Preparing a will is one of the most valuable gifts you can leave for your loved ones.
A will insures that your estate will be distributed according to your wishes upon your death, and not pursuant to state intestacy law. And a power of attorney is imperative in the event of your disability to avoid an incapacity proceeding. You also need continuation plans for your business and home.
“It’s never too early to start the planning process,” says Howard Greenberg, managing member at Semanoff Ormsby Greenberg & Torchia, LLC. “You may think you’re too young to be concerned about preparing for death or disability, but anyone can have an accident or become ill, so it’s important to be prepared.”
Smart Business spoke with Greenberg about the importance of having a will and power of attorney, how to create business and household transition plans, and the value of providing information to family members and business associates.
Why is it important to have a will and power of attorney?
To insure that the right people and institutions receive what they’re supposed to, when they’re supposed to, and that the right people and institutions administer your estate, it’s important to have a will, as well as ancillary documents, including a power of attorney.
Otherwise, you will be subject to state intestacy laws, which may not accord with the way you want your assets distributed.
And if you’re disabled, it could become necessary to have a guardian appointed in an expensive incompetency proceeding if you have no power of attorney directing who can handle your assets.
How have new technologies affected how wills are accessed?
Most people have accounts with vendors, banks, security firms, etc.
Many access their records online.
Many people don’t receive paper statements. If someone passes away or becomes disabled, there is a significant chance that until tax season — when you might get 1099 forms and the like — you would have no idea about a person’s account information.
It’s important to have a list of accounts and password information in a secure place, like a safety deposit box, or secure storage site, known to your heirs or advisers.
What about business and household transition plans?
A business transition plan requires being prepared with a management plan for your company to function without you in the event of death or a disability.
Do you want the business to continue, or be sold or liquidated? Who is going to manage the business? Is that future management in place and what steps have you taken to induce them to stay in place? Who will make policy and strategic decisions?
If you die or become disabled and don’t have a plan that addresses these questions, it might be too late, managers may leave, no one will step in to direct the business and your thriving business will suffer. Unfortunately, your family, and your employees will suffer with it.
For household transition plans, similar principles to business transition apply. In most families one person handles bill paying, makes sure that repairs are done, contacts the plumber, makes sure that the gardener comes, etc.
Another family member should be aware of these household functions in case the responsible manager passes away, or is not functioning.
Similarly, one family member is often responsible for dealing with family accountants, lawyers and investment advisers.
These professionals need to be ready to act in the event of a death or disability. It’s crucial that the survivor knows who to contact and how to contact those advisers should it become necessary.
How should one provide directions to family?
You should write a letter to your spouse, children, or other loved ones outlining a plan in the event you become disabled or die. The plan should cover your spouse, household, family and business.
The letter should be concise and address who will be in charge of various functions and what assets are available and what professionals will assist.
If you don’t provide directions to your loved ones, locating assets and professional advisers will be a major problem, will cause them to incur needless professional expenses, and could result in losses to your estate and business. ●
Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC
