Father’s Day is a time to celebrate fatherhood and express our appreciation for all of the things that our dear old Dad does for us, day in and day out, week after week, over the course of a lifetime. That special day may be filled with a trip to the beach, the park or a ballgame. Maybe it’s simply a barbeque in the backyard or a visit to his favorite restaurant. Often times, perhaps with a little prodding from mom (“Oh, go on, he’ll love it!”), kids give dear ol’ dad a Father’s Day gift… raise your hand if you have the coffee mug that reads “World’s Best Dad!”
Well, Dad… if you want to be honored as a GREAT Dad, give your family the protection that comes from having the proper estate planning documents in place. Granted, it may not be as memorable or as awesome as a 2-week trip to Disney World, but it will be as thoughtful a gift as any vacation package, and maybe even more so.
The fact is that you should not wait until you are in your later years to obtain these documents; rather you should obtain them as soon as you have children, if not before. Think about the tragedy of expectant parents who were killed in car crash on way to the hospital yet their unborn baby survived. More commonplace are the stories of a parent dying in an accident or from a sudden health issue.
I would bet a dime to a doughnut that the parents that died in the car accident did not have estate-planning documents in place. So who will raise their child? It might be the dad’s parents, or the mom’s, or some other aunt or uncle or it could even be a distant relative. Who will monitor the assets on behalf of the child? Perhaps in your own situation you would say to yourself, well of course I want this brother or that sister or my lifelong best friend to care for my child. Would you want those decisions left up to the state and the courts to decide? How would they know which individual you would have chosen? They cannot, and if you do not want those decisions to be made by the state and the court, then take action now to obtain the proper documents.
From the National Association of Personal Financial Advisors newsletter, below is a summary of the documents that can help to ensure that your desires are clear and legal, hence minimizing conflicts and confusion within your family:
The Advance Health Care Directive
lists your healthcare preferences. It is used only when you cannot communicate your personal wishes. It puts your family, doctors, and hospitals on notice as to the types of treatments, tests, and care you would or perhaps more importantly, would not want (as in a “Do Not Resuscitate” order). The proper format of the Advance Healthcare Directive varies from state to state, so make sure you obtain the right form.
Power of Attorney for Asset Management
appoints those individuals you will entrust to handle your financial affairs in the event you are unable to do so yourself. The form also lists the areas in which you are allowing the individual to assist you. This form can help avoid conservatorship if you become incapacitated. Work with an attorney to make sure you are using the proper form for your situation.
HIPAA Release Form
(named for the Health Information Portability and Accountability Act of 1996) allows individuals named in your Advance Health Care Directive and/or Power of Attorney for Asset Management to have access to your healthcare information when you are incapacitated.
is the most common document for indicating how you want your assets to be distributed when you die. People who own real estate or significant levels of assets might also consider having a Living Trust (see below) though you will still need a will.
A Living Trust
is the preferred method for transferring assets upon death for many individuals. Trusts will enable the heirs to avoid a “probated will”. The result, usually, is that assets can be transferred on a more confidential basis, with less cost and faster distribution, and with more flexibility in terms of timing and tax impacts. Trusts also are less likely to be contested than wills under probate. For those with substantial wealth, the trust might provide estate tax benefits, too. The downside of a trust is that it is usually more expensive to create and maintain.
A few more notes about trusts. First, make sure the trust is properly funded. Real estate, savings accounts, mutual funds, and other investments (not retirement accounts) should be transferred to the trust. Second, assigning your personal property to the trust and having the proper documentation will allow the trustee to distribute your personal property to those that you list, thus helping to avoid conflicts within the family when you’re gone.
If your children are older than 18, you should encourage them to have the Advance Health Care Directive, Power of Attorney for Asset Management and HIPAA Release Form, at a minimum.
In conclusion, do yourself and your family a favor and make sure you have completed (or updated) your estate planning documents. Truly deserve to be the “Best Dad in the Whole World” and be certain your family is protected with the best Father’s Day gift ever!