July 30, 2011 (Original publish date) • By Dennis Beaver
Last week we answered a question from Jenny, a 32-year old reader who wanted to know if she needed a will.
“I’m single, never been married, no children, rent an apartment and own my car. I’ve got checking, savings and retirement accounts and both of my parents are in good health, living in San Diego,” she wrote.
“At this stage of my life, do I need a will, or is there some other way of transferring property, making sure that funeral expenses are taken care of and possibly leaving something to my nieces and nephews for their education? At most, if everything I had were to be sold or cashed in, the total would be less than $50,000. “
Use beneficiary designations
As we mentioned in that article, Jenny can accomplish her goals without a will, as she puts it, at this stage of her life, “by carefully doing the right things,” in the opinion of two California Central Valley estate planning lawyers, Melvin Thompson of Bakersfield and Michael Noland from Hanford.
“In part, that would include having money or property transferred to these family members, after her death, by using beneficiary designations which are found on checking, savings, investment, retirement, IRA accounts, life insurance and other financial instruments.”
“At the time an account is opened, you will be shown the Payable on Death section and can designate who will receive the funds upon your death. If this is done correctly, there is no need for a will, and the money or property will be transferred directly to that person when a death certificate is produced. The Department of Motor Vehicles also has a simple procedure of transferring vehicle ownership,” Thompson stated.
“However, Jenny really should have a will as a backup in case something goes wrong, such as not properly identifying beneficiaries on the accounts. Also, if a beneficiary dies, or she and that person died together – say, in an accident -without a will, the money in that account would go to Jenny’s heirs, and that might not be the person or people she would want to receive the assets,” Noland points out.
Planning for the unexpected
“What happens if she has a stroke, illness or a brain injury and can’t handle her own financial affairs? How do you plan for the unexpected?” I asked.
Noland described two separate documents which, “At a minimum, your reader, or anyone in a similar situation absolutely needs and takes so much pressure off of family.”
They are:
1) A Durable Power of Attorney for Financial Management, Personal Care and Nomination of Conservator
2) An Advanced Health Care Directive
“The Durable Power of Attorney for Financial Management, Personal Care and Nomination of Conservator allows a spouse, family member or trusted friend named to make decisions regarding the management of Jenny’s assets, acting for her while she is disabled and unable to do so herself. The document may require the person designated, along with a physician, to sign a declaration that the individual is incompetent, unable to manage their own finances and needing the person designated to do these things for them.”
“It is extremely important that the people selected must be trustworthy and able. In a very real way, your financial future could be in their hands for a short period of time, or years. These are truly serious matters. These documents provide important powers to others – don’t be in a hurry to name just anyone,” Noland cautions.
Finally, Noland believes strongly that having an Advanced Health Care Directive “Is one of the most important documents you may ever sign, as it gives you the right to designate a person who can make health care decisions – including termination of life-sustaining treatment – if you are incapacitated and cannot make those heath care decisions on your own.”
Our advice: use a lawyer
All of these documents can be prepared without the assistance of a lawyer.
Over the years, this column has been contacted by many readers in tears because they went the do-it-yourself route, filled out the forms incorrectly, and now a loved one was in the hospital. Suddenly, it had become a rush to find an attorney and then going to court for the appointment of a conservator: time-consuming and expensive.
How expensive? When you involve the courts, look at $3,500 to $5,000 – or more in some cases. Why run that risk when an experienced estate planning attorney will charge from $700 to $1,000 for exactly what you need.
In a very real way, having these documents done right the first time buys you what you need, and which has no price tag: peace of mind.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.