We thank you, teachers, for your time and dedication to teaching the future generation. You provide the foundational knowledge necessary to ensure the success of tomorrow’s leaders. We are here to make sure you have the foundational estate planning documents to ensure your own successful future. As a teacher, you are well aware that having a plan makes teaching go much more smoothly. By analogy, we will consider your estate planning documents to be your lesson plans for your loved ones.

What is an estate?
Although you may not be a billionaire, you have an estate that needs a proper legal plan. Estate is a general term used to describe everything you own. This includes things such as bank accounts, real estate, household furniture, automobiles, etc. At your death, everything you own has to find a new owner.

What is an estate plan?
An estate plan is your personal set of lesson plans for your trusted decision-makers’ use. The legal documents that dictate what will happen to you and your money and property at your death comprise the lesson plans. If you have a minor child, your estate plan can also enable you to nominate your child’s guardian. Some estate planning documents allow you to dictate what happens to you and your finances during any period when you cannot make your own decisions or if end-of-life decisions need to be made on your behalf.

Is retirement planning really necessary?
Depending on your school district, several different retirement planning options may be available to you. Defined-benefit plans, also known as pension plans, are calculated ahead of time and promise a specific payment amount when you retire. Defined contribution plans allow you and your employer (if the employer chooses) to contribute money to your individual account. The amount you receive from this type of account is based on the investment results. Regardless of the available options, you may need to do a little homework to make sure you understand the basics of your plan:

  • What type of payments will you receive: a lump sum or installments?
  • Do payments stop at your death?
  • Does your spouse receive any money at your death?
  • Are your children entitled to any payments at your death?
  • Do you need to complete any paperwork to control what happens at your death?
  • What happens if you die while you are still employed?
  • What happens if you die before you retire but after you are no longer employed by the school district?

Because the rules governing retirement plans can vary depending on the type of account, it is critical that you study and understand your plan’s rules and requirements.

What documents make up an estate plan?

Last Will and Testament
A Last Will and Testament is where you name a personal representative or executor (the person who collects all of your accounts and property, pays your outstanding debts, and distributes your money and property to those you have named), specify who will receive your accounts and property, and name a guardian for any minor children. Although this document is useful only at your death (and not during your incapacity), it provides a way to officially express your wishes. In contrast to having an RLT (described below), having a will to distribute your money and property will require your family to go through the probate process, the court-supervised procedure that must take place to distribute to your loved ones the accounts and property you own at your death. If you have no will, the probate court will determine who gets your money and property according to state law.

Revocable Living Trust
A revocable living trust (RLT) is a trust you create during your lifetime. You can change this trust at any time until you become incapacitated (unable to make your own decisions) or die. Contrary to what some may think, you do not have to have a lot of money and property to benefit from a trust. An RLT also allows you to continue enjoying your money and property during your lifetime and to designate what will happen to that money and property upon your death privately and without the need to go through probate with assets being available immediately to your named heirs (unlike a Last Will and Testament).

Pour-Over Will
If you have an RLT as part of your estate planning, you will still have a will, but it will be called a pour-over will. This document will be used only if an account or piece of property was not transferred either to your trust during your lifetime or to your trust or another beneficiary at your death through a beneficiary designation. Unlike a regular will, a pour-over will directs that all accounts or property subject to probate be transferred to your RLT. Although your loved ones will still have to go through probate, your money and property will end up in the trust, managed and handed out according to the trust’s instructions.

Financial Power of Attorney
In a financial power of attorney, you choose a trusted person, or agent, to handle financial transactions (e.g., signing checks, opening bank accounts, signing a deed, etc.) for you while you are alive and unable to act for yourself.  If you do not formally choose someone to make financial decisions on your behalf, your loved ones will need to go through an expensive and timely (average cost of $4,000 and process that takes 3 – 6 months) guardianship process that culminates with a court hearing in order for a judge to appoint someone who is not of your choosing.

Advance Medical Directive and Living Will
An advance medical directive (AMD) allows you to name a trusted healthcare decision-maker to communicate your healthcare wishes or make medical decisions on your behalf if you cannot do so, like a substitute teacher for your healthcare. If you do not formally choose a medical decision-maker, your loved ones will need to go through the same guardianship proceedings as described above for a financial guardian.  This document also includes your lesson plan for communicating your specific wishes regarding end-of-life decisions (also known as a living will). Carefully considering your desires regarding life-prolonging procedures and clearly communicating them to your chosen medical decision-maker is imperative. Not only can this situation be very stressful for your medical decision-maker, it can also be a breeding ground for disagreements among your loved ones if their opinions differ.

Next Assignment
Now that you are familiar with what estate planning is and the benefits it can provide for you and your loved ones, your next assignment is to call us at 410- 825-2255. Together, we can dive deeper into your unique situation and design a lesson plan that will protect you and guide your loved ones.