March 18, 2016 at 11:58 am EDT | by Lawrence S. Jacobs
7 myths of estate planning
estate planning, gay news, Washington Blade

Get over the idea that you don’t have the kind of assets that qualify as an estate and prepare documents to protect yourself.

Editor’s note: This is the first in a series of seven articles to help you understand what you do know, don’t know and should know about estate planning.

It’s ironic, but “estate” may be the most understood word in estate planning. It sounds like I’m talking about landed gentry, but I’m not. The word “estate” refers to money or assets that may change hands as a result of your death – or which need to be managed if you are incapacitated. My clients’ estates are almost always bigger and more valuable than they realize. Yours includes cash, investments and equity in real estate. But then add in the proceeds of life insurance policies. (It’s real money even if you can’t collect on it.)  If you’re a federal employee participating in FEGLI, that coverage could be as much as five times your salary. You might also have a TSP (the Federal 401(k) program). When you total everything up, it can easily exceed $1 million. To paraphrase my favorite quote: “A million here, a million there, and pretty soon it’s real money” – and definitely worth planning for.

Get ready for the 3 Big Bad D’s.

Estate planning is shorthand for dealing with what I refer to as the “three Big Bad D’s”: disability, divorce and death. The last one is for sure, and the other two are more common than most people like to think. I’ll tackle the first two in this column, but save divorce for later.

The first critical part of planning your estate is not about deciding who gets what in case of death. Before then, you are much more likely to need someone to help manage your life in the event of disability.

Disability (or more accurately “incapacity”) occurs when, as a result of an illness or accident, you are unable to make decisions for yourself. Most people want to be able to designate who will make medical decisions for them, as well as who will manage their finances and make all the other myriad decisions that adults take for granted. The documents that delegate decisions to the people that you choose are powers of attorney.

Medical powers of attorney typically grant broad medical decision-making rights to people whom you believe will be able to make those decisions under pressure. If you have a partner but are not married, a medical power of attorney will help to ensure that that person has a role in taking care of you. If you are married, the medical power of attorney will grant the same rights to other people if your spouse or partner cannot take care of you.

What’s more, if you become incapacitated for a significant time, there may be hundreds of other necessary decisions that have nothing to do with medical care. That’s where a financial power of attorney comes in. No one gets the right to access your solely owned assets automatically, even a spouse. Who will pay the bills, manage your money, take care of your home, and take care of your partner or spouse? This document can grant important, broad rights to people that you trust to manage all of your assets while you cannot. It’s frequently overlooked and causes significant problems if it doesn’t exist, often requiring a costly and time-consuming guardianship petition.

Most people know the planning for death is handled by wills, but that is far from the only way. Trusts and beneficiary designations are also commonly used tools, as are real property deeds. I will tell you what you need to know about those documents in later columns in this series.

And that’s how the process begins. Get over the idea that you don’t have the kind of assets that qualify as an estate. Think of your estate not just in terms of who gets it after your gone, but how to protect it and your own interests as well as the interests of the people who matter to you.

Lawrence (Larry) Jacobs has helped hundreds of same-sex couples and LGBT singles in the Washington area protect their assets and loved ones through partnership planning. He is a partner at McMillan Metro, P.C. and has practiced law for 41 years. He is admitted to the bar in Maryland, Virginia and the District of Columbia. You can learn more about Larry and his practice at PartnerPlanning.com. (This column is not intended to provide legal advice, but only general guidance that may or may not be applicable to your specific situation.)

Comments are closed
© Copyright Brown, Naff, Pitts Omnimedia, Inc. 2018. All rights reserved.