Thursday, January 22, 2009

Risks to Young Professionals Who Ignore Estate Planning

Encouraging anyone to complete their estate planning can be difficult. Statistics suggest that less than 25% of all adults have created a Will or Powers of Attorney. The numbers are even more alarming for young professionals.

Young professionals who do not complete their estate planning assume some serious risks and I'll discuss those in this article. Here are four (among others not discussed here) risks that you should beware of:

1. Assuming that your wishes will be followed since you have discussed them with family or friends.

2. Failing to name decision makers in appropriate documents dealing with disability or death.

3. Failing to name proper beneficiaries for 401(k) plans, IRA's, savings plans and insurance policies.

4. Failing to take any steps to protect a domestic partner.

Let's explore each of these in the context of the following cases.

The first case involves Jack W. a young designer living in Denver. Jack had conversations with his parents about his assets and told them where his records were before leaving on a ski trip to Utah. He was seriously injured in Utah and later passed away. His parents discovered that Jack had not created a Will or left any instructions for them.

Jack created the following problems for his parents:

1. Which one of his parents should be named as Jack's Personal Representative?
2. What if his parents disagree on the disposition of Jack's dogs and other personal belongings?
3. Since Jack was unmarried and had no children, his entire estate passes to his parents, even though he had discussed leaving money to the Dumb Friends League.
4. Prior to his death, his parents struggled to speak with his doctors due to Jack's failure to name them as HIPAA Personal Representatives for the purpose of receiving his protected health information.
5. His parents were uncertain about Jack's wishes for his funeral and burial.

All these problems could have been solved if Jack had created a Will and Durable Powers of Attorney.

Our next case involves Marie and Stephie, one an interior designer and the other a nurse at a local hospital. Marie and Stephie were domestic partners. They had no Wills, Powers of Attorney, or any other written documents concerning their wishes. Stephie died tragically in a car accident. Marie faced the following problems:

1. First, Marie learned that she would not inherit from Stephie since Stephie died without a Will. As a domestic partner, Marie is not recognized as Stephie's heir.

2. Marie learned that Stephie had not completed the beneficiary designations for her 401(k); IRA and insurance policies. This meant that those benefits were paid to Stephie's estate in which Marie could not share.

Marie was devastated by these consequences and they were all avoidable with proper estate planning. Stephie could have named Marie as the beneficiary for her plans. Stephie could have created a Will which named Marie as the beneficiary of Stephie's estate and also named Marie as the Personal Representative of Stephie's estate. In addition, Stephie could have named Marie as her agent in Durable Financial and Health Care Powers of Attorney eliminating any disputes about who would make decisions for Marie prior to her death.

These cases illustrate how serious the risk of not planning in advance can be. Please take the cases of Jack and Stephie to heart as you consider the risks that you create for you loved ones and family by not completing your estate planning.

Feel free to contact with questions or comments. We can discuss with you how to minimize risks in your situation. We urge everyone to consider making a Will; Durable Powers of Attorney and Living Will so your wishes can be carried out. In some cases, additional planning considerations are analyzed. Make sure that you don't leave your loved ones and family with these problems.

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