without going to court because the account was in his name and he didn’t have a durable power of attorney naming anyone to act for him legally.
The cost of going to court was going to cost their family more than the money that was in the bank!
Don’t leave your family in this kind of a painful situation, unable to access the limited resources you have because you didn’t do what you need to do. Be sure you have a financial durable power of attorney in place and make sure it’s comprehensive and will work when your family needs it.
Document Set #3: Health Care Directive (Living Will)
A Health Care Directive (also known as a Living Will or Health Care Power of Attorney) is another document set that every adult needs, even if you don’t have little ones at home counting on you.
These sets of documents do two important things:
- Appoint the person you want to make health care decisions for you if you cannot make them for yourself; and
- Tell your appointed decision-maker how you want those decisions to be made.
Each state has its own rules for how these documents should be prepared. In some cases, your instructions can be all in one document and in others they need to be two separate documents. The most important thing is that you get something down in writing.
And, once again, make sure you’ve got something that will really work when your family needs it. I recommend giving broad discretion to someone you trust to make decisions about all of your health care needs, including life-saving medical care, such as respiration, but also continued nutrition and hydration in case you are incapacitated. If you recall the Terry Schiavo case from several years ago (in which her husband and her parents fought over whether she should be kept alive or not and the case was brought all the way to the Florida Supreme Court), the issue was not whether to continue to keep her lungs pumping, but whether to continue to provide nutrition and hydration – so be sure your medical directive addresses these issues.
Document Set #4: Will
When it comes to estate planning, most people think of having a will. Unfortunately, having a will often provides a false sense of security to people who think “I have a will, therefore, I’ve taken care of everything.” Sadly, that’s a myth.
In fact, your will is the least important of the five legal documents every parent must know about.
A will sets forth what you want to happen to your assets at the time of your death. But, when there’s a will and your assets are owned in your name, the will merely acts as instructions to the court as to what to do with your assets.
That means your family is stuck dealing with the court after you are gone. Nobody wants that, trust me.
The court process for handling your assets after your death is called probate. It’s typically expensive time-consuming, and always totally public, which means anyone in town can find out how much you’ve left behind, who it went to and when they get it. That puts your loved ones on the radar of every con artist in the neighborhood.
A will alone is really only appropriate for parents who have no (or very limited) assets titled in their name. If you have assets, such as a home, bank accounts, life insurance, and retirement accounts, you need to have a living trust to keep everything out of court, totally private and make it easy for your loved ones.
You may have heard that if you only have life insurance and retirement accounts, you can simply name beneficiaries on those assets and avoid probate. That’s true, but not going to work if you have minor children because they are too young to be the beneficiaries of your assets and would end up in court with a guardian appointed to handle them—which I can tell you from experience is not what you want.
Document Set #5: Trust
If you have financial assets or real estate, you want to have a living trust. A living trust is the single best way to make life as easy as possible for the people you love, bar none. It keeps things totally private, out of court, and ensures your assets are passed in the way you want, to the people you want, easily and quickly.
But, and it’s a big BUT, most people who have a living trust in place have one that won’t work when their family needs it.
It’s the same for each of these documents I’ve talked about; they are only going to work the way they were designed to work if the law stays the same and your life stays the same.
As your life changes, the documents need to change. As the law changes, the documents need to change.
And, for your living trust, it won’t work unless all of your assets are titled in the name of it, not just once, but every time you acquire an asset in the future.
Far More Important Than All of These Documents….
While these five document sets are vitally important for all parents to have in place, they are not the end all, be all. Why is that? Well, think about it this way: In the event of an accident or your death, will your family know what to do even if you have great documents in place? No, they won’t.
What you really need to leave behind for your loved ones is clear guidance that ensures they know what to do and whom to talk to when something happens. That guidance is simply not going to come from a set of cold documents. It’s going to come from a relationship with a trusted advisor who knows you, knows what’s important to you and is going to be able to guide your loved ones and make things as easy as possible for them during a trying time.
Is Hiring a Lawyer the Answer to All My Problems?
Unfortunately, no, hiring a lawyer won’t guarantee that everything will be as easy as possible for your loved ones when something happens.
I’ve met with loads of people who thought they had everything taken care of because they had prepared these five documents or had them prepared by a lawyer, but because the documents had not been kept up-to-date or their assets were not owned properly, the documents didn’t work!
In fact, that happened in my own family when my father-in-law died. He had spent thousands of dollars to work with a lawyer who put in place a set of documents for him and then didn’t keep them up-to-date and didn’t make sure his assets were owned properly on an ongoing basis. What that meant is at the end of his life, we were stuck dealing with the one thing he thought he was protecting us against—the probate court and a fight with his ex-wife.
Even Michael Jackson, who no doubt spent hundreds of thousands of dollars with his lawyers, had a trust-based estate plan that he was probably told would keep his family out of court. As we now know, his family has already been dragged into court multiple times since his death—with everything open to the public. It’s sad to say, but his lawyers failed him and his family.
So, what needs to happen to ensure your family has what it needs in a crisis? You need to be sure you are working with a lawyer who is not only going to put in place these five vital documents that will make life as easy as possible for your family, keep your loved ones out of court and get them easy access to your assets in the midst of a crisis, but who will also keep the documents up-to-date throughout your lifetime, ensure your assets are owned properly AND focus on capturing and passing on not just your money, but your most valuable intellectual, spiritual and human assets, as well.
Most people do not have the time, knowledge and discipline to do this for themselves the right way. If you do, great. But who is going to guide your family to make the right decisions and carry things out the right way after you are gone?
Because when all is said and done, that’s really what this is about, isn’t it?
T here’s nothing more important to you than your family. They are why you do everything you do, right? So, to protect them, it’s essential to find a lawyer who will guide you throughout the course of your lifetime and be there for your loved ones when you can’t be. It’s far easier for you to take care of things now, while you are living and able, than it will be for them to take care of things after you are gone. Legal planning is not about the money; it’s about making life as easy as possible for the people you love … no matter what.
If you or someone you care about has been in an accident, we’re here to talk.
Contact us today for a free consultation.