Michigan Estate Planning Blog

Has the Pandemic Made People More Aware of Estate Planning?

 

The COVID-19 pandemic has led many more Americans to pay attention to estate planning, but just a third of them have taken action, according to a recent report.

Financial Advisor IQ’s recent article entitled “More Americans Set Up Estate Plans Since Start of Pandemic” reports that more than 50% of Americans think estate planning is at least somewhat important, senior living referral service Caring.com found in a survey of more than 2,600 American adults. Caring.com didn't disclose when the survey was conducted.

The number of those aged 18 to 34 with estate planning documents has increased 50% since the beginning of the pandemic, according to the survey. Americans who’ve suffered through a serious COVID case are also 66% more likely to have a will than those who haven’t, Caring.com found.
Roughly 48% who have had a serious case have estate planning in place, as do 41% of those who have loved ones who had one. That’s compared to 29% who have no experience with a serious COVID -19 case, according to the survey.

Overall, two out of three American adults don’t have a will — the percentage has only inched up from 32.1% in 2020 to 32.9% in 2021 to 33.1% this year.

More than 60% of those without a will have done nothing toward getting a will or any estate planning document, according to the survey.

The most cited reason for not having a will is simply not getting around to it. That’s cited by 40% of all Americans without one.

That’s particularly prevalent among those earning $80,000 a year or more and without a will, 63% of whom say they haven’t had time to do so, as well as those with postgraduate education, two out of three of whom say they haven’t got around to it, according to the survey.

On the other hand, 48% of those earning $80,000 or more say they do have a will or another estate planning document.

That represents a 7% increase since 2020, Caring.com says.

However, a third (33%) of Americans overall say they don’t have an estate plan because they don’t have enough to leave behind, according to the survey.

Meanwhile, 12% say they don’t know how to get a will or living trust, and about 13% believe it’s too expensive to set up. Another 6% think it takes too long, and 9% say they don’t have anyone to leave their assets to, Caring.com found.

Reference: Financial Advisor IQ (April 25, 2022) “More Americans Set Up Estate Plans Since Start of Pandemic”

What Should I Know about Estate Planning before ‘I Do’?

Romance is in the air. Spring is the time for marriages, and with America coming out of the pandemic, wedding calendars will be filled.

AZ Big Media’s recent article entitled “5 estate planning tips for newlyweds” gives those ready to walk down the aisle a few things to consider.

1. Prenuptial Agreement. Commonly referred to as a prenup, this is a written contract that you and your spouse enter into before getting legally married. It provides details on what happens to finances and assets during your marriage and, of course, in the event of divorce. A prenup is particularly important if one of the spouses already has significant assets and earnings and wishes to protect them in the event of divorce or death.

2. Review you restate plan. Even if you come into a marriage with an existing plan, it’s out of date as soon as you’re wed.

3. Update your beneficiary designations. Much of an individual’s estate plan takes place by beneficiary designations. Decide if you want your future spouse to be a beneficiary of life insurance, IRAs, or other pay on death accounts.

4. Consider real estate. A married couple frequently opts to live in the residence of one of the spouses. This should be covered in the prenup. However, in a greater picture, decide in the event of the death of the owner, if you’d want this real estate to pass to the survivor, or would you want the survivor simply to have the right to live in the property for a specified period of time.

5. Life insurance. You want to be sure that one spouse is taken care of in the event of your death. A married couple often relies on the incomes of both spouses, but death will wreck that plan. Think about life insurance as a substitute for a spouse’s earning capacity.

If you are soon-to-be-married or recently married and want to discuss it with an expert, make an appointment with a skilled estate planning attorney.

Reference: AZ Big Media (March 23, 2022) “5 estate planning tips for newlyweds”

What’s the Best Way to Create a Comprehensive Estate Plan?

 

The number of young adults ages 18 to 34 with estate planning documents increased by 63% since 2020. That’s mainly because of the pandemic, says CBS News’ recent article entitled “How to create a well-rounded estate plan.”
Estate planning is more than just writing a will. A will is one part of a comprehensive estate plan, which involves multiple tools.
Some common inclusions are wills, powers of attorney, advance directives, trusts and more. Estate plans can involve both durable power of attorney for your finances and healthcare power of attorney for medical decisions, if you’re incapacitated.
For young adults, a significant issue beyond the distribution of family assets may be designating a health care proxy and power of attorney (POA).
This part of an estate plan addresses the question of who will make a health care decision on your behalf, if you are unable to do this yourself.
A POA solves the issue of who will make a business or financial decision on your behalf if you can't.
These documents aren’t just for when you're on life support. They may be implemented when you're in the hospital and out of action for a while.
As far as medical directives, you should detail your treatment wishes as much as possible.
This is a very big task to place on someone, so the more detailed you can be about your wishes, the better it will be. And the easier it will for the person who’s your health care agent to carry out your wishes.
You should talk to the individual you’ve selected to be your agent to make certain that he or she is willing and able to assume this big job.
If you have a complicated situation, such as a blended family or you're not in great standing with the rest of your family, you should definitely work with a qualified estate attorney in the state in which you reside.
Reference: CBS News (Aug. 11, 2021) “How to create a well-rounded estate plan”

Should I Discuss Estate Planning with My Children?

US News & World Report’s recent article entitled “Discuss Your Estate Plan With Your Children” says that staying up-to-date with your estate plan and sharing your plans with your children could make a big impact on your legacy and what you’ll pay in estate taxes. Let’s look at why you should consider talking to your children about estate planning.
People frequently create an estate plan and name their child as the trustee or executor. However, they fail to discuss the role and what’s involved with them. Ask your kids if they’re comfortable acting as the executor, trustee, or power of attorney. Review what each of the roles involves and explain the responsibilities. The estate documents state some critical responsibilities but don’t provide all the details. Having your children involved in the process and getting their buy-in will be a big benefit in the future.
Share information about valuables stored in a fireproof safe or add their name to the safety deposit box. Tell them about your accounts at financial institutions and the titling of the various accounts, so that these accounts aren’t forgotten, and bills get paid when you’re not around.
Parents can get children involved with a meeting with their estate planning attorney to review the estate plan and pertinent duties of each child. If they have questions, an experienced estate planning attorney can answer them in the context of the overall estate plan.
If children are minors, invite the successor trustee to also be part of the meeting.
Explain what you own, what type of accounts you have and how they’re treated from a tax perspective.
Discussing your estate plan with your children provides a valuable opportunity to connect with your loved ones, even after you are gone. An individual’s attitudes about money says much about his or her values.
Sharing with your children what your money means to you, and why you are speaking with them about it, will help guide them in honoring your memory.
There are many personal reasons to discuss your estate plans with your children. While it’s a simple step, it’s not easy to have this conversation. However, the pandemic emphasized the need to not procrastinate when it comes to estate planning. It’s also provided an opportunity to discuss these estate plans with your children.
Reference: US News & World Report (Feb. 17, 2021) “Discuss Your Estate Plan With Your Children”

Should I Consider a ‘Life Settlement’?

Even in this volatile environment, many seniors may have an option for more retirement income available in the sale of their life insurance policy. A “life settlement” could provide them with an average of four or more times the cash surrender value of their policy.
The Street’s recent article entitled “Is Your Life Insurance Policy Worth More Than Its Cash Surrender Value?” explains that anytime a senior isn’t going to keep a life insurance policy, they should look into a life settlement to bring them the most money when they terminate the policy.
When a policy is lapsed, the policy owner gets nothing. When a policy is surrendered back to the insurance company, the policyowner receives little, if any, cash surrender value. So, in instances where a policy is being lapsed or surrendered, a life settlement makes financial sense.
According to 2019 life insurance industry data, over 90% of life insurance policies (by face amount) that terminated in 2018 were lapsed or surrendered. In 80% of those cases, the policyowners received nothing in return for years of premium payments to the insurance company, because they lapsed their policies.
Over the next decade, more than $2 trillion in life insurance policy death benefits that could qualify for a life settlement is anticipated to be lapsed or surrendered—about $850 billon is projected to be policies between $100,000 and $1 million.
To qualify for a life settlement, an individual must usually be at least 70 years old and own a whole life, universal life, or convertible term insurance life insurance policy, with a death benefit of $100,000 or more.
Traditionally, life settlements have been available only where the insured has developed a significant health impairment since the policy was started, but now even those insureds without a change in health can qualify for a life settlement, depending on their age and the type and size of the policy.
Some life settlement companies take several months to make an offer to purchase a policy, asking for full medical records and independent underwriting. However, recently, life settlement companies have shortened the time in evaluating a policy and making an offer.
Reference: The Street (Dec. 22, 2020) “Is Your Life Insurance Policy Worth More Than Its Cash Surrender Value?”

How Important Is Estate Planning in the Pandemic?

Waiting to create a will leaves nothing but headaches for your heirs and relatives. With nearly 200,000 deaths due to Covid-19 in the U.S. alone, we are reminded of how fast our lives can change. The Street’s recent article entitled “Life Changes Fast: The Importance of Estate Planning and Health Care Directives” also notes that this reminds us how important it is to make sure we have current estate planning decisions and end-of-life decisions in place. Here is a basic overview of some important areas of estate and health care planning you should consider: Your Assets and Belongings An experienced estate planning attorney can help you determine if a will or a trust would best take care of your objectives and needs. Don’t make this decision on your own because there are major differences between these two types of documents. Some people use a living trust instead of a will because it avoids the publicity and expense that comes with the probate process. Ask your attorney what is best for your family and situation. You’ll need to name an executor, who will be in charge of making sure your requests are carried out, including the division of assets. In addition to your will or trust, be sure the beneficiaries on your life insurance and accounts, such as your bank and retirement accounts are current. You should also see how the title is held on any real estate property you own. Health Care and Your Body Make certain that it’s super clear and in writing as to what your final wishes are for your medical treatment and final arrangements. Your documents need to address what type of medical treatment you want, if you are not able to make those decisions for yourself. It should also be clear as to any specific life-preserving measures you would want taken. A power of attorney for healthcare lets you name an agent to make health-related decisions for you, if you’re unable to do so. Some states combine both the power of attorney for health care and a living will into one document, which is called an advance directive. If you want to be an organ donor, make sure this is recorded and your wishes are known (some states have directories or it’s on a person’s driver’s license). Be sure that your hospital and doctor are aware of your wishes and they have copies of any necessary documents. Guidance and Financial Help. Always consult with an experienced estate planning attorney to be certain that your wishes and objectives are properly spelled out and legally binding. Reference: The Street (Aug. 28, 2020) “Life Changes Fast: The Importance of Estate Planning and Health Care Directives”