With the year winding down, I thought I would talk about a super upbeat topic: what happens when you die. Not anything religious or existential, but more practical. You’ll be gone, but your estate (the stuff that was once yours and must now be given to others) still has a lot of stuff. All sorts of stuff. Land, cars, guns, comic books, late 17th Century weaponry…whatever. You know what kind of stuff you have, right?
Sometimes people don’t plan ahead, and their stuff has to pass under what are call intestacy (in-TEST-uh-see) laws. Intestacy is a fancy word meaning you didn’t have a will. In that instance the State of Texas dictates where your stuff goes. It’s complicated and not very fun for anyone except lawyers like me who might get paid to help distribute the stuff. Often people think that if they are married, their spouse gets all their stuff, so there’s no reason to have a will. This is false, and I won’t go into detail, but basically your stuff will be split among your spouse and either your kids, or parents, or siblings, or grandparents, or aunts and uncles, depending on what your familial situation is at the time. It’s a headache, and an expensive one at that.
“But, Ben,” you’re saying now, “what if I don’t want that to happen, but I don’t know what to do?” Excellent question. The answer is that you can create your own estate plan. An estate plan is the collection of documents that dictates how your property gets distributed when you die. Estate plans also determine who will take care of you if you can’t take care of yourself. It’s a bit of a macabre thought, but it is important, so I’ve decided to provide a little insight into all of that. Here are the main parts of an estate plan:
Most people have heard of wills. Wills are documents that literally provide instructions for how your stuff will be distributed. “My friend Joe gets my sculptures made of beer cans. Aunt Jolene gets my collection of Dolly Parton albums. My sister gets $15,000 cash.” Fairly straightforward. Your will also appoints an executor, who is responsible for executing the terms of the will. Wills can also help determine who will have custody of minor children, so that can also be a huge upside to making a will at a younger age.
Wills are normally only made complicated by how much stuff you have and how many kids you have with how many different people. Former NFL player Antonio Cromartie has fourteen children from eight different women. His will might be pretty complicated. Current NFL player and former teammate of Cromartie Philip Rivers has nine children but from only one woman, his wife. His will is also likely to be complicated, but less so than Cromartie’s on the kid front because all of the Rivers children have the same parents.
The will, sometimes known fancifully as the last will and testament, is the cornerstone of estate planning. It is a good idea to have one, and it’s a good idea to reexamine and possibly update your will every time you have some major life change like a new kid, a new marriage, or a sudden change in net worth.
Trusts are only mentioned because people know they exists but most folks probably don’t know what they are. At their most fundamental, trusts are a way for a settlor (the person establishing the trust) to have a trustee hold property for the benefit of a beneficiary. Here’s an example: Sam Settlor is 81 years old. He wants to leave $5 million in cash and his collection of classic cars to his 6-month old grandson, Bob Beneficiary. However, Sam doesn’t want Bob to have immediate control over that amount of wealth right now. So, Sam’s will establishes a trust whereby Bob’s uncle, Tony Trustee, will oversee the property until Sam reaches adulthood.
Most people do not have trusts. Trusts can be tricky to create and manage, and can create headaches. Plus, most folks having an estate plan made don’t know what a trust is and don’t want to make a decision like that based on what they learn from a one-hour consultation with their lawyer. That said, trusts are a part of some estate plans and may be the best thing in a given situation.
The Powers of Attorney
There are two main types of power of attorney in Texas: the Statutory Durable Power of Attorney and the Medical Power of Attorney. Statutory durable powers of attorney are what most people mean when they say “power of attorney.” Statutory durable POAs enable a person to appoint another to make decisions for them related to everything. Healthcare, finances, living arrangements; you name it, and it’s possible to appoint someone to control it. These can be very broad or very limited. Most POAs like this don’t take effect until the principal (the person making the POA) is incapable of caring for themselves.
Medical powers of attorney are more limited and only allow the appointed agent the authority to make medical decisions for the principal. Normally the agent on the medical power of attorney and the statutory power of attorney are the same. Medical powers of attorney can be added to a patient’s medical chart and therefore easily found at any given hospital.
The Advance Directive, Guardian Preference, and Disposition of Remains
Each of these is brief, so I lumped them into one subheading. Advanced Directives are made to provide instruction to healthcare providers in the event a patient is incapable of communicating with them. Sometimes these are referred to as “do not resuscitate” or “DNR” forms. Most of the time they just say “I wish to be taken off life support and made comfortable if I am not showing signs of improved condition.”
Guardianship Preference forms allow a person to declare who they want as their legal guardian should something terrible happen. It should be noted that this is merely a preference and technically courts don’t have to enforce them, but they are still a good idea. Often these are used in combination with a statutory power of attorney to have someone made a permanent guardian. However, as in any guardianship matter, the ultimate test is whether a specific guardian being appointed is in the best interest of the person needing a guardian.
Finally, the Disposition of Remains form can serve two purposes. For one thing, it appoints someone to be in charge of what to do with your remains after you have gone on to your great rewards. For another, it allows you to specifically dictate what you want to happen. Want to be cremated and scattered somewhere? Okay. Want to be buried in the family plot? Sure. Want to be donated to science? Awesome? These have become more prevalent in Texas over the past few years, and with good reason. Soul singer James Brown provides a case study on the issue: his family fought over what to do with his remains for years after he passed in 2006. His body was moved fourteen times. That could not have been fun for anyone involved. Had he lived in Texas and created his estate plan here, the drama could have been prevented.
Estate plans are important. For one thing, they are not all that expensive. For another, they can save money in the long run by preventing a protracted legal fight over someone’s stuff. Estate plans are good for people at every age because it’s good practice to expect the unexpected. The fact is that estate plans are both selfish and altruistic. Selfish in that you can determine who gets your stuff. You can cut someone out if you’d like, or purposed give someone less. But there is also a real altruism. Estate plans save your loved ones time, money, and stress. Passing and funerals are sad events as it is. There is no reason to add to that sadness by inadvertently causing additional strife.