Taking Care of the Details are often easy to procrastinate about and rationalize delaying action. When are you prone to procrastinate? Yard work? Laundry? Taxes? Oil changes? Dirty dishes? Saving for retirement? Life insurance? Your estate planning? Project for work? One of my favorite T-shirts says “Don’t Rush Me, I Am Waiting for the Last Minute.” The topic of this blog is estate planning in particular, “Special Needs Planning.”
What is meant by “Special Needs” planning? Examples include congenital disorders such as Down syndrome or autism, debilitating diseases such as multiple sclerosis and mental health related issues, catastrophic events such as strokes or heart attacks and afflictions of aging populations such as Alzheimer’s disease or Parkinson’s disease. If you have a family member afflicted by one of these items, they would be considered to have a special need that should probably be taken into consideration when planning your estate documents. In many cases, the special needs individual is receiving benefits from a governmental agency that may be affected if they receive money via inheritance. This is an important discussion that needs to be had with your estate planning / legal professional.
So why are we talking about procrastination? Often, procrastination has no huge or long-lasting consequences. For many people, a deadline puts an end to the procrastination….like doing your taxes. For many, that deadline increases the level of anxiety as the deadline nears but the amount of work completed has not been decreased and only is compressed into a shorter time.
In other cases, the consequences of procrastination are large and potentially have wide ranging, long-term and devastating results.
What if there is no will….no trust…and the 401(k) beneficiary is the spouse you divorced fifteen years ago. The current wife won’t mind if the X-spouse gets the 401(k)…right? And who is the beneficiary of all the life insurance? Or if both you and your spouse die in a car accident with no will or trust, the kids won’t care if probate takes two years and costs three percent of the estate…no big deal…right? Oh yes, the two older kids won’t mind if you loaned / gifted $200,000 to the youngest and the estate document you did many years ago says the estate is split evenly between the three --- but now the youngest gets an extra $200,000.
And if there is no will, no trust, no handwritten note in the sock drawer that outlines your intention, you are deemed by the laws of the state to have died “intestate.” This has a legal meaning you can google. Bottom line: this could be a MESS --- Big Time. The probate court decides who will be the executor of your estate from the likely list of suspects: 1) your kids; 2) siblings; 3) parents. Who from the list of prospects does the judge deem to be the most capable of dealing with a seemly endless list of requests / demands from the court to complete the probation of your estate –remember, in many places this process can take up to two years. The person selected for this dubious joy may thank you for the honor or curse you for shirking your responsibility.
In the end, the court decides who among your family, friends, significant others and x-spouses gets your money and property. You have nothing to say about it because you elected to procrastinate and didn’t get around to it.
Lest you think this is just for “old people,” if you have minor children and have no document, that same probate judge perhaps with the aid from the judge from family court will decide who will be the guardian of the kids until reaching the age of majority. If you have any money, the court also appoints the conservator of the kid’s money until they become an “adult.” In most states, children become by definition an “adult” at eighteen and in the eyes of the law capable of making wise financial decisions with any amount of money, small or large. Why? Because you procrastinated and some might say failed to be a good parent. Harsh? Maybe?....or maybe not.
Let’s say you have been planning to buy life insurance because you have a family that includes minor kids, a mortgage, college plans for those kids and a household budget that requires both incomes. You are young and will live another 50+ years….but then you or your spouse makes a left turn at the wrong time and suddenly there is a single parent of small children and can only afford half the bills and no idea of how to pay for the kid’s college someday or be able to retire. Oh ya, you planned to get life insurance someday but had not gotten around to it yet. Opps.
Who else in your life is important to you? Or put another way, who is dependent upon your financial support? Parents? Siblings? Friends? Your children? Nieces / nephews? Which organizations receive your financial support now that you wish to support after your death? Do your children have the resources, tools, skill-set to manage your wealth as well as you have? Or will they just spend all the money on stuff and leave nothing for future generations? How does that make you feel?
The issue of “special needs” planning often applies to parents of disabled children. Today, more and more of these children grow to become adults as their parents age and Mom and Dad begin to wonder what will happen to their disabled child after their death. “Who will care for them? Who will manage their piece of the estate?” Sometimes the doubt begins, “Can I really trust my other kids when it comes to money and their little disabled sister? Plus, didn’t you say something about loosing government benefits if my disabled child / adult owns / inherits too much money?” Yes, and maybe yes! Please seek appropriate, professional legal assistance on these matters. No more procrastination, please!!
Often, I see our role as the professional nag. We suggest, then suggest again, and sometimes finally nag people into getting past the procrastination on many topics: signing up for the 401(k); saving more money; buying the life insurance; putting together their estate plan or updating the document that was done twenty years ago. My mission is to not allow my clients to become professional procrastinators. Sometimes it is ok to procrastinate…but usually, it is just better to take care of the details while you still can and don’t miss the opportunity to do the right thing, especially when the consequences are great. Call us if you need someone to remind you what you know you need to do.
The views and opinions expressed are those of the author, and the information should not be construed as individual investment advice, or as the opinion(s) of Voya Financial Advisors.