5 Legal Documents Every Dad Must Know About & How to Make Sure They Don’t Fail

by Jackie Bedard on August 24, 2009

in Estate Planning,Family Wealth,Guardians,Health Care Directive,Power of Attorney,Trusts,Wills

The following article, written by national legal expert, Alexis Martin Neely, originated from Chris Brogan’s Dad-O-Matic blog.  Alexis was featured in an interview on Good Morning America this morning, where shared some important information that all parents need to hear:

***Featured on Good Morning America***

Here’s the segment on 5 Legal Documents Everyone Should Have

with Chris Cuomo & Alexis Neely

GoodMorningAmerica_logo

Becoming a dad is the ultimate step into adulthood.  It simply doesn’t get more real than that, does it?  That little face looking up at you makes you realize that life isn’t just about you anymore.  Suddenly, you are responsible for the well-being and care of a little person who is totally reliant on you.  And in some ways, this new “mini-you” that has come into the world makes you feel immortal.

On the flip side though is the lurking thought “what will happen to mini-me if something happens?”  If you are like most people (69%), you push away the thought because it’s too scary to contemplate your child being raised by anyone besides you.

But, here’s the thing … if you aren’t willing to take the time and invest the energy in setting things up for your little one (and her mom) the right way, you will leave your family with a world of hurt if something happens to you.

The good news is that setting things up the right way and doing the right thing by your family doesn’t have to be as painful as you think it will be.  If you are in the know about what you need and how to get it taken care of, getting your personal affairs in order can even be downright enlightening.

Let’s start with the bare minimum of what every dad needs to have in place to make life as easy for his kids and their mom if anything happens.

Document Set #1: Kids Protection Plan
baby feet Regardless of the size of your bank account, if you’ve got a child at home who depends on you, you need to have a comprehensive Kids Protection Plan® (KPP) in place to ensure her well-being and care in case you can’t be there.

A KPP begins with naming legal guardians to raise your children if anything happens to you and their mother.  But, that’s just the beginning. A comprehensive KPP will also name local friends or family as guardians for the immediate/short-term care of your children so that the authorities never have to take your children out of your home and into the care of strangers.  With a KPP in place, you’ll carry an ID card in your wallet listing the names and addresses of your immediate/short-term guardians as well as provide written instructions to all of the people who care for your children, such as babysitters and schools.  Finally, a KPP will confidentially exclude anyone you know you would never want to serve as guardian of your children to ensure there are no court-room battles over your child’s care and will also provide detailed instructions about things like health care, education, discipline and your values, so your children are raised the way you want, no matter what.

To get started with your Kids Protection Plan® by naming long-term guardians (which EVERY parent must do), go here and be guided through a process of first choosing the right people to raise your kids if you can’t and then easily document your choices … legally.

Document Set #2: Financial Durable Power of Attorney

A financial durable power of attorney is something every adult needs, even if you don’t have little kids at home.  This document is what will let your family access your bank accounts, pay your bills, and make financial and legal decisions for you if you are hospitalized or otherwise incapacitated.

This story should bring home the importance of having a durable power of attorney in place:

My law firm was contacted by a young woman after her father was hurt at his janitorial job, hospitalized and unable to communicate.  This man thought he didn’t need estate planning because his income was very low and he had less than $10,000 in the bank.

Unfortunately though, his failure to plan left his family in a lurch. They needed the little bit of money he had in the bank, but couldn’t access it without going to Court because the account was in his name and he didn’t have a durable power of attorney naming anyone to act for him legally.

The cost of going to Court was going to cost their family more than the money that was in the bank!

Don’t leave your family in this kind of a painful situation unable to access the limited resources you have because you didn’t do what you need to do.  Be sure you have a financial durable power of attorney in place and make sure it’s comprehensive and will work when your family needs it.

Document Set #3:  Health Care Directive (Living Will)

A Health Care Directive (also known as a Living Will or Health Care Power of Attorney) is another document set that every adult needs, even if you don’t have little ones at home counting on you.

These set of documents do two important things:

  1. Appoint the person you want to make health care decisions for you, if you cannot make them for yourself; and
  2. Tell your appointed decision-maker how you want those decisions to be made.

Each state has its own rules for how these documents should be prepared.  In some cases, your instructions can be all in one document and in others they need to be two separate documents.  The most important thing is that you get something down in writing.

And, once again, make sure you’ve got something that will really work when your family needs it.  I recommend giving broad discretion to someone you trust to make decisions about all of your health care decisions, including not only life-saving medical care, such as respiration, but continued nutrition and hydration in case you are incapacitated.  If you recall the Terry Schiavo case from several years ago, in which her husband and her parents fought over whether she should be kept alive or not and the case was brought all the way to the Florida Supreme Court, the issue was not whether to continue to keep her lungs pumping, but whether to continue to provide nutrition and hydration – be sure your medical directive addresses these issues.

Document Set #4:  Will:
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When it comes to estate planning, most people think of having a Will.  Unfortunately, having a Will often provides a false sense of security to people who think “I have a Will, therefore, I’ve taken care of everything.”  That’s a myth. In fact, your Will is the least important of the 5 legal documents every dad must know about.

A Will sets forth what you want to happen to your assets at the time of your death.  But, here’s the thing, where there’s a Will and your assets are owned in your name, the Will merely acts as instructions to the Court as to what to do with your assets. That means your family is stuck dealing with the Court after you are gone.  Nobody wants that, trust me.

The Court process for handling your assets after your death is called probate.  It’s typically expensive, time-consuming, and always totally public, which means anyone in town can find out how much you’ve left behind, who it went to and when they get it.  That puts your loved ones on the radar of every con artist in the neighborhood.

A Will alone is really only appropriate for dad’s who have no (or very limited) assets titled in their name.  If you have assets, such as a home, bank accounts, life insurance, and retirement accounts, you need to have a Living Trust to keep everything out of court, totally private and make it super easy for your loved ones.
You may have heard that if you only have life insurance and retirement accounts that you could simply name beneficiaries on those assets and avoid probate.  That’s true, but not going to work if you have minor children because they are too young to be the beneficiaries of your assets and would end up in Court with a guardian appointed to handle them.  Not what you want.

Document Set #5:  Trust

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If you have financial assets or real estate, you want to have a Living Trust.  A Living Trust is the single best way to make things as easy as possible for the people you love, bar none.

But, and it’s a big BUT, most people who have a Living Trust in place have one that won’t work when their family needs it.
It’s the same for each of these documents I’ve talked about; they are only going to work the way they were designed to work if the law stays the same and your life stays the same.

As your life changes, the documents need to change.
As the law changes, the documents need to change.

And, for your Living Trust, it won’t work unless all of your assets are titled in the name of it, not just once, but every time you acquire an asset in the future.

I’ve met with loads of people who thought they had everything taken care of because they had prepared these 5 documents or had them prepared by a lawyer, but because they had not been kept up to date or their assets were not owned properly, the documents didn’t work!

In fact, that happened in my own family when my father in law died.  He had spent thousands of dollars to work with a lawyer who put in place a set of documents for him and then didn’t keep them up to date and didn’t make sure his assets were owned properly on an ongoing basis.  What that meant is at the end of his life, we were stuck dealing with the one thing he thought he was protecting us against – the probate court and a fight with his ex-wife.

Even Michael Jackson, who no doubt spent hundreds of thousands of dollars with his lawyers, had a trust-based estate plan that he was probably told would keep his family out of court.  As we now know, it must have failed because his family has been dragged into court already multiple times since his death with everything open to the public.

So, yes, these 5 documents are absolutely vital because they will make life as easy as possible for your family, keep your loved ones out of court and get them easy access to your assets in the midst of a crisis, but only if they are kept up to date and your assets are owned properly.

Most people do not have the time, knowledge and discipline to do this for themselves the right way.  If you do, great.  But, who is going to guide your family to make the right decisions and carry things out the right way after you are gone?

Because when all is said and done, that’s really what this about, isn’t?

There’s nothing more important to you than your family.  They are why you do everything you do, right?  So, for them, find a lawyer who will guide you right during your lifetime and be there for your loved ones when you can’t be.  It’s far easier for you to take care of things now, while you are living and able than it will be for them to take care of things after you are gone.  Legal planning is not about the money; it’s about making life as easy as possible for the people you love … no matter what.

Alexis Martin Neely is America’s Personal Family Lawyer, author of the bestselling book “Wear Clean Underwear! A Fast, Fun, Friendly – and Essential – Guide to Legal Planning for Busy Parents” and the nation’s leading legal expert guiding you to smart financial and legal decisions for your family. Subscribe to Alexis’ free online magazine, Family Wealth Secrets, and have wealth advice delivered right to your inbox each week.

Special Update!

In honor of the Dad-o-Matic article and her appearance on Good Morning America, Alexis has convinced her publisher to give her vital book on legal planning for parents (Wear Clean Underwear, Morgan James Publishing 2008) away on Kindle for just .99.  Get your copy today right here.

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S.O.A.P. Episode One – All My Children & the Kids Protection Plan | North Carolina Wills and Trusts
August 24, 2009 at 3:41 pm

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