What You Need to Know If Your Spouse Has a Terminal Illness and You Are Updating Your Will
Estate planning and ensuring that all of your important documents are updated never becomes more urgent than when a spouse becomes ill, and suddenly you find yourself panicked over whether you will be able to provide for your children, should your spouse pass from that illness. One of the first steps people usually take is to execute a power of attorney and advance directive (prepared to ensure that someone receives the healthcare decisions that they want when someone is not incapacitated; as opposed to a healthcare proxy, which is used when someone has failed to prepare an advance directive and is unable to make healthcare decisions for themselves) as soon as possible for emergency purposes, and/or drafting or updating their will. Below, we discuss some important information that you should take with you in meeting with your estate planning attorney to take these important steps:
Choosing an Executor
Your executor will take on the responsibility of fulfilling your wishes rather than leaving it up to the court. Keep in mind that it is wise to choose someone who is in-state.
Choosing A Guardianship
If you have children under the age of 18, you will want to designate a guardian for them. While the court will have to approve of the choice, it still helps to ensure that your wishes are followed.
Your Home & Other Assets
In most cases, if you and your spouse own your home jointly, upon one spouse’s death, their share passes immediately onto you, and you become the sole owner. In addition, Florida has elective share laws to protect surviving spouses, allowing them to elect to receive certain assets from their spouse’s estate, regardless of what is provided in the will.
When it comes to 401(k)s and other retirement benefits, note that these are non-probate assets that have beneficiaries named as opposed to being addressed in your will. This means that you fill out forms with the employer or bank (i.e. beneficiary designations) where the accounts are housed, whereby you will provide for who receives the proceeds upon your death.
Formalities
Also keep in mind that there are certain formalities that must be followed in order for a will to be enforceable: It must be in writing and signed by the testator, or by someone signing at the direction of and in the presence of the testator. It must also be signed in the presence of two witnesses and a registered notary public, along with the testator.
How Often Should Your Will Be Updated
Your will should be updated every year or when there is a change of residence, a death or disability in the family, a dramatic increase in your beneficiaries’ financial worth, any change in marital status, or other noteworthy changes.
What About a Trust?
Depending upon the size of their estate, many individuals opt to create a trust, especially if they have children. Trusts hold property for the benefit of others, and release this property in portions. A living trust, for example, ensures that your estate will be quickly divided upon your death, without the intervention of the courts.
There are three parts to every trust: A grantor, who owns the property, the trustee, who has legal control and administers it, and the beneficiaries, who benefit from it.
Information You Should Bring to Your Meeting
Information that you may want to bring to your meeting with your estate planning attorney includes the following:
- All contact information for family members who may be beneficiaries (children, spouse, other relatives)
- All contact information for possible executors and guardians
- Amounts and sources of income for you and your spouse, including dividends and interest
- Amounts and sources of all debts, including mortgages, loans, etc.
- Amounts and sources of all retirement benefits – 401(k)s, IRAs, pensions, government benefits, etc.
- Amounts, account numbers, sources, balances, beneficiaries, etc. of other financial assets, such as annuities, bank accounts, life insurance policies, etc.
- Information on any other valuable property that you own, individually and/or jointly, such as collections, furniture, heirlooms, jewelry, real estate, etc., as well as potential beneficiaries for these assets
- Any other documents that could affect estate planning, such as prenuptial agreements, existing wills, property deeds, any previous marriage settlements, etc.
Other Considerations
There are a number of other important elements that you may want to consider, such as:
- Purchasing disability and/or life insurance
- Ensuring that there is a HIPAA (Health Insurance Portability Accounting Act) Release in place authorizing a named individual to have access to your medical information, which includes allowing for your doctors to discuss important details with them
- As previously mentioned, a power of attorney, advance directive, healthcare proxy, and living will are important considerations, depending upon your circumstances
- Strategic planning for tax consequences, including whether your beneficiaries will owe any gift taxes
- Some property can be transferred via a joint tenancy with the right of survivorship, whereby, upon your death, your interest automatically passes onto someone else without court involvement
- If there is a family business, you will likely have to engage in estate tax and succession planning
- Depending upon your prognosis, you may want to discuss whether your spouse should shift assets to you, or pursue a sale for a private annuity, etc. All of this should be discussed in terms of strategically planning for the income tax basis of your assets
- You can add a “payable-on-death” designation to bank accounts so that a beneficiary can claim the money directly from the bank without probate court proceedings
- If you are interested in giving property away as gifts, this is something you will need to work directly with your attorney to accomplish, as there are specific tax limitations involved
- A Physician Order for Life-Sustaining Treatment, which is a medical directive prepared with your medical care team (versus your attorney)
Contact Our Florida Estate Planning Attorneys Anytime to Find Out More
If you have any questions, our Orlando estate planning attorneys are here to help. Contact the office of Gierach and Gierach, P.A. at any time for a free consultation to find out more.
Resource:
forbes.com/sites/martinshenkman/2019/07/05/breast-cancer-financial-and-estate-planning-check-up/#24f43a705075
