Why Women Need Estate Planning
Megan Harris-Pero Explains Estate Planning on WAMC Northeast Public Radio Program
As a recent guest on 51%, Megan Harris-Pero explains estate planning on WAMC Northeast Public Radio’s program. During the interview, she debunks common misconceptions about estate planning, including why you need much more than a will. She also explains why everyone over 18 should have a health care proxy and power of attorney, and the reason estate planning is especially important for women.
According to the Caring.com 2023 Estate Planning and Wills Survey:
64% of Americans think having a will is important, yet only 34% of Americans have an estate plan in place.
1 out of 4 Americans say inflation has caused them to see a greater need for estate planning.
Younger Americans are 63% more likely to have an estate plan than in 2020.
While the report shows more Americans see the value of estate planning, Harris-Pero says too many families put it off or forget to keep important documents up to date.
Listen to Megan’s interview by clicking the image.
Covid Lesson
Because they lived through the Covid pandemic, Harris-Pero says more young people understand how quickly an illness can change things. She has always recommended that anyone over age 18, including college students, have a health care proxy with living will in place as well as power of attorney. Each of these documents is outlined below.
More than a Will
Harris-Pero says the biggest myth she and her associates debunk is that estate planning is just a will.
“A will just outlines who gets your things, should you pass,” she explains. “There are several other important documents that you need to be protected – especially in an emergency or if you become ill and cannot make decisions for yourself,” she said.
These include:
WILL: A last will and testament is used by the court to disburse your assets, including money, items and real estate, etc.
HEALTH CARE PROXY: This document allows you to choose who you want (called an “agent”) to make health care decisions for you, should you be unable to make them. Whether it is a spouse, sibling or parent, she says anyone over the age of 18 should have a health care proxy.
LIVING WILL: This document outlines instructions for the end of your life. It provides important guidance for your health care agents, should they have to make decisions, such as whether to remove you from life support.
POWER OF ATTORNEY: This document allows you to name agents for non-medical issues that arise while you are still alive. Harris-Pero counsels her clients to give the designated person (or people) broad powers that include modifications the law firm includes. This helps prevent the court from naming an outside guardian to handle your affairs.
While controversial, Harris-Pero says the recent court battle over Brittany Spears’ conservatorship is a high-profile example of how an outside guardian can be appointed.
“In New York, we call it a guardian, but it is the same thing as a conservator,” she explains. “It is when the court decides that as an adult, you need someone else to make decisions and handle your affairs.”
A Big Surprise for Many Women
Harris-Pero says she encourages women of all ages to take the time to understand estate planning – especially if they have a partner or spouse who manages the finances.
“According to the National Institutes of Health, women live, on average, five years longer than men,” she explains. “It is important for women to understand the financials while their partner is alive. It can be a real shock when a widow sees her situation for the first time as an individual.”
Harris-Pero says a big misconception she encounters with many women is assuming as the spouse, they automatically inherit all their partner’s assets at the time of death.
In fact, Harris-Pero says every state has their own default plan if someone doesn’t have a will. In New York, if you are the surviving spouse and have children, you receive the first $50K in assets in your partner’s name, then half of the rest. Children receive the other half.
If you and your partner are not married, the assets go to the children.
Don’t Just Download Forms from the Web
More and more, Harris-Pero says meets with clients who tried to do their own estate plan, often paying to download documents that promise a fast and easy estate plan.
“The problem is the AI software or website doesn’t really understand your particular situation,” she says. “And often, online forms don’t comply with New York’s particular requirements.”
Instead, at Harris-Pero’s firm, attorneys begin with a questionnaire and comprehensive consultation.
“We want to know your goals, but also get a picture of your family dynamics and assets,” she explains.
Family: Harris-Pero says it is important to know if the potential client has been previously married; if a couple is not legally married, but wish to treat each other like spouses; whether there are children and if anyone in the immediate family has health issues, a disability or addiction.
Assets: Harris-Pero says an attorney needs to consider whether a client has sufficient funds to cover long-term care costs. And if not, when the couple may need to apply for Medicaid to cover the costs. Families with more wealth may also benefit from taking steps early to avoid estate taxes later.
When do I need a trust?
Harris-Pero explains that while most people who come to her firm are looking for a will, after a consultation, many decide to also set up a trust.
“A will doesn’t go into effect until it goes through the courts, or probate,” she explains. “For a variety of reasons, people set up trusts to avoid that process.”
These may include:
Cost and time: Often, families want to avoid probate. There are fees and it can take a long time before beneficiaries receive any payment.
Privacy: Many people want to avoid others going to the courthouse to look up their assets.
Family situation: In probate, immediate family must be notified. In cases where there is an estranged child or complicated family situation a trust prevents the notification process.
Which trust is right for me?
There are two main types of trusts, revocable and irrevocable. There are also many different variations of these trusts each serving different purposes in estate planning, according to Harris-Pero.
Revocable trust: This is a contract that explains how you want your assets to be treated. You can add things or take them out. You can use it to pay bills.
“I tell clients a revocable trust’s superpower is keeping you out of probate,” she says. “Often, we use it to help balance out estates of spouses to avoid estate taxes and protect your privacy. “For business owners, a revocable trust makes it easier to keep the business running versus relying on a will.”
Irrevocable trust: Once in place, it can’t be changed. Harris-Pero says an irrevocable trust is often used to set aside assets apart from your estate. This can be done to reduce estate tax liability or, more commonly, to protect assets from long-term care costs.
Harris-Pero says there are different types of irrevocable trusts, depending on their purpose. They include:
Keeping an estate plan up to date
Creating an estate plan is important, but Harris-Pero warns that too many people fail to keep it up to date.
“I advise clients to review their plan every year, to make sure nothing major has changed, such as a birth or death,” she explains. “Anytime you have a major life event, it should be updated. An estate plan for an 18 year old is going to look very different than someone having children in their 30s or retiring in their 70s. Marriage, property, children, owning a business – it all affects your decisions.”
Estate planning attorneys dig deeper
“Consider an estate planning attorney a member of your team of advisors, which often includes your financial planner and CPA,” Harris-Pero explains. “I tell clients my job is to diagnose your goals, the issues you might not realize you have, and then recommend the best path forward.”
She says many people believe if beneficiaries are designated for their accounts, they will avoid probate.
“As attorneys, we dig deeper into the issues,” she explains. “Maybe you have a grandchild who really shouldn’t be receiving money directly, so we can set up a trust instead. In many cases, we can set up ‘safety nets’ that hold money for beneficiaries for different milestones that come up in their lives.”
A family accident drew Harris-Pero to estate planning
Harris-Pero, who brings experience working in large and boutique law firms, practicing different types of law, says she was drawn to estate planning because of a deeply personal experience.
“When I was ten, my 16-year-old sister suffered a traumatic brain injury in a car accident,” she says. “Things changed in an instant for my family and I think that’s why I gravitated to estate planning. I know the power of preparation and how much heartache and stress it can save you. It is fulfilling, knowing I am helping people in my community be ready for the curveballs life throws at you.”
When something happens, Harris-Pero says, your estate planning attorney is there to help protect and guide your family.
“We also want to make your wealth last longer,” she says. “Your relationship with an estate planning attorney can last decades. This is much more than a bunch of papers you sign. We go to our clients’ hospital bedside to help them. We meet with the family afterwards to answer questions and guide their next steps. That’s something artificial intelligence or a website will never do.”
READY TO START AN ESTATE PLAN?
TIME TO UPDATE YOUR WILL, HEALTH CARE PROXY OR POWER OF ATTORNEY?