It was nothing short of an American tragedy. Actress and disability rights advocate Dana Reeve, 44, died of lung cancer this week, just 17 months after the death of her husband Christopher Reeve, best known for his movie portrayals of Superman.
While news stories focused on her stalwart support of her paraplegic husband following his 1995 horseback riding accident and her own struggle with cancer, the shock of the dual celebrity deaths prompted questions about what would happen to their 13-year old son, Will, now an orphan. A spokesman for the Christopher Reeve Foundation said he was in the "loving care of family and friends."
Still, the death of Dana Reeve provides an important reminder about estate planning. Attorney Martin Shenkman of Teaneck, N.J., an expert in the field, hopes the high-profile story will resonate with American families, the majority of whom do not have a will. He likened it to the increased interest in living wills in the wake of public drama surrounding Terri Schiavo, the 41-year-old brain-damaged Florida woman, whose parents and husband battled over whether to remove her feeding tube and allow her to die last year.
"There are three things that people must do," says Shenkman. "Write a will, name a guardian for minor children, and set up a trust to provide protection for the money to support those children." He also urges parents to write a heart-felt letter, what he calls a "two-tissue box" set of instructions, of how they want their children to be cared for in the event they are not able to do it themselves.
Don't be fooled into thinking you are too young to worry about estate planning or that you don't have enough assets to warrant legal advice, warns Tracy Craig, an estate planning attorney from Worcester, Mass., whose practice includes many families with young children. She highlights the importance of planning for the unthinkable.
Without your instructions, a court will make crucial decisions about who will care for your children and what will happen to your assets, including turning everything over to your kids when they turn 18, regardless of whether they are capable of handling major financial decisions.
Here are five issues to consider when deciding how to protect your family after you are gone:
Setting up a trust: Married couples can draft their wills to leave everything to their surviving spouses, or in the event there is no surviving spouse, to a testamentary trust for the benefit of the children. In establishing the trust, the parents select a trustee and prepare a trust agreement giving the trustee the power to manage the trust and use the income for the children. Life insurance proceeds can be paid to the trust to provide for your children's care and education.
Naming a guardian: Although most couples assume the surviving spouse will be the one to care for the children, their wills should also name a successor guardian in the event that both of them die at the same time. The name of that guardian should be the same in both wills.
Carefully consider your choice of guardian. While your parents may adore their grandchildren, an elderly guardian may not be physically up to the task. And while you may be tempted to name a married couple as guardians, don't, advises Shenkmen. In the event that couple divorces, you would be subjecting your children to a second nightmare.
Who is appropriate? Someone closer to your own age is usually a better way to go, Shenkmen advises. And if you do want to go with a couple, pick just one as the guardian. That will prevent complications in the event they get divorced.
Think about checks and balances: While you can name the same person as guardian of your children and trustee of their assets, it's a big burden for one person and could create problems, like the fox watching the henhouse. It's better to have at least two people sharing those duties.
Be proactive: Make sure you have enough life insurance to provide for your family when you're gone. If you are young and healthy, term insurance is cheap to buy.
Don't forget safekeeping: Once you take the steps to draw up these crucial documents, make sure someone knows where to find them. Otherwise, it's like leaving your family a buried treasure -- without a map. Normally, your attorney keeps one set of documents, you keep another, and you give a third set to the person you have named the executor of your estate.
If you need help keeping track of all the paperwork and contact information for the important people and advisers in your life, you can order a copy of the Kiplinger's Your Family Records Organizer. And if you haven't gotten around to seeing a lawyer yet, Kiplinger's WILL Power software can help you in a pinch. Your family will thank you.