These Celebrities Didn’t have Wills…But You Should

Rapper Coolio died at age 59 after being found unresponsive on the floor at a friend’s house. His real name was Artis Leon Ivey Jr., and his former manager, Jared Posey, recently filed a probate case to appraise the value of his estate, according to a recent article “What Coolio, Prince and Picasso didn’t have that you should” from MarketWatch.

The filing names Coolio’s seven adult children, who are reported to wear his ashes in necklaces, as his next of kin and likely beneficiaries of his estate. There are also three other children who are under legal age.

The estimated value of the estate is more than $300,000, including personal property, demand deposit accounts, financial accounts, insurance policies and royalties.

Coolio is far from alone in failing to have a will. A 2021 Gallup poll revealed that fewer than half adults in the U.S. have a will outlining how they want their estate to be handed upon their death. It’s a recipe for disaster for their families.

Dying without a will—known as dying intestate—means a local probate court has to decide how to distribute property according to state law, which can take months or even years. What finally occurs may not be what you intended. However, it will be too late.

A will is only one of many tools in the estate planning toolbox. You also need an updated Medical Power of Attorney, a Financial Power of Attorney and to have beneficiary designations on all of your accounts. The beneficiary designations override your will, which is often news to loved ones.

If you have a beneficiary listed on your 401(k) plan, the person listed will receive the assets in the 401(k), regardless of what is in your will. You want to make sure beneficiaries and secondary beneficiaries are all up to date on all of your accounts.

Another important consideration: if a spouse is cut out of a will who would normally receive an inheritance, they have legal standing to challenge the will in court.

For a complete estate plan, you need a Durable Power of Attorney, which states who can make financial decisions on your behalf if you are incapacitated. A Medical Power of Attorney names a person to make medical decisions for you if you are unable to make them yourself, and guardianship designations if you have minor children.

Every few years or after any big life changes, these documents, including beneficiary designations, need to be reviewed and updated with your estate planning attorney.

Other accounts, like brokerage accounts or bank accounts, may have “Pay on Death” or “Transfer on Death” designations which would immediately put the assets into the named person’s hands upon your death.

Another item to consider is a letter of intent, in which you describe for the executor of your estate your final wishes regarding burial or funeral. This document is not legally binding but can be used to share your wishes. The will may not be reviewed until after the funeral, so final directions for funerals, cremations, memorial services, etc., should not be in the will.

You can create a list to be appended to your will listing who will receive certain tangible items, like the family silver or your mother’s pearls. One good thing about having such a list is that it gives you an opportunity to update beneficiaries of your tangible personal property without needing to update your will itself. Be sure the list doesn’t contradict anything in your will and describe the items with great detail. You might also want to include contact information, so your executor can easily locate the person and make sure the items find their desired home.

Better yet—give the items away before you die. You won’t have to worry if they won’t get to the right person, and you’ll get to share the person’s enjoyment when they receive the gifts.

Reference: MarketWatch (Dec. 31, 2022) “What Coolio, Prince and Picasso didn’t have that you should”

Why Is Power of Attorney So Important for Estate Planning?

One of the most overlooked and important documents in estate planning is the Power of Attorney. A recent article from Farm Progress, “Often overlooked estate planning issues: Powers of attorney,” explains how this document works and why it’s so important.

Most people will become incapacitated at some point in our lives, especially as we age. Some experts believe this number is as high as two-thirds of all Americans who, at some point in their lives, will become incapacitated. We are living longer and the chances of developing a condition to impair or rob us of the ability to make important health or financial decisions increases every year.

Powers of Attorney are just as important for young adults because the risk of disability or impairment is often actually higher than death for someone younger.

Designating a Power of Attorney gives you the control of choosing a trusted person to step in and act as your agent. A “Durable” POA remains in effect until it is revoked, or upon the death of the person who made it.

The person establishing the POA is the “principal.” The principal has the right to revoke the POA until they lack capacity to do so. The person or persons named to act for you through your POA is your “attorney-in-fact” or “agent.”

You may choose to have the POA in a “durable” form or a “springing” POA. The springing POA becomes effective only when you have been determined to be incapacitated. This sounds like a good idea. However, it comes with an issue: for the springing POA to become active, there must be proof of incapacity.

Depending upon your state, this may require a court to review documents attesting to your incapacity from a physician or health care provider. The durable POA is always in effect and your agent can step in for you immediately.

Everyone should also have a Health Care Power of Attorney, sometimes called a Health Care Proxy or a medical POA. The Health Care POA should be someone who can act quickly, so it’s optimal to name someone who lives nearby, in case there’s an emergency and decisions need to be made in a timely manner.

While it’s tempting to simply download a form from the internet, these two POAs are best prepared with an estate planning attorney, so they align with your state’s laws and your wishes. You may want someone to make all decisions for you, or you may want to limit their powers. Your estate planning attorney will be able to create a document to suit your specific needs.

It’s also important for your estate plan to address digital assets, since today so much of our financial and medical information is stored online. Your agent also needs to be able to access your digital life, to keep your life running smoothly and make informed decisions.

Reference: Farm Progress (Oct. 18, 2022) “Often overlooked estate planning issues: Powers of attorney.”

The Most Important Part of Estate Plan Is Planning for Living

Most people think of estate planning as planning for death. However, a well-titled article “Planning for death probably isn’t the most important part of your estate plan” from Coeur d’Alene/Post Falls Press presents another reason for estate planning in clear terms. Estate planning is planning for the unexpected eventualities of life.

Estate planning documents address how things will work while you are still living but if you have become incapable of making your own decisions. In many cases, this is more important than distributing your worldly possessions.

Yes, you should have a will (last will and testament). But you should also have Power of Attorney documents—one for health care purposes and another for financial purposes.

The Power of Attorney document states who will be your substitute decision maker, or agent, if you are incapacitated or unable to make your own decisions while still living. This should be a personalized document prepared by an estate planning attorney to include the scope of tasks and the limits, if any, you want to set for your agent. The financial POA is an important one, as it gives your chosen agent the legal authority to make financial decisions on your behalf.

The health care power of attorney gives your agent the authority to make health care decisions on your behalf.

With both of these documents properly prepared and available, someone you name will be empowered to serve as your decision maker if necessary.

The will is used to state what happens to your possessions and assets when you die. It is also the legal document used to name your executor—the person who will be in charge of carrying out your instructions. The will tells the probate court how you want your estate to be administered after death.

Why do you need these and other documents? Your will only becomes effective after death. Your POA documents are effective if you become incapacitated. They are both part of your estate plan, which is a collection of legal documents and has nothing to do with whether you reside in a palatial estate.

Here’s how it might work. If you become seriously ill and cannot speak on your own behalf, but you have a Power of Attorney naming your daughter Carol to serve as your POA for healthcare and financial decisions, Carol will be able to pay bills, including paying the mortgage, keeping your car lease up to date, and taking care of all of the financial aspects of your life. If she is also named as your Health Care POA, she will be able to speak with your medical team, be involved in decisions about your course of care and follow the wishes you’ve expressed in your POA.

If you die, and Carol has also been named your executor, she will be able to transition into this new role by representing you through the probate process. She will be able to work with your estate planning attorney to have your will filed with the court and follow your directions for distribution of your assets.

Having only a last will and testament would not protect you while you are living. Having only a Power of Attorney would not protect your wishes after you have died. All of these documents—and there are others not mentioned here—work together to protect you during life and after you’ve passed.

Reference: Coeur d’Alene/Post Falls Press (Aug. 29, 2022) “Planning for death probably isn’t the most important part of your estate plan”

Is it Important to have an Estate Plan?

Everyone needs to have an estate plan to ensure that their family can take part in medical care, assets will pass to the heirs they want and to protect minor children, as explained in a recent article titled “Estate Planning Considerations That Apply to Nearly Everyone” from mondaq.com. An estate plan does all this, and more. Having an estate plan can also protects privacy; any assets moved into a trust do not become part of the public record.

Here are the documents making up the foundation of an estate plan.

Last Will and Testament. This is used to direct the disposition of assets and appoints an executor to handle final affairs after your death. If there is no will, the state law controls how your estate is distributed.

Revocable Trust. Trusts permit more control of the management and disposition of assets in a more private and tax-efficient way during your lifetime and after death.

General Durable Power of Attorney. This document usually names a spouse, adult child or trusted individual who can take over your legal and financial affairs, especially if you should become incapacitated.

Health Care Power of Attorney. Everyone over age 18 should have this document. This nominates a person you choose to make health care decisions. Without it, parents of teenagers and young adults may not be involved in their care. Treating physicians will not be able to discuss your loved one’s care, or you may need to petition the court for guardianship.

Living Will. This document allows you to express your wishes with regard to end-of-life care and medical treatment decisions. It alleviates the emotional burden of guessing what you would have wanted by family members.

HIPAA Authorization. Your medical and health insurance records are protected from being released to third parties without the patient’s consent. While this is helpful for patients seeking to maintain their privacy, it also means parents or loved ones will not have any access to medical records and healthcare providers will not discuss the patient’s medical condition with family members. Fines and penalties for professionals and facilities are strict.

Asset and Beneficiary Designations. Part of an estate plan includes ensuring that assets are in alignment with your wishes. Your will does not control how assets with a beneficiary designation or those with joint ownership titles will be inherited. For your estate to achieve the outcome you want, you’ll need to dig deep into your records and ensure that all assets are properly titled, including insurance policies, investment accounts, retirement accounts, property and any other assets.

If you have an estate plan in place and have not updated it in recent years, or failed to get one or more of the above-mentioned documents, there is no time like the present to do so. Unexpected events are always around the corner and being prepared in advance helps ensure your wishes will be achieved and your family will be protected.

Reference: mondaq.com (July 29, 2022) “Estate Planning Considerations That Apply to Nearly Everyone”

What are Alternatives to Guardianship?

Guardianships are drastic and very invasive. They strip individuals of their legal autonomy and establish the guardian as the sole decision maker. To become a guardian requires strong evidence of legal incapacity, and approval by a judge, explains an article titled “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First” from Kiplinger. They should not be undertaken unless there is a serious need to do so. Once they’re in place, guardianships are difficult to undo.

If an elderly person with dementia failed to make provisions durable powers of attorney for health care and for financial matters before becoming ill, a guardianship may be the only ways to protect the person and their estate. There are also instances where an aging parent is unable to care for themselves properly but refuses any help from family members.

Another scenario is an aging grandparent who plans to leave funds for minor beneficiaries. Their parents will need to seek guardianships, so they can manage the money until their children reach the age of majority.

Laws vary from state to state, so if you might need to address this situation, you’ll need to speak with an estate planning attorney in the elderly parent or family member’s state of residence. For the most part, each state requires less restrictive alternatives to be attempted before guardianship proceedings are begun.

Alternatives to guardianship include limited guardianship, focused on specific aspect of the person’s life. This can be established to manage the person’s finances only, or to manage only their medical and health care decisions. Limited guardianships need to be approved by a court and require evidence of incapacity.

Powers of attorney can be established for medical or financial decisions. This is far less burdensome to achieve and equally less restrictive. A Healthcare Power of Attorney will allow a family member to be involved with medical care, while the Durable General Power of Attorney is used to manage a person’s personal financial affairs.

Some families take the step of making a family member a joint owner on a bank, home, or an investment account. This sounds like a neat and simple solution, but assets are vulnerable if the co-owner has any creditor issues or risk exposure. A joint owner also doesn’t have the same fiduciary responsibility as a POA.

An assisted decision-making agreement creates a surrogate decision-maker who can see the incapacitated person’s financial transactions. The bank is notified of the arrangement and alerts the surrogate when it sees a potentially suspicious or unusual transaction. This doesn’t completely replace the primary account holder’s authority. However, it does create a limited means of preventing exploitation or fraud. The bank is put on notice and required to alert a second person before completing potentially fraudulent transactions.

Trusts can also be used to protect an incapacitated person. They can be used to manage assets, with a contingent trustee. For an elderly person, a co-trustee can step in if the grantor loses the capacity to make good decisions.

Planning in advance is the best solution for incapacity. Talk with an experienced estate planning attorney to protect loved ones from having to take draconian actions to protect your best interests.

Reference: Kiplinger (July 7, 2022) “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First”

What Is Power of Attorney and Is It Important?

Most people realize the importance of the last will and testament. However, they remain unaware of the importance of a durable power of attorney. This document authorizes another person to act on your behalf while you are alive and expires upon death, as explained in a recent article titled “Power of attorney likely to be first vital estate document” from The News-Enterprise.

The power of attorney is used to give authorization regarding legal and financial matters. It can be tailored to be as broad or as narrow as one wishes. A healthcare proxy, also known as a healthcare power of attorney, is used to give authorization for medical decisions.

The general Power of Attorney is used when a person is unable to act for themselves due to illness or injury. It is also needed when a person is unable to act on their own behalf because of mental incapacity. The POA is also used for when someone prefers to have another person manage their financial affairs.

Spouses use POAs to handle day-to-day financial tasks, from dealing with insurance companies to managing bank accounts, loans, or other financial matters. If one spouse cannot attend a real estate closing, for instance, the other will need a POA so they may represent their spouse.

Some people think just adding another person to an account will work the same way as a POA. However, this is not accurate. A co-owner might be able to pay bills. However, their ability to do anything else will be limited. They won’t be able to amend the account, unless both parties are present, for instance.

POAs are state-specific documents, so any Power of Attorney, whether for healthcare or finances, should be created by an estate planning attorney in the state where you live and any state where you own property.

Some powers, including the ability to make gifts of the principal’s property or to change beneficiaries for retirement accounts or life insurance policies, may sound as if they are far beyond what’s needed when these documents are first drafted. However, unexpected things happen at all stages of life, and situations arise where these powers are needed. Seemingly simple tasks become far more complicated, if the POA doesn’t permit these types of additional powers.

If there is concern about broad powers, the document can include limited language. For instance, a POA can include a limit on gifting the principal’s property pursuant to any previously documented wishes. This will allow gifting to be completed, but only to the terms already indicated. However, be careful about broad limiting language, like limiting gifts to annual gift exclusions. Prohibiting an agent from acting in ways to protect the principal’s property and best interest could be counterproductive.

Drafted by an experienced estate planning attorney to suit the specific needs of the individual, a power of attorney can make it possible for a trusted individual to conduct your wishes and protect your best interests. Make sure that you have one and update it whenever you update your overall estate plan.

Reference: The News Enterprise (June 25, 2022) “Power of attorney likely to be first vital estate document”

Just What Is in an Estate Plan?

Getting your affairs in order may not be on anyone’s top ten fun list for a weekend. However, once it is done, you can relax, knowing your loved ones will be cared for. Is estate planning more or less painful than doing taxes once a year? The answer depends on who you ask, but a recent article titled “Estate Planning Checklist: 12 Things to Get in Order” from South Florida Reporter breaks it down into easy-to-manage steps.

A last will and testament outlines how your assets will be distributed after your death. They include personal property, real estate, bank accounts, etc. You can name a guardian for minor children, and name an executor, the person who will be in charge of managing your estate.

Proof of identity. Your executor will need information including a valid birth certificate, Social Security card, marriage or divorce certificates, a prenuptial agreement, or military service discharge papers.

Digital asset information. With so much of our lives lived online, everyone needs a digital vault, an integrated password manager or some kind of system for managing your digital assets. Without this, your traditional and digital assets are vulnerable to identity theft and fraud.

Property deeds and titles. You have titles for cars, homes, or real estate property. They need to be gathered and kept in a safe place, then one or two highly trusted individuals need to be told where these documents are located.

Revocable living trust. Creating a trust with an experienced estate planning attorney can help loved ones avoid the time and cost of having your estate go through probate. The trust creates a legal entity allowing you to control property while you are alive but preparing for the future. If you are living and become incapacitated, the successor trustee controls the assets owned by the trust.

Debts. These do not disappear when you die. Your executor will need to know what debts exist because they will need to address them. Compile a list of your debts, which may include mortgages, auto loans, credit cards, personal loans and student loans. Add contact information for the lender, account number, login information and approximate amount of the debt. If you have credit cards you rarely use, include those also, so they can be closed out before identity theft occurs.

Non-Probate Assets and Beneficiaries. Assets with named beneficiary designations can be transferred directly to beneficiaries. However, this does not happen automatically. Your executor will need to provide beneficiaries with the information for the assets, including the name of the insurance company or financial institution, the location of policies, account numbers and the value of the asset. The beneficiary may need to provide a death certificate and identification information before the assets are released.

Financial information. Let your executor skip the scavenger hunt. Create a detailed list information including bank accounts, car insurance, credit cards, health, home and life insurance, pension plans, retirement plans and tax returns.

Advanced Health Care Directive. This document is an opportunity for you to tell health care providers how you want medical decisions to be made, if you cannot communicate your wishes. The AHCD typically has two parts: Health Care Power of Attorney (also known as a health care proxy) and a living will.

The Living Will outlines your wishes, if you are unable to communicate. It describes your preferences for end-of-life requests, medications, resuscitation, surgeries, or other invasive procedures.

Power of Attorney is a document to give someone else the power to act on your behalf regarding financial and legal affairs. The scope of power can be as broad as managing everything or limited to selling your classic car collection. Your estate planning attorney will help you clarify what responsibilities you wish to give in a POA.

Funeral Wishes. If you want to save your family a lot of stress during a very difficult time, outline what you would want to happen. Do you want a cremation or embalming and burial? Should it be a full-on faith-based memorial service, or a few poems read at graveside? Make sure that your wishes are communicated and shared with loved ones, so everyone knows what you want.

Meet with an Estate Planning Attorney. Make an appointment to meet with an estate planning attorney to put all of this information in the appropriate legal documents. They may have recommendations for options that you may not know about.

Reference: South Florida Reporter (April 2, 2022) “Estate Planning Checklist: 12 Things to Get in Order”

No Will? What Happens Now Can Be a Horror Show

Families who have lived through settling an estate without an estate plan will agree that the title of this article, “Preventing the Horrors of Dying Without a Will,” from Next Avenue, is no exaggeration. When the family is grieving is no time to be fighting, yet the absence of a will and an estate plan leads to this exact situation.

Why do people procrastinate having their wills and estate plans done?

Limited understanding about wealth transfers. People may think they do not have enough assets to require an estate plan. Their home, retirement funds or savings account may not be in the mega-millions, but this is actually more of a reason to have an estate plan.

Fear of mortality. We do not like to talk or think about death. However, talking about what will happen when you die or what may happen if you become incapacitated is very important. Planning so your children or other trusted family member or friends will be able to make decisions on your behalf or care for you alleviates what could otherwise turn into an expensive and emotionally disastrous time.

Perceived lack of benefits. Working with an experienced estate planning attorney who will put your interests first means you will have one less thing to worry about while you are living and towards the end of your life.

Estate planning documents contain the wishes and directives for your legacy and finances after you pass. They answer questions like:

  • Who should look after your minor children, if both primary caregivers die before the children reach adulthood?
  • If you become incapacitated, who should handle your financial affairs, who should be in charge of your healthcare and what kind of end-of-life care do you want?
  • What do you want to happen to your assets after you die? Your estate refers to your financial accounts, personal possessions, retirement funds, pensions and real estate.

Your estate plan includes a will, trusts (if appropriate), a durable financial power of attorney, a health care power of attorney or advanced directive and a living will. The will distributes your property and also names an executor, who is in charge of making sure the directions in the will are carried out.

If you become incapacitated by illness or injury, the POA gives agency to someone else to carry out your wishes while you are living. The living will provides an opportunity to express your wishes regarding end-of-life care.

There are many different reasons to put off having an estate plan, but they all end up in the same place: the potential to create family disruption, unnecessary expenses and stress. Show your family how much you love them, by overcoming your fears and preparing for the next generation. Meet with an estate planning attorney and prepare for the future.

Reference: Next Avenue (March 21, 2022) “Preventing the Horrors of Dying Without a Will”

How Do You Get a Power of Attorney?

If you are involved as a care provider for someone who is not able to manage their own affairs, you need to have the legal authority to act in the person’s best interest. To do that, you’ll need to have Power of Attorney (POA) for them, explains the article “How to get power of attorney for a loved one” from Tyron Daily Bulletin.

If the person you are trying to help suffers from dementia, a terminal illness or a condition which makes it difficult for them to communicate or make reasoned decisions, you may not be able to obtain a POA. As a result, may need to go to court for a guardianship or conservatorship instead.

POAs vary by state, so talk with an estate planning attorney to find out what your state allows. In most cases, the POA gives you the power to act on someone else’s behalf for a specific period of time regarding financial management. In most states, you will need a separate healthcare POA to make healthcare decisions or to speak with healthcare providers.

The agent (also known as an attorney in fact) under a POA is required to act in the best interest of the principal. Decisions regarding investments, property, bank accounts, debts and other financial matters must always place the principal first. It is crucial to maintain complete and accurate records of all transactions, and the agent’s finances and personal affairs must be kept separate from the principals.

If the principal is alive and of sound mind, they can overrule the agent’s decision, change or even terminate the POA agreement. They can also name someone else to serve as their agent with another POA. All POA powers terminate upon the death of the principal. Unless the same person has been named as agent under POA and as the executor of the estate or is appointed as executor (or administrator) by the court, that person’s responsibility ends upon the death of the principal.

There are a number of things that an agent under a POA cannot do:

  • Be paid for personal services provided to the principal
  • Vote in place of the principal
  • Take over the principal’s guardianship of another person
  • Change the principal’s will.

Even if you or the person who is naming you as the agent under their POA is in good health now, it is wise to plan for the future. We do not know when our capacity to manage finances or make healthcare decisions will be lost. Speak with an estate planning attorney about the POA to best serve your circumstances before it is needed.

Reference: Tyron Daily Bulletin (March 7, 2022) “How to get power of attorney for a loved one”

What Does Estate Plan Include?

The will, formally known as a last will and testament, is just one part of a complete estate plan, explains the article “Essential components of an estate plan” from Vail Daily. Consider it a starting point. A will can be very straight-forward and simple. However, it needs to address your unique situation and meet the legal requirements of your state.

If your family includes grown children and your goal is to leave everything to your spouse, but then make sure your spouse then leaves everything to the children, you need to make sure your will accomplishes this. However, what will happen if one of your children dies before you? Do you want their share to go to their children, your grandchildren? If the grandchildren are minors, someone will need to manage the money for them. Perhaps you want the balance of the inheritance to be distributed among the adult children. What if your surviving spouse remarries and then dies before the new spouse? How will your children’s inheritance be protected?

Many of these questions are resolved through the use of trusts, another important part of a complete estate plan. There are as many different types of trusts as there are situations addressed by trusts. They can be used to minimize tax liability, control how assets are passed from one generation to the next and protect the family from creditor claims.

How a trust should be structured, whether it is revocable, meaning it can be easily changed, or irrevocable, meaning it is harder to change, is best evaluated by an experienced estate planning attorney. No matter how complicated your situation is, they will have seen the situation before and are prepared to help.

A memorandum of disposition of personal property gives heirs insight into your wishes, by outlining what you want to happen to your personal effects. Let’s say your will leaves all of your assets to be divided equally between your children. However, you own a classic car and have a beloved nephew who loves the car as much as you do. By creating a memorandum of disposition, you can make sure your nephew gets the car, taking it out of the general provisions of the will. Be mindful of state law, however.

Note that some states do not allow the use of a memorandum of disposition, let alone permit such “titled” assets to be transferred by such an informal memorandum. Consequently, you must clarify how this situation will be handled in your state of residence with your estate planning attorney.

You will also need a Power of Attorney, giving another person the right to act on your behalf if you should become incapacitated. This is often a spouse, but it can also be another trusted individual with sound judgment who is good with handling responsibilities. Make sure to name a back-up person, just in case your primary POA cannot or will not serve.

A Medical Power of Attorney gives a named individual the ability to act on your behalf regarding medical decisions if you are incapacitated. Make sure to have a back-up, just to be sure. Failing to name a back- up for either POA will leave your family in a position where they cannot act on your behalf and may have to go to court to obtain a court-appointed guardianship in order to care for you. This is an expensive, time-consuming and stressful process, making a bad situation worse.

A Living Will is a declaration of your preference for end-of-life care. What steps do you want to be taken, or not taken, if you are medically determined to have an injury or illness from which you will not recover? This is the document used to state your wishes about a ventilator, the use of a feeding tube, etc. This is a hard thing to contemplate, but stating your wishes will be better than family members arguing about what you “would have wanted.”

Reference: Vail Daily (Feb. 15, 2022) “Essential components of an estate plan”