A Year-Long Taxi Ride

Close-up car accidentMy good friend and fellow attorney, Max Elliott, graciously accepted my offer to compose a guest blog that would mesh with why planning is something all of us must do, whether it be financial planning, estate planning, or planning for the dreaded automobile collision.

Well, Max did even better than that--she managed to write about a scenario where all of those decisions, and more, come into play, when an ordinary person is involved in a taxi cab collision through no fault of her own.

Below is Max's guest blog.

iStock_young_couple_review_financesA Year-Long Taxi Ride

First, thank you Stephen for inviting me to write a piece for your blog. As one of the most respected attorneys in Chicago, I’m honored by this opportunity.

Estate planning doesn’t simply involve planning for death; it also involves planning for life and the well-being of your family, especially if you become incapacitated for a long time. Injuries and accidents occur more frequently to us and people around us than we would like to acknowledge. No one is immune, irrespective of your life stage. Equally important, if you aren’t immune, then your loved ones may suffer indirectly.

Jessie’s Long Ride:

Jessie, a single mom and newly divorced, went out for an evening with girlfriends. Unfortunately, a driver ran a red light, hitting the taxi that Jessie had climbed into to return home. Her injuries were severe enough to require 35 days of hospitalization and a 7-month home-recovery period.

Jessie was taken to emergency in a “non-network” hospital. Her only next of kin was her 8 year-old daughter, Ashley, but Jessie needed someone to tell the doctors about her allergies to certain pain relievers, and Ashley couldn’t.

Lesson 1: The basic estate planning document that would have helped Jessie is a healthcare power of attorney. Jessie could have designated her BFF of 30 years, Chris, to speak with doctors and to make healthcare decisions on Jessie’s behalf and inform the doctors about Jessie’s allergies.

For the first 2 months after her release, Jessie was on 24-hour bed rest. Yet, somebody had to pay the bills. Again, Ashley couldn’t do it; she was a minor, and there was no way Jessie would let her ex-spouse access her financial accounts. Las Vegas was the primary reason he became an “ex.”

Lesson 2: Fortunately, Jessie was lucid during most of her hospitalization and was able to complete another basic planning document that should have been completed immediately after her divorce: a property power of attorney. Jessie gave Chris the authority to temporarily manage her financial affairs.

During home-recovery, Jessie nearly drained her savings dry to pay for expenses incurred because she could no longer manage the household and Ashley. Additionally, Jessie’s disability only covered 6 months; she had no long-term disability. All that remained was her 401(k) and life insurance. Furthermore, the first few months of Jessie’s return to work was part-time, so her income was insufficient to meet her family responsibilities. Her only option was to make a 401(k) withdrawal, which she did and paid stiff penalties and taxes, leaving her with 15% of the funds she had before the accident.

However, Jessie’s accident taught her a third, unforgettable lesson. In the hospital, Jessie learned that her ex could have gained sole custody of Ashley had Jessie died from the crash. She didn’t have a will that designated a guardian for her daughter, so the Court would have likely appointed the biological father, Jessie’s ex as guardian. So about a year after the accident, Jessie had a will prepared designating Chris as guardian and a trust prepared that would hold the life insurance proceeds for Ashley. She also agreed to meet another estate planning team member – a financial planner, to determine if there was a way to financially plan for another disastrous ride.

Estate planning largely involves putting the proper pieces in place to successfully manage life’s “what if’s.” A good estate plan doesn’t require wealth; the only requirement is a desire to protect what you have –your health, your loved ones, and your current assets, – and taking the necessary steps to do so.

Max Elliott is an estate planning attorney licensed in the State of Illinois whose focus is servicing “non-traditional” families. Max routinely speaks to lawyers, students, and community groups on the effect of the Illinois Civil Union Act and the Defense of Marriage Act on estate planning; the intersection of estate planning and retirement planning; and small business essentials. You can learn more about Max’s practice and estate planning on her website, http://www.maxelliottlaw.com Facebook - http://www.facebook.com/maxelliottlaw Twitter (@maxelliottlaw - https://twitter.com/maxelliottlaw LinkedIn - http://www.linkedin.com/in/maxelliott and can contact her at 312.396.4053 or melliott@maxelliottlaw.com.

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