Everyone Should Have a Power of Attorney and Healthcare Power of Attorney

Before snowbirds begin their seasonal journey to warmer climates, it’s time to be sure that they have the important legal documents in place, advises LimaOhio.com in a recent article “Different seasons and documents, same peace of mind.” The two documents are a healthcare power of attorney and a financial power of attorney, and they should be prepared and be ready to be used at any time.

These documents name another person to make healthcare and financial decisions, in case you are not able to make those decisions for yourself. We never think that anything will really happen to us, until it does. Having these documents properly prepared and easily accessible helps our loved ones. They are the ones who will need the powers given by the documents. Without them, they cannot act in a timely manner.

If traveling between a home state and a winter home, it is wise to have a set of documents that align with the laws of both states. It may be necessary to have a separate set of documents for each state, if the laws differ.

Financial powers of attorney typically need updating more often than healthcare powers of attorney. The law has changed in recent years, and there are a number of specific powers that need to be stated precisely, so that the document can grant those powers. This includes the power to gift assets and make a person eligible for nursing home and other healthcare assistance, like Medicaid.

If these documents are not in place and are needed, the only way that someone else can make decisions for the person, is to become a guardian of that person. That includes spouses. Many people think that the fact that two people are married gives them every right, but that is not the case. Guardianship takes considerably more time and costs more than these two documents. It should be noted that once guardianship is established, the person who is the guardian will need to report to the court on a regular basis.

Another document that needs to be in place is a living will or advance directive. This is a document prepared to instruct others as to your wishes for end-of-life care. The document is created when a person is mentally competent and expresses their wishes for what they want to happen, if they are being kept alive by artificial means. For loved ones, this document is a blessing, as it lets them know very clearly what their family members wishes are.

Peace of mind is a wonderful thing to take with you as you prepare for a warm winter in a different climate. Talk with an estate planning attorney to be sure that your estate planning documents will be acceptable in your winter home.

Reference: LimaOhio.com (Oct. 26, 2019) “Different seasons and documents, same peace of mind”

What are the Biggest Estate Planning Errors to Avoid?

Nobody likes to plan for events like aging, incapacity, or death. However, failing to do so can cause families burdens and grief, thousands of dollars and hundreds of hours.

Fox Business’ recent article, “Here are the top estate planning mistakes to avoid,” says that planning for life’s unexpected events is critical. However, it can often be a hard process to navigate. Let’s look at the top estate planning mistakes to avoid, according to industry experts:

  1. Failing to sign a will (or one that can be located). The biggest mistake is simply not having a will. Estate planning is critically important to protect you, your family and your hard-earned assets—during your lifetime, in the event of your incapacity, and upon your death. We all need estate planning, no matter the amount of assets you have. In addition to having a will, it needs to be findable. The Wall Street Journal says that the biggest estate planning error is simply losing a will. Make sure your family has access to your estate planning documents.
  2. Failing to name and update beneficiaries. An asset with a beneficiary designation supersedes any terms in a will. Review your 401(k), IRA, life insurance, and any other accounts with beneficiaries after any significant life event. If you don’t have the proper beneficiary designations, income tax on retirement accounts may have to be paid sooner. This may lead to increased income tax liability, and the designation of a beneficiary on a life insurance policy can affect whether the proceeds are subject to creditors’ claims.

There’s another mistake that impacts people with minor children, which is naming a guardian for minor children and then naming that person as beneficiary of their life insurance, instead of leaving it to a trust for the child. A minor child can’t receive that money. It also exposes the money to the beneficiary’s creditors and spouse.

  1. Failing to consider powers of attorney for adult children. When your children reach age 18, they’re adults in the eyes of the law. If something unfortunate happens to them, you may be left without any say in their treatment. In the event that an 18-year-old becomes ill or has an accident, a hospital won’t consult with their parents if a power of attorney for health care isn’t in place. Unless a power of attorney for property is signed, a parent may not be able to take care of bills, make investment decisions and pay taxes without the child’s signature. This could create an issue when your child is in college—especially if he or she is attending school abroad. It is very important that when your child turns 18 that you have powers of attorney put into place.

Reference: Fox Business (October 15, 2019) “Here are the top estate planning mistakes to avoid”

Why A Health Care Power of Attorney Makes Sense

Having a Health Care Power of Attorney in place before it is needed, is one of the best ideas of estate planning, along with having a Power of Attorney in place before it is needed. Why? This is because taking a pro-active approach to both of these documents, means that when the unexpected occurs and that is exactly how things occur—unexpectedly—the person or persons you have named for these important roles will be able to step in quickly and made decisions.

Time is often of the essence, when these documents are needed.

According to the article “Medical guardianship versus power of attorney” from The News Enterprise, a health care power of attorney is a document that grants another person the power to make medical decisions for you, when you no longer have the ability to make those decisions for yourself. It is known by a few other names, depending on the state where you live: health care proxy, a medical power of attorney or a health care surrogate.

It needs to have HIPAA-compliant language, which will allow the person you name the ability to review medical information and discuss protected health information with your health care providers.

A health care power of attorney may also include language for an advance medical directive, which gives instructions for end-of-life decisions. This is often called a “living will,” and is your legal right to reject medical treatment, decisions about feeding tubes and the number of doctors required to determine the probability of recovery and pain management.

A health care power of attorney does not generally empower another person to make decisions, until you are unable to do so. Unlike a general durable power of attorney, which permits another person to make financial or business decisions with you while you are living, as long as you are able to understand your medical situation, you are still in charge of your medical decisions.

A guardianship is completely different from these documents. A guardian may only be appointed, if a judge or jury finds you wholly or partially disabled in such a way that you cannot manage your own finances or your health. The appointment of a guardian is a big deal. Once someone has been appointed your guardian, you do not have any legal right to make decisions for yourself. A court will also appoint a legal fiduciary, who will make your financial decisions.

There are record-keeping requirements with a guardianship that do not exist for a power of attorney. The court-appointed representative is responsible for reporting to the court any actions that they have taken on your behalf.

To have power of attorney documents executed, the person must be capable of understanding what they are signing. This means that someone receiving a diagnosis of dementia needs to have these documents prepared, as soon as they learn that their capacity will diminish in the near future.

If the documents are not prepared and executed in a timely fashion, a guardianship proceeding may be the only option. Planning in advance is the best way to ensure that the people you trust are the ones making decisions for you. Speak with an experienced estate planning attorney now to have these documents in place.

Reference: The News-Enterprise (Oct. 13, 2019) “Medical guardianship versus power of attorney”

Steps to Take as a Parent’s Condition Takes a Turn

An 80-year-old man had seizures several months ago. He was treated in the hospital and since then, has had some lapses in short-term memory. His long-term memory is okay, but he is not retaining day-to-day matters very well. His awareness of a loss of some functionality has left him frustrated and a little depressed, as described in the article “Dear Counselor: Need options as father’s condition worsens” from the Davis Enterprise. The use of some antidepressants and medication has been helpful, and he seems better. However, what should the children be doing, at this time, to prepare for what may come next?

The children should make arrangements to have their parents go see an estate planning attorney soon. The fact that only the wife is power of attorney, and that the forms have not been updated in many years is cause for serious concern. While their mom may be capable right now of handling his personal and financial affairs, the stress of caretaking for her husband is likely to take its toll on her. If the father’s condition deteriorates, she will likely need help. If for some reason she’s unable to act, then it will be far better if the children, or one of the children, has the legal right to step in.

The first question is whether the father has the legal capacity to create new powers of attorney for financial management and health care. To execute a power of attorney, a person must have mental capacity. The legal standard for this is the same as it is for someone signing a contract: the person must understand and appreciate the consequences of the document being signed.

There are four broad categories of mental deficits that impact a person’s capacity: alertness and attention, information processing, thought processes and the ability to modulate mood. Short-term memory problems and depression may be considered deficits in both information processing and mood. However, that is only one part of the analysis.

Most estate planning attorneys will suggest that any client whose mental capacity may be questionable, should obtain a note from their treating physician that they are capable of understanding and signing legal documents. This is not a legal requirement, but it will help if there is a challenge to the documents he signed, and someone claims that he lacked capacity.

If the father indeed has capacity to execute a new power of attorney, then the adult children can be identified as alternates to the wife. If she is not able to act as an agent, then the siblings will be able to step up. However, if he is unable to execute a new power of attorney, the previous power of attorney would be the operative document. If for some reason, the wife is unable to perform as his agent, there is no one to serve as a backup.

In that case, a petition would need to be filed in the probate court to have a child or children appointed conservator. While that would give the child(ren) the same power as a power of attorney, they will also need to report to the court on an on-going basis. Conservatorship proceedings are expensive and time-consuming and should be a last resort.

These problems rarely get better over time. Speak with an experienced estate planning attorney as soon as possible to prepare for the future.

Reference: Davis Enterprise (Oct. 2019) “Dear Counselor: Need options as father’s condition worsens”

Planning for Care in Advance

An aging parent’s health can fail suddenly, or they can have a fall that will unexpectedly put them into a precarious state. Therefore, it is vitally important that legal and medical arrangements be made, while they are still well enough to be an active participant in decisions, advises TAP into Roxbury in the article “Putting Together a Plan of Care.” Here are the steps to get you started:

Advance Directive: This document spells out their wishes regarding future medical care and treatment, if they are no longer able to speak or make decisions on their own behalf.

A Living Will is used to state in advance whether or not they want to have medical treatment, like a feeding tube, ventilator, or heart machine to prolong life, when death is inevitable.

A Durable Health Care Power of Attorney appoints another person to make medical decisions, if the person becomes incapacitated.

A Power of Attorney names someone who will be able to make decisions about their finances, pay bills, and manage real estate and other assets.

A Last Will and Testament provides information about what they would like to happen to their assets upon their demise and names an executor who will be in charge of carrying out their wishes.

Copies of medical insurance cards and any other insurance information, if emergency treatment is needed.

A Do Not Resuscitate (DNR), if they do not wish to be brought back to life during a medical emergency.

A list of medications they are currently taking, as well as doctor’s names and contact information.

A list of professionals, including their estate planning attorney, CPA and financial advisor, and all contact information.

Having all these documents prepared in advance of any emergency will be helpful, if they are ever needed. Keeping them in a safe and accessible location where they can be obtained quickly in an emergency is also important. Do not put them in a safe deposit box, which may be sealed upon their death.

Some seniors are reluctant to have these discussions, although they may be more comfortable having them with a person outside the family, like an estate planning attorney.

Reference: TAP Into Roxbury (October 7, 2019) “Putting Together a Plan of Care”

Succession Planning For Business Owners
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Succession Planning For Business Owners

A business owner without an estate plan, is a business owner whose business and personal estate are both in jeopardy, says the Augusta Free Press in an article that asks “Own a business? 5 reasons you need an estate plan.”

You need more than a will to plan for incapacity. If you become ill or incapacitated, a will isn’t the estate planning tool that will help you and your family. What you need is a power of attorney (POA). This document names another individual or individuals to manage your finances and your business dealings, while you are unable to do so. Your estate planning attorney can create a power of attorney that limits what the named person, known as an “agent” may do on your behalf, or make it a broad POA so they can do anything they deem necessary.

Your state’s estate plan may not align with your wishes. Every state has its own laws about property distribution in the event a person does not have an estate plan. A popular joke among estate planning attorneys is that if you don’t have an estate plan, your state has one for you—but you may not like it. This is particularly important for business owners. If you have a sibling who you haven’t spoken to in decades, depending upon the laws of your state, that sibling may be first in line for your assets and your business. If that makes you worried, it should.

Caring for a disabled family member. A family that includes individuals with special needs who receive government benefits requires a specific type of estate planning, known as Special Needs Planning. This includes the use of trusts, so a trust owns assets the assets for the benefit of such a family member without putting government benefits at risk.

 

Help yourself and heirs with tax liability. If your future plan includes leaving your business to your children or another family member, there will be taxes due. What if they don’t have the resources to pay taxes on the business and have to sell it in a fire sale just to satisfy the tax bill? An estate plan, worked out with an experienced estate planning attorney who regularly works with family-owned businesses, will include a comprehensive tax plan. Make sure your heirs understand this plan—you may want to bring them with you to a family meeting with the attorney, so everyone is on the same page.

Avoid fracturing your own family. An unhappy truth is that when there is no estate plan, it impacts not just the family business. If some children or family members are involved in the business and others are not, the ones who work in the business may resent having to share any of the business. How to divide your business is up to the business owner. However, making a good plan in advance with the guidance of an experienced advisor and communicating the plan to family members will prevent the family from falling apart.

There’s no way to know how family members will respond when a parent dies. Sometimes death brings out the best in people, and sometimes it brings out the worst. However, by having an estate plan and business plan for the future, you can preclude some of the stresses and strains on the family.

Reference: Augusta Free Press (August 13, 2019) “Own a business? 5 reasons you need an estate plan.”

The Conversation with Your Doctor, Estate Planning Lawyer and Family Members

Everyone needs to have an annual checkup, taking stock of their health with their primary physician and making sure that everyone is on the same page when it comes to instructions for health care and an advanced healthcare directive, also known as a living will. When people sign their last will and testament, everyone breathes a big sigh, says The Huntsville Item’s article “Make sure you talk to your doctor and family.” But that’s not the end of estate planning.

Your primary care provider needs to know what your wishes are, as well as your spouse and children. The best way to make sure they have this information, in addition to having a conversation, is to bring a copy of an advanced healthcare directive or living will with you to your next check up and talk with your doctor about it. Ask them to keep a copy on file.

It’s a good idea to give a copy of the Medical Power of Attorney and Medical Directive to Physicians and Family to each primary care physician, and a copy to the healthcare agents you have selected.  Don’t forget to keep a copy or two in your records to take with you, if you ever have to go to the hospital. The signed original should be kept with all of your estate planning documents—in a safe place in your home, possibly in a fireproof safe.

Make sure to tell a few family members where these documents are, in case of an emergency.

The hardest part of estate planning is not usually picking the right fiduciaries or deciding how to distribute assets among loved ones. The hardest part is almost always having these conversations with family and loved ones.

It can be so daunting that families often don’t have these important discussions. Here’s the problem: avoiding the conversation doesn’t mean the issues go away. More family infighting takes place after a death than any other time. Emotions are running high, old wounds are opened, and unresolved issues, especially between siblings, come pouring out. If the parent who has died has always been the one who made peace between everyone, that buffer is gone.

Having this discussion in a low-pressure, non-emergency time, is something that every parent should do for their children. Consider a family gathering where the underlying agenda is to get everyone comfortable with the concept of talking about what the future holds. It doesn’t have to be a formal meeting; a casual family get-together is more likely comfortable for everyone.

If the conversations are taking place in a casual manner over an extended period of time, a lot of ground can be covered with less tension and stress. Getting people used to the idea that you know that you are not going to live forever, and you want to be sure they are taken care of, may make it easier for everyone when the time does come.

In some families, these conversations begin when all are invited to attend a family meeting with the estate planning attorney to discuss wills, powers of attorney and medical power of attorney. Sometimes having this conversation with an experienced professional can take some of the sting out of planning for the future.

Reference: The Huntsville Item (June 30, 2019) “Make sure you talk to your doctor and family”

 

Can a Trust Be Amended?

A son has contacted an elder law estate planning attorney now that mom is in a nursing home and he’s unsure about many of the planning issues, as reported by the Daily Republic. The article, “Amending trust easier if parents can make informed decision,” describes the family’s situation.

There is one point to consider from the start. If the son been involved in the planning from the start, in a family meeting with the attorney and discussions with his parents, he might have less uncertainty about the plan and the details.

As for the details: the parents are in their 90s, with some savings, a few annuities, a CD and a checking account. They also have five acres of land, which has their home and a duplex on it and 12 additional acres, with a rental property on it. Everything they own has been placed in a family trust. The son wants to be able to pay her bills and was told that he needs to have a power of attorney and to be named trustee to their trust.

He reports that his parents are good with this idea, but he has a number of concerns. If they are sued, will he be personally liable? Would the power of attorney give him the ability to handle their finances and the real estate in the trust?

If his parents have a revocable or living trust, there are provisions that allow one or more persons to become the successor trustees, in the event that the parent becomes incapacitated or dies.

What happens when they die, as they each leave each other their share of the assets? The son would become the trustee, when the last parent passes.

Usually the power of attorney is created when the trust is created, so that someone has the ability to take control of finances for the person. See if the trust has any of these provisions—the son may already be legally positioned to act on his parents’ behalf. The trust should also show whether the successor trustee would be empowered to sell the real estate.

Trusts can be drafted in any way the client wants it written, and the successor trustee receives only the powers that are given in the document.

As for the liability, the trustee is not liable to a buyer during the sale of a property. There are exceptions, so he would need to speak with an estate planning attorney to help with the sale.

More specifically, assuming the trust does not name the son as a successor trustee and also does not give the son power of attorney, the bigger question is are the parents mentally competent to make important decisions about these documents?

Given the age of these parents, an attorney will be concerned, rightfully so, about their competency and if they can freely make an informed decision, or if the son might be exercising improper influence on them to turn over their assets to him.

There are a few different steps that can be taken. One is for the son, if he believes that his parents are mentally competent, to make an appointment for them with an estate planning attorney, without the son being present in the meeting, in order to determine their capacity and wishes. If the attorney is not sure about the influence of the son, he or she may want to refer the parents for a second opinion with another attorney.

If the parents are found not competent, then the son may need to become their conservator, which requires a court proceeding.

Planning in advance and discussing these issues are best done with an experienced estate planning attorney, long before the issues become more complicated and expensive to deal with.

Reference: Daily Republic (Aug. 10, 2019) “Amending trust easier if parents can make informed decision”

Preparing for the Legal and Medical Aspects of End-of-Life

Planning for the end-of-life transition is something most people still avoid as a difficult topic. It’s true: for many people this topic is just too sad and scary to talk about, says Flagstaff Business News in the article “Easing the End-of-Life Transition with Advance Care Planning.”

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However, planning for one’s death is a kindness to loved ones, family members, friends or even neighbors when others are left to make decisions about medical care, when an individual can’t do it for themselves.

In the estate planning field, this is called advance care planning. It involves learning about the decisions that often need to be made, considering the options and decisions ahead of time, and memorializing those decisions with the correct and enforceable legal documents. This gives a person the ability to think about what they want in the way of treatment or care, and what they don’t want.

It makes things much easier for the survivors, who otherwise have to guess what was on their loved one’s mind or what they would have wanted.

Here are the medical decisions that most frequently need to be made:

CPR, or Cardiopulmonary Resuscitation. This is to get the heart to start beating again, when it has stopped and can range from the use of hands, a defibrillator or chemical means.

Ventilator or Assisted Breathing. This is the use of a machine, connected to a breathing tube that is inserted through the mouth or lungs and down the throat. It is not comfortable, and the patient cannot speak with the tube in their throat.

Artificial Nutrition. This is the delivery of nutrition through an IV (intravenous) or a feeding tube.

Comfort Care. Doing anything to make an individual comfortable at the end of their life. It can include everything from medication to emotional and spiritual counseling. The goal is to provide a person with a dignified end of life, while relieving as much suffering as possible.

Once decisions have been made about these medical treatments, it’s time to get them down on paper.

You’ll need a Living Will. This is a written document expressing your wishes for end-of-life care. If you cannot speak on your own behalf, this is the document doctors will use to guide your care.

Durable Power of Attorney. This is a legal document used to name another person to make health care decisions on your behalf.

In addition, you should have your estate planning attorney prepare a Last Will and Testament, so your property is distributed according to your wishes. An estate planning attorney can help make sure all the details are addressed.

These are not fun topics but thinking about what you would like to have occur and documenting your wishes provides direction for your loved ones, who would otherwise be guessing at what you would have wanted.

Reference: Flagstaff Business News (Aug. 2, 2019) “Easing the End-of-Life Transition with Advance Care Planning”

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