First Responders Estate Planning Kierman Law

Myths and Frequently Asked Questions: Estate Planning for First Responders

Myth 1: I can do estate planning any time. I do not need to worry about it right now.

Tragedy can strike at any time. Putting your life on the line as a first responder means that you are more likely than most to be injured or killed in the line of duty. If you wait until something bad happens, it might be too late.

If you are injured and unable to make decisions for yourself, your loved ones will have to go to court to have someone appointed to make financial and medical decisions for you. This is a time-consuming, expensive, and public process that will add stress to an already stressful situation. You can help alleviate this burden by having a proper estate plan prepared.

In addition, if you do not intentionally plan, the state’s rules (also known as the intestacy statute) will determine who gets your hard-earned money and property at your death. Depending on your unique family situation, this may not be how you would have chosen to hand out your money and property. Also, the money and property will be given to those court-chosen individuals outright, making it vulnerable to creditors, lawsuits, and divorcing spouses.

Myth 2: My family is covered. I got the maximum amount of life insurance that I am eligible for through my employer.

Maxing out the amount available through your employer-provided life insurance is a great first step. However, have you considered whether this is enough? Your employer or the life insurance company established a maximum for everyone based on a standardized factor such as your annual compensation, not your personal circumstances. Based on your unique situation, you need to consult with a financial professional to make sure that you have provided your loved ones with enough to carry out your wishes for them.

In addition to ensuring that you have enough life insurance, it is important to review the beneficiary designation form for each policy. This form instructs the life insurance company to pay the death benefit to the named individual or entity. However, it does nothing to protect the death benefit once in the hands of that named beneficiary. If you name an individual as the beneficiary of your life insurance policy, the death benefit will be paid directly to that individual in one lump sum. This can put the death benefit at risk of being spent frivolously, seized to satisfy a creditor, or used to pay a judgment against the beneficiary. Additionally, if the beneficiary you name is a minor, a court-appointed guardian will manage the money until the individual reaches the age of majority (eighteen or twenty-one depending on state law). At that point, the money will be given to the beneficiary in one lump sum. These are some of the reasons why we recommend naming a trust as the beneficiary of the life insurance policy, especially when there is a large sum of money at stake.

Question 1: I am married, but my spouse works a lot. Can I meet with you on behalf of both of us?

We understand that schedules can be busy. However, if we will be planning for both of you, we must meet with both of you. We have an ethical obligation to ensure that any strategies we put in place regarding your spouse’s money and property are what your spouse actually wants. In most cases, we can only guarantee that by meeting with both of you. Also, because you will more than likely have jointly owned accounts or property, we need to ensure that both of you agree on what will happen to those accounts and pieces of property at the death of the first of you and then at the survivor’s death. Because we would be representing both of you, we strive to create an open and honest environment for your joint planning. To do this, both of you need to be present for all discussions.

We understand that you may have a unique situation; accordingly, we may be able to accommodate you and your spouse by meeting virtually for some parts of the estate planning process. Let us know how we can best accommodate your busy schedules.