You're Not Too Young or Too Poor To Start Thinking About Your Will, Living Will, And Other Important Estate Planning Documents
Hi Queens! So as many of you might know, Aretha Franklin, the queen of soul, passed away a few weeks ago. (Rest in power, Queen)!
But what many of you might not know is that Franklin had no will at the time of her death.
This means that her 80 million dollar estate will have to go through what is called probate court to be equitably distributed amongst her surviving family.
his may not seem like a big deal on the surface. So for a quick moment I want you to envision 6.4 million dollars.
You could buy a nice sized house (or a few depending on what part of the country you lived in)…
You could travel the world guilt-free…
And those student loans would be a thing of the past!
Now I want you to imagine taking 6.4 million dollars, and just handing it to a stranger.
And not only are you handing it to a stranger, but there's no real reason attached to it either.
That is what happens when you go to probate court -- in the case of Aretha Franklin it is estimated that anywhere between 3 to 8% of her estate (which is roughly 6.4 million dollars) will just be handed over to the courts/probate attorneys because she didn't have a will at the time of her death.
And usually the higher value of the estate that you have, the more money it will cost to have your assets processed by the courts.
Franklin’s family for the most part won't take too big of a hit considering that she has 80 million dollars worth of assets to be distributed amongst her surviving children. So in the grand scheme of things 6.4 million dollars isn't a lot.
But it's still important to keep in mind that it's 6.4 million dollars of her hard-earned money and property that will not be going to her family, and that this situation could have easily been avoided.
Then to make matters worse, when there is no estate plan in place sometimes it can take months, if not years, to gain access to the assets. Not to mention that if there are no designated beneficiaries, depending on a particular state's law, distant family members can also stake a claim on your surviving assets, which could include family members that you don't have a great relationship with that you wouldn't want to have access to your property/money.
Now I know some of you are thinking, "I'm way too young to be thinking about life/estate planning. I don't even have a house (and #RealTalk, with student loan debt the way that it is, I'm not even sure I ever will )." And I totally get that concern.
But you don't actually need a house/property in order to prepare some of your documents, like a living will (which is different from a last will and testament).
To me, it's never too early to have these documents in place just in case unforeseeable and unfortunate events take place in the future.
Last year, I signed up with a company called LearnVest when they offered life/financial planning services. Sadly they don't offer such services anymore, but at the time I got a really good education on the importance of setting up life/estate planning documents like a will, living will, and power of attorney.
So inspired by the unfortunate situation that Franklin's family will have to go through, I wanted to share some knowledge and resources about life/estate planning documents. I hope that this post gives you a lil' more insight as to how you can best prepare for the worst, helps you make sure that all of your hard-earned money and assets go to the right people, and that your body is well taken care of after death.
I would say that if you're at least a college graduate that has entered the workforce, this post is definitely applicable to you!
1. What are life/estate planning documents?
So the most common form of life/estate planning documents that you can prepare right now are a living will, a power of attorney/health care power of attorney, and last will and testament. I'll briefly go over the difference between each one below.
A living will
A living will is a formal document that outlines what your loved ones should do in the case that you are unable or you are deemed mentally unfit by a doctor to communicate health care decisions in a time of need. It answers the important questions such as whether or not you would like to be kept on life support, or what to do with your body if you fall into a vegetative state.
You can read more about it here.
A power of attorney/health care power of attorney
A power of attorney is a designated person of your choosing that will be responsible for handling your money and financial needs if your health keeps you from being unable to do so for yourself. In order to formalize your power of attorney, you would need to write up a document that specifically outlines who they are, what roles they would play in handling your money and financial needs, and what state of health you would need to be in for their power to come into effect.
This person can also be responsible for making healthcare decisions on your behalf. But if you would like to differentiate those people, you may also have a health care power of attorney as well. You would just set up another form of documents outlining who is your health care power of attorney, and what state of decline you would need to be in before their judgment goes into effect.
Other terms that you might hear that signify a power of attorney are a durable power of attorney, or a healthcare proxy.
You can read more about it here.
A last will and testament
So this is the document that we traditionally understand to be a will. It is the document that outlines who is entitled to your assets after your death. It is the last opportunity for you to decide if you would like to leave money, and/or assets to certain charities, organizations or family members that wouldn't otherwise be entitled to it because they are not next of kin.
As I mentioned before, having a will is so important because it ensure that your loved ones will be entitled to all of your assets/money after death, and keep them out of probate court. I know some people might be scared to think about what they would leave behind to people after they died, or think that they might not have much of anything to leave behind.
And for where some of you are at in life right now that might be true. But I still recommend having at least a basic document put together. And then it was recommended to me that after every big milestone in life like getting married, buying a car, buying a house, having a child, etc, that I should update it.
It may seem weird now, but there are many people who get to the end of their life such as Aretha Franklin, and somehow forget to do it. And all this does is cheat your family out of resources to make sure they can take care of all of your burial, and after death needs.
You can read more about it here, and there are many free templates for you to use online.
Another aspect of this conversation to think about are your beneficiaries. Your beneficiaries are people who will inherit certain assets that you designate to them. So if you have a last will and testament, then they will follow the instructions that you set for beneficiaries in the will. But if the idea of creating a will still freaks you out, then I would highly suggest at least setting beneficiaries on your bank accounts. I have Ally Bank, and they have a button under each of my accounts that allows me to designate my beneficiaries. For some banks you might have to call, and see if they have an option that you can opt in to.
The most important thing to note about setting beneficiaries is that they should all be at least over 18. Any beneficiary that you designate that is under 18 will be subject to go through the probate court to decide how to distribute the funds.
2. What resources are available to help me figure all this shit out?
So I'm sure many of you are wondering how the hell do you even get started trying to put all of this stuff into action? While Learnvest no longer offers their life/financial planning service anymore, I would still highly recommend checking out their articles as they talk a lot about many of these topics.
Rocket Lawyer is by far one of the best legal platforms on the market. I was lucky in that it was an employee benefit at the last place that I worked. So I got access to all of their resources for free. But given that I had such a horrendous experience with a company called LegalShield, which had a cheaper monthly subscription, but reminded me that you get what you pay for, I believe that you definitely get your money's worth through using Rocket Lawyer.
And one of the cool things about Rocket Lawyer is that you have lifetime access to your estate planning documents on their portal. So even if you cancel your membership, you will always have access to make edits to your document. You just won't be able to make new documents unless you reactivate your subscription.
While I don't have personal experience with LegalZoom, from what I've researched it has great reviews.
But I can't tell you enough how much I don't like LegalShield. The lawyer they assigned me was very grouchy, unhelpful, and I ended up just asking a family friend that I knew was a lawyer for advice because I did not think that this particular lawyer was giving me the best advice possible.
So I hope that was helpful, and that you feel inspired to protect your hard-earned assets and Queendom.
I know it can seem scary to think about these kinds of documents, but the best part about the process is that you only have to think about it (at least) once, and then you have some form of protection for life. So I'd say it's always better to be safe than sorry.