You’ve been planning your next family vacation since last year. It’s that one time of the year when you’ll be able to spend time with your loved ones away from the hustle and bustle of life.
But those same people often make one big mistake along the way: they don’t spend a minute on planning their estate.
No one wants to think about their demise or what can go wrong. Most people want to think about a vacation that allows them to escape their everyday lives and enjoy the fruits of their labor.
The Scary Reality – Even on Vacation
The risks of dying while on vacation exist. These risks, no matter how small, can lead to your children being left without a father or mother – or both – to care for them. The following statistics, provided by the National Security Council, demonstrate your risk of dying from:
- Car Accidents: 1 in 113 chance of dying
- Pedestrian Incident: 1 in 672 chance of dying
- Transportation Accidents: 12 out of every 100,000 people die
When you get in that taxi to race to your next destination while in Bermuda, there is a risk that the vehicle will be struck by a truck and you’ll die.
No one wants to think about death, but there are a million different ways you can become incapacitated or die. If you’ve spent more time planning out your vacation than you have on your estate plan, your family and loved ones will be the ones to suffer.
3 Must-Dos Before Vacation
If you’re thinking “I need to start planning my estate,” there are a few things you can do to help prepare for the worst. Always seek the help of a qualified attorney to ensure all of the following measure have been taken:
1. Name Guardians for Your Children
All children that are still considered minors should have a guardian named. This is a person, or persons, who will take over the guardianship of your children if you die. If the child’s other parent is alive, he/she will maintain guardianship of the children.
If both parents have died, a guardian can be chosen for the child. Guardians can be a:
Anyone who you trust to care for your children on your behalf can be a guardian. Just make sure to discuss the matter with the proposed guardian beforehand.
Short-term and long-term guardianship can be made.
A short-term guardianship may be used in the event of an emergency, such as being incapacitated.
2. Create a Will
If you don’t put all of your assets into a trust, you can create a will. A will allows your wishes to be met for all of your assets. Even a person who doesn’t have any significant assets should create a will to protect his/her estate.
It’s essential to create a will in a consistent manner.
For example, if your life insurance names one beneficiary and your will names another, this will lead to a contest of the will. This will also pit two parties against each other, which is not something that most people envision when they create a will.
3. Advanced Health Directive
There’s a chance that you’ll be incapacitated and unable to make your own healthcare decisions. This will cause your family undue hardship, and they may not be able to carry out your wishes as a result.
There are two things you want to do:
- Execute a Durable Power of Attorney: This directive will allow a person to be able to make decisions on your medical care and finances. This must be a “durable” power of attorney to ensure your medical care and finances are granted to the person named.
- Execute a HIPAA Release: A HIPAA release form will allow your medical information to be shared.
4. Overview Beneficiary Documents
Beneficiary documents can and should be updated when major life events occur. You may have chosen your ex-wife as your beneficiary for your life insurance policy, and this would result in her getting all of the money instead of your current wife, or children, or anyone you wish to be the benefactor.
The beneficiary documents you’ll want to update, include:
- Life insurance policies
- Retirement accounts
There is a concern with giving your life insurance or retirement to your children. If they’re not of age, their guardian may use the money to their benefit, and there are times when this power will be abused.
The right step to take is to open up a trust where the money will be given to the trust and not the child.
When you decide to open a trust, you’re maintaining some of your control even after death. A trust can be set up to:
- Disperse money to your child at a given date. For example, you can choose for the money to be dispersed to your child at 25, 30, 35 or 40. Another option is to disperse the money in 25% increments, or a variety of other ways.
- Disperse money on milestones. Maybe you disperse some money when your child is 18, and when he/she finishes college or gets married, the rest will be dispersed.
A trust is a very powerful estate planning tool that can be used to your benefit.
Proper estate planning will allow you to form an estate plan that is carried out as per your wishes and ensures a battle over your estate doesn’t arise upon your death. Estate planning is peace of mind before going on a once-in-a-lifetime vacation where anything can happen.
The Micklin Law Group, LLC is a New Jersey law firm specializing in family law and estates. Attorney Brad Micklin was recently named to The National Advocates list of Top 100 attorneys from each state. Brad has a special expertise in working with high asset divorce. You can read more on this topic by visiting our divorce blog. To set up a consultation, call 973-562-0100.