Liz Weston, a Certified Financial Planner and regular national columnist on financial issues, called *“Five Financial Tasks You should Tackle By Year-End,” at the end of 2019.
As we are all considering what we need to do in the midst of the Coronavirus crisis, her article takes on new and more urgent wisdom. I am going over those tasks she discusses in a bit of different order in this blog, but they are all of great importance. In a separate, recent blog, I also discussed the urgency of preparing your Living Will (also called Physician’s Directive).
In Texas, our Department of Health and Human Services provides a basic form for this purpose. The Texas Health and Human Services website says that, “Except to the extent you state otherwise, this document gives the person you name as your agent the authority to make any and all health care decisions for you in accordance with your wishes, including your religious and moral beliefs, when you are no longer capable of making them yourself.”
Basically, in comparison to a Living Will, which informs your family, friends, and medical personnel of your end-of-life wishes, a Medical Power of Attorney assigns a person or person to make what I would call more affirmative decisions when you are unable to, such as, if you need surgery or a blood transfusion. This is in comparison to, for example, removing you from life-support equipment. The document provided by the Texas Department of Health and Human Services also has a basic explanation of what it is and what you should know when executing it. Of course, like any other document, this should be discussed with your attorney thoroughly before you execute it.
Just as in the Medical Power of Attorney, the Texas Department of Health and Human Services provides a basic form for what is called a Statutory Durable Power of Attorney, or as described on the TXHHS website, it is a form, “…for designating an agent who is empowered to take certain actions regarding your property. It does not authorize anyone to make medical and other healthcare decisions for you.” It is especially critical that you only execute this document with the advice and counsel of an attorney because it can have serious ramifications to your financial situation.
3. Check Your Beneficiary Designations.
Your beneficiary designations are those persons you designate to receive your benefits from certain assets upon your death. 401k plans or other retirement plans and life insurance policies or annuities usually ask you to choose a beneficiary. Liz Weston says you can usually check and change those beneficiaries online or you may need to call your company and complete a form to do that. In some instances, you can name your estate as the beneficiary, but there are legal considerations in either of these choices, so please talk to a lawyer before you make the decision and either name or change a beneficiary designation. I have often been surprised at how a company that sells these products give ill or uniformed legal advice to their clients.
4. Review Your Pay On Death Designations.
Often bank accounts and other investment accounts also have designations called Payable-On-Death, Joint Tenancy, something called Joint Ownership with Right of Survivor (JTWROS). I am forever amazed at how financial institutions have the cutest little very young girl at the “new accounts” desk who helps clients open new accounts and from what I have seen has absolutely no idea of the issues resulting from how their check the box on their signature card as to how the funds will be handle upon the account holder’s death.
5. Additional Considerations.
If clients are wanting to have assets such as retirement accounts, life insurance or bank or investment accounts pass “outside probate,” in other words, by contract and not by supervision of a probate court, they especially need to talk to their attorney; I have seen people leave these assets to their “estate” and often there are good reasons for that, but in many cases people do that not having enough information to make an educated decision about why this should or should not be their name beneficiary designation.
Also, in Texas, if you are divorced and have not redesigned your insurance beneficiaries, the proceeds would, by operation of law, go to the beneficiary or beneficiary named after your ex-spouse, if your ex-spouse is still listed as your beneficiary, but Liz Weston reminds us that in some states that is not the case.
I can recall when a distant relative’s father died some years go–his entire life insurance benefits went to an ex-wife from whom he had been divorced over 20 years; luckily, in Texas that is no longer the law, but check your state to be sure about that question, and make sure your beneficiaries will be who you want. You should also be sure to talk to a family lawyer before you change anything or designate a beneficiary, Transfer-on-Death or Payable on Death because the law where you live may not let you do that, without a written agreement from your spouse, if you are married.