No Time Like the Present Pandemic to Get the Estate Plan Going

The pandemic has made many people focus on depressing things, like death. Many of us are worth more dead than alive.

Federal News Network’s recent article entitled “It’s your estate, but who gets it?” says that lack of control is one of the frustrating things about this already terrifying pandemic. We can wear masks, keep our distance and avoid crowds, but then what?

There are some very important and valuable things that are still under your control. One of these is estate planning.

Any number of things could have occurred in 2020 that are off your radar because you’re still adjusting to the many changes the pandemic has brought to our everyday lives.

Many people see their estate plan as one of life’s necessary chores. Once it’s signed, they simply file it away and forget about it. However, an estate plan should be reviewed regularly to be certain that it continues to meet your needs. Here are just a few of the life events that make it essential for you to review and possibly revise your estate plan with an experienced estate planning attorney:

  • The birth or adoption of a child
  • You are contemplating divorce
  • You have recently divorced
  • Your child gets married
  • Your child develops substance abuse problems or has issues with managing finances
  • Those you’ve named as executor, trustee, or agents under a power of attorney have died, moved away, or are no longer able to fulfil these obligations
  • Your child faces financial challenges
  • Your minor children reach the age of majority
  • There has been a change in the law that impacts your estate plan
  • You get a sizeable inheritance or other windfall.
  • You have an estate plan but can’t locate it
  • You acquire property; or
  • You move to another state.

If any of these events occur, talk to your estate planning attorney to see if it is necessary to revise your estate plan to address these issues.

Reference: Federal News Network (Nov. 4, 2020) “It’s your estate, but who gets it?”

Does My Business Need a Power of Attorney?

Some business owners may need a power of attorney (POA). However, what type would be of benefit the most is the question. This article looks at the types of power of attorney and in what circumstances a business owner may need each of them.

Entrepreneur’s recent article entitled “Does Your Business Need a Power Of Attorney?” reports that the Consumer Financial Protection Bureau (CFPB) defines power of attorney as a legal document that permits a trusted agent the authority to act on your behalf. Accordingly, signing a power of attorney allows the business owner to authorize another person to conduct business in his stead. The person designated in the document is called the “agent” or sometimes the “attorney-in-fact.” There are three main types of power of attorney:

Financial Power of Attorney. This document allows the agent to deal with the financial responsibilities and functions of the “principal” (the person who signs the document), if the principal is unable to do so themselves. Some functions for the agent of a financial power of attorney include the following:

  • Delegation of the operation of your business
  • Hiring an attorney and making decisions in lawsuits
  • Filing and paying taxes
  • Conducting transactions with banks and other financial institutions
  • Making decisions on your investments and retirement plan
  • Entering into a contract
  • Purchasing of selling real estate or different types of property; and
  • Using your assets to pay for your living expenses.

Special Power of Attorney (or Limited Power of Attorney). A business owner may need to accomplish a task for the company, but she’s unable to be there because of other responsibilities. This document permits a particular agent to conduct business on her behalf, concerning a specific and clearly outlined event, like opening a bank account, settling a lawsuit, or signing a contract.

Healthcare Power of Attorney. An individual who is incapacitated and can’t communicate, can use this to permit an agent to make medical decisions on his behalf. Note that a healthcare power of attorney isn’t the same as a living will. A living will focuses on a person’s preferences for healthcare treatment, such as do-not-resuscitate and other religious or philosophical beliefs that they want to be respected. A healthcare power of attorney is more flexible and leaves the decisions regarding healthcare to the agent. A living will concerns end-of-life decisions only, where healthcare power of attorney applies in all medical situations.

Durable Power of Attorney. A POA usually becomes effective when a person is incapacitated and stops once they’re able to make their own decisions. However, a durable power of attorney or enduring power of attorney may be applied to any of the types mentioned above. As a result, the agent can make decisions on behalf of a business owner when they aren’t incapacitated.

A POA provides considerable protections that will help a business deal with regular operations, while the owner is unable to lead the company. If the business is an LLC or corporation, a power of attorney for the company may not be needed. However, it’s wise to have one for your own estate planning. Ask an experienced estate planning attorney about the types of power of attorney and how they might help your business.

Reference: Entrepreneur (Nov. 3, 2020) “Does Your Business Need a Power Of Attorney?”

What Key Estate Planning Terms Should I Know?

Estate planning can help you accomplish several objectives, including naming guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can give more wealth to your heirs and saying how and to whom you would like to pass your estate at death.

Emmett Messenger Index’s recent article entitled “13 Estate Planning Terms You Need to Know” provides some important terms to understand as you consider your own estate plan.

Assets: This is anything a person owns. It can include a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, collectibles, art, and clothing.

Beneficiary: This is an individual or entity (like a charity) that gets a beneficial interest in an asset, such as an estate, trust, account, or insurance policy.

Distribution: A payment in cash or asset(s) to the beneficiary who’s designated to receive it.

Estate: All of the assets and debts left by a person at death.

Fiduciary: An individual with a legal obligation or duty to act primarily for another person’s benefit, such as a trustee or agent under a power of attorney.

Funding: The process of transferring or retitling assets to a trust. Note that a living trust will only avoid probate at the trustmaker’s death if it’s fully funded. A trustmaker also may be known as a grantor, settlor, or trustor.

Incapacitated or Incompetent: The situation when a person is unable to manage her own affairs, either temporarily or permanently, and often involves a lack of mental capacity.

Inheritance: These are assets received from someone who has died.

Probate: This is the orderly court-supervised process of distributing the assets of a person who has died.

Trust: This is a fiduciary relationship where a trustmaker gives a trustee the right to hold property or assets for the benefit of another party, known as the beneficiary. The trust is a written trust agreement that directs how the trust assets will be distributed to the beneficiary.

Will: A written document with directions for disposing of a person’s assets after their death. A will is enforced by a probate court. A will can provide for the nomination of a guardian for minor children.

Reference: Emmett Messenger Index (Oct. 28, 2020) “13 Estate Planning Terms You Need to Know”

Do I Need to Name a Guardian for My Children in the Will?
Judge Gavel And Striking Block Over Law Book With Guardianship Law Text On Wooden Desk

Do I Need to Name a Guardian for My Children in the Will?

Many young couples with children and bills to pay may look at you askance, when asked about estate planning and say, “what estate?”

However, a critical part of having a will—one frequently overlooked—is naming a guardian. If you don’t name a guardian, it could result in issues for your children after your death. Your child might even be placed in a foster home.

For a young family, designating a guardian is another good reason to draft a will. If you and your spouse die together with no guardian specified in a will, the guardian will be chosen by the court.

In a worst-case scenario, if you have no close family or no one in your family who can take your child, the court will send them to foster care, until a permanent guardian can be named.

The judge will collect as much information as possible about your children and family circumstances to make a good decision.

However, the judge won’t have any intimate knowledge of who you know or which of your relatives would be good guardians. This could result in a choice of one of the last people you might pick to take care of your child.

Try to find common ground, by agreeing to a set of criteria you want in a guardian. This could include the following:

  • The potential guardian’s willingness to be a guardian
  • The potential guardian’s financial situation
  • Where the child might live with that person
  • The potential guardian’s values, religion, or political beliefs
  • The potential guardian’s parenting skills; and
  • The potential guardian’s age and health.

Next, make a decision, get the chosen guardian’s consent, write it all down, and then set out to create a will.

Ask an experienced estate planning attorney to help you do it correctly.

Reference: Lifehacker (Oct. 27, 2020) “Why You Should Name a Guardian for Your Kids Right Away”

Is My Estate Plan Set with a Power of Attorney?

A June 2020 Transamerica Center for Retirement Studies survey showed that a mere 28% of retirees have a financial power of attorney (POA)—and many people don’t understand that there are two types of these advance directives that serve different purposes.

MarketWatch recently published an article “Does your estate plan use the right type of Power of Attorney for you?” that says knowing how both types work is crucial in the pandemic, especially in the event that you get sick with coronavirus.

A Durable Power of Attorney for Finance can be either “springing” or “immediate.” “Durable” refers to the fact that this Power of Attorney will endure after you have lost mental or physical capacities, whether temporary or permanent. It lists when the powers would be granted to the person of your choosing and the powers end at your death.

An “immediate” Durable Power of Attorney for Finance is effective, as soon as you sign the document. In contrast, a “springing” POA for Finance means two physicians must first examine you and confirm in writing that you can no longer manage independently.

Therefore, to begin paying your bills, your agent must have those two physicians’ letters, and he or she doesn’t automatically have the authority to ask for them.

When issues, such as doctors’ letters, are required before the agent you chose can serve you, ask your estate planning attorney for guidance.

An obstacle for a Durable Power of Attorney for Finance can come upon you very fast and possibly include you and your spouse at the same time. For example, you both might get COVID-19.

The powers granted by a typical POA for Finance are often broad and permit selling and buying assets; managing your debt, car and Social Security payments; filing your tax returns; and caring for any assets not named in a trust you may have, such as your IRA.

If you recover your capacity, your agent must turn everything back over to you when you ask.

Remember that your advance directive documents are only as good as the people who implement them. You should also make certain anyone named knows that they’ll have the job, if needed. They must know where to find your POA and all other important information.

Reference: MarketWatch (Oct. 9, 2020) “Does your estate plan use the right type of Power of Attorney for you?”

How Do I Know If Mom Left Me Her IRA?

Nj.com’s recent article entitled “I think my mother left a retirement account to me. How can I find out?” explains that retirement accounts typically are “non-probate” assets—they pass by beneficiary designation, rather than under the account owner’s will.

Each designated beneficiary can contact the financial institution where the account is held directly and request his or her share of the death benefit. The financial institution will need a copy of the account owner’s death certificate to move forward with the claim.

If the account owner doesn’t name a beneficiary, the agreement or contract governing the account may say who gets the death benefit. In many cases, the governing document says that the death benefit is payable to the account owner’s estate. However, some do have a breakdown of beneficiaries that may be close to the succession of heirs under intestacy.

If the mother didn’t name a beneficiary on her retirement account and, as a result, it’s payable to her estate, then it becomes a “probate” asset. Therefore, her will governs who receives it.

If her will doesn’t specifically bequeath that account to specified individuals, it will be a part of her residuary estate. The clause typically says, “I give the rest, residue and remainder of my estate to…”

Residuary beneficiaries are entitled to information about the estate—including the value of estate assets. In addition, there are laws that spell out their rights and remedies to make sure the executor is doing his or her fiduciary duty.

When an executor won’t provide reasonable information to the beneficiaries on the estate and the status of the administration, the beneficiaries should speak with an experienced estate planning attorney. One option may be to initiate a lawsuit to compel the executor to file an accounting and/or an inventory and appraisement of the estate assets. If a beneficiary thinks the executor has acted improperly and/or refuses to disclose estate information, he or she should demand that the executor provide an accounting and file an action with court for an accounting, if the executor refuses. Beneficiaries shouldn’t simply trust an executor, especially one who won’t give out basic information about the estate.

Reference: nj.com (Oct. 5, 2020) “I think my mother left a retirement account to me. How can I find out?”

How Much Power Does an Executor Have?

The Pauls Valley Daily Democrat’s recent article entitled “It doesn’t end with the will” explains that there’s constant confusion about wills. This misunderstanding involves the scope of power of those named in the will as the personal representative (or executor) of the decedent’s estate. Let’s try to straighten out some of these myths or pieces of bad information about wills and probate.

The Executor Doesn’t Need Court Permission. False. An estate executor or personal representative can’t distribute a decedent’s assets to themselves or to any heirs, until okayed by the court. Many people think that a will provides immediate authorization to distribute the assets of an estate.

If He had a Will, We Don’t need Probate. Another incorrect belief is that if a person dies with a will, probate isn’t needed or required. If a person has a will, the will and the distributions named in it can only be made valid by the probate court. There are ways to avoid the probate process. However, the fact that a person had a will doesn’t do it.

The Executor Can Start Giving Away Stuff ASAP. This is also false. Some people think that as soon as a person receives appointment as the personal representative or executor from the probate court, they can begin distributing assets from the decedent’s estate. Nope. If this were true, it would defeat the objectives of probate, which is court oversight and control.

The Court Doesn’t Monitor the Executor’s Actions. This statement is also incorrect. The entire probate process is structured to provide a court monitored coordination of a decedent’s estate to make certain that his or her wishes are followed. This also helps to prevent unauthorized distributions or “raids” on a decedent’s assets by improper persons.

Remember, the executor’s Letters Testamentary authorize that person to act for the estate—they don’t permit any distributions before court approval or final probate court order.

What Does Probate Do? Probate fulfills these purposes:

  • At death, the deceased’s property is subject to control and monitoring by the court.
  • The court then starts to see what the decedent’s wishes were for distribution and who was named to administer the estate.
  • The court must also review the scope of the estate, define all assets in the estate and determine all debts of the estate.
  • Probate requires a notice to creditors, so the executor has a complete list of debts of the estate and to give each creditor the opportunity to be paid.
  • The court watches any transfers, sales of assets or payments during probate.
  • The executor is authorized to receive money and manage the assets of the estate, but he can’t withdraw or transfer assets from the estate.
  • At a final hearing and after notice to interested parties, the court determines who should get distributions.

Ask an experienced estate planning attorney about the probate process and how to devise a complete estate plan.

Reference: Pauls Valley Daily Democrat (Oct. 1, 2020) “It doesn’t end with the will”

The Wrong Power of Attorney Could Lead to a Bad Outcome

There are two different types of advance directives, and they have very different purposes, as explained in the article that asks “Does your estate plan use the right type of Power of Attorney for you?” from Next Avenue. Less than a third of retirees have a financial power of attorney, according to a study done by the Transamerica Center for Retirement Studies. Most people don’t even understand what these documents do, which is critically important, especially during this Covid-19 pandemic.

Two types of Durable Power of Attorney for Finance. The power of attorney for finance can be “springing” or “immediate.” The Durable POA refers to the fact that this POA will endure after you have lost mental or physical capacity, whether the condition is permanent or temporary. It lists when the powers are to be granted to the person of your choosing and the power ends upon your death.

The “immediate” Durable POA is effective the moment you sign the document. The “springing” Durable POA does not become effective, unless two physicians examine you and both determine that you cannot manage independently anymore. In the case of the “springing” POA, the person you name cannot do anything on your behalf without two doctors providing letters saying you lack legal capacity.

You might prefer the springing document because you are concerned that the person you have named to be your agent might take advantage of you. They could legally go to your bank and add their name to your accounts without your permission or even awareness. Some people decide to name their spouse as their immediate agent, and if anything happens to the spouse, the successor agents are the ones who need to get doctors’ letters. If you need doctors’ letters before the person you name can help you, ask your estate planning attorney for guidance.

The type of impairment that requires the use of a POA for finance can happen unexpectedly. It could include you and your spouse at the same time. If you were both exposed to Covid-19 and became sick, or if you were both in a serious car accident, this kind of planning would be helpful for your family.

It’s also important to choose the right person to be your POA. Ask yourself this question: If you gave this person your checkbook and asked them to pay your bills on time for a few months, would you expect that they would be able to do the job without any issues? If you feel any sense of incompetence or even mistrust, you should consider another person to be your representative.

If you should recover from your incapacity, your POA is required to turn everything back to you when you ask. If you are concerned this person won’t do this, you need to consider another person.

Broad powers are granted by a Durable POA. They allow your representative to buy property on your behalf and sell your property, including your home, manage your debt and Social Security benefits, file tax returns and handle any assets not named in a trust, such as your retirement accounts.

The executor of your will, your trustee, and Durable POA are often the same person. They have the responsibility to manage all of your assets, so they need to know where all of your important records can be found. They need to know that you have given them this role and you need to be sure they are prepared and willing to accept the responsibilities involved.

Your advance directive documents are only as good as the individuals you name to implement them. Family members or trusted friends who have no experience managing money or assets may not be the right choice. Your estate planning attorney will be able to guide you to make a good decision.

Reference: Market Watch (Oct. 5, 2020) “Does your estate plan use the right type of Power of Attorney for you?”

How Do You Ask Parents about Estate Planning?
Shot of a young couple talking with their parents over coffee at homehttp://195.154.178.81/DATA/istock_collage/0/shoots/784407.jpg

How Do You Ask Parents about Estate Planning?

How do you ask your parents about their estate planning? No matter how you slice it, it’s a touchy subject to bring up.

You don’t want to come off as greedy when asking your parents about their estate planning.  However, you need answers to certain questions to ensure that their financial wishes are carried out and there is a smooth transition of wealth and assets.

Yahoo Finance’s recent article entitled “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)” shows us how to approach this touchy subject and get the info that you need.

Begin by asking your parents about whether they have an estate plan. You can tell them that they don’t need to share the numbers and that you just want to be able to follow their instructions. A good way to start this conversation, is to acknowledge how awkward and difficult this conversation is for you. You should emphasize that you don’t want to think about their deaths but are just trying to sort things out.

Experts say that you’ll likely get a better reception from your parents, if you let the conversation happen organically and not schedule a time to talk. No matter how you approach the topic of an inheritance from your parents, the objective of the discussion is to make certain they have a plan in place, so there will be a clear path for whomever is left behind to go forward. You can start by asking if they have these key legal documents:

  • A will
  • A power of attorney; and
  • A living will or health care directive.

Ask where your parents keep these documents and how you can access them, if necessary.

You should also ask if your parents have written funeral or burial instructions. You also need to ask them to give you other important information, so you can handle their finances if they are unable to or when they die. This includes account numbers and passwords, insurance policies, information on their retirement plan or pension administrator, as well as the contact information for their accountant, attorney, financial planner, or other financial professional.

Reference: Yahoo Finance (Oct. 7, 2020) “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)”

What Does an Estate Planning Attorney Actually Do?

It’s critical to understand what will happen to your estate after your death. That’s where the help of an experienced estate planning attorney comes in, says VENTS Magazine’s recent article entitled “What Does an Estate Lawyer Do Exactly?”

An experienced estate planning attorney is a legal professional, upon whom you can rely to help protect your estate after your death or in the event that you become incapacitated.

He or she will make certain that your assets and property are handled correctly.

In addition to assisting you with your estate, an estate planning attorney can help handle any family members trying to get involved in your legal affairs.

It may be difficult to please everyone when creating your will. Having an estate planning attorney will help you make the best decisions, when it comes to distributing your wealth.

Estate planning is critical—especially if you’re older, experiencing chronic illness, or just want to be smart about protecting your assets.

As we grow older, we can accumulate a long list of stressful issues and responsibilities. You may worry that your estate will be gobbled up by creditors once you pass away, or that your children will fail to distribute your assets as you intended.

Much of this stress is eliminated with the guidance and counsel of an experienced estate planning attorney. Having an estate plan allows you to enjoy a better quality of life, once you’re older. You won’t have to live every day with worry or stress about the future after you’re gone.

An experienced estate planning attorney is a valuable resource for your family, in the event someone tries to contest the will after your death.

Estate planning attorneys also aid in distributing the wealth, protecting your property from creditors and lowering estate taxes.

Reference: VENTS Magazine (Sep. 28, 2020) “What Does an Estate Lawyer Do Exactly?”