Here’s Why a Basic Form Doesn’t Work for Estate Planning

It’s true that an effective estate plan should be simple and straightforward, if your life is simple and straightforward. However, few of us have those kinds of lives. For many families, the discovery that a will that was created using a basic form is invalid leads to all kinds of expenses and problems, says The Daily Sentinel in an article that asks “What is wrong with using a form for my will or trust?”

If the cost of an estate plan is measured only by the cost of a document, a basic form will, of course, be the least expensive option — on the front end. On the surface, it seems simple enough. What would be wrong with using a form?

Actually, a lot is wrong. The same things that make a do-it-yourself, basic form seem to be attractive, are also the things that make it very dangerous for your family. A form does not take into account the special circumstances of your life. If your estate is worth several hundreds of thousands of dollars, that form could end up putting your estate in the wrong hands. That’s not what you had intended.

Another issue: any form that is valid in all 50 states is probably not going to serve your purposes. If it works in all 50 states (and that’s highly unlikely), then it is extremely general, so much so that it won’t reflect your personal situation. It’s a great sales strategy, but it’s not good for an estate plan.

If you take into consideration the amount of money to be spent on the back end after you’ve passed, that $100 will becomes a lot more expensive than what you would have invested in having a proper estate plan created by an estate planning attorney.

What you can’t put into dollars and cents, is the peace of mind that comes with knowing that your estate plan, including a will, power of attorney, and health care power of attorney, has been properly prepared, that your assets will go to the individuals or charities that you want them to go to, and that your family is protected from the stress, cost and struggle that can result when wills are deemed invalid.

Here’s one of many examples of how the basic, inexpensive form created chaos for one family. After the father died, the will was unclear, because it was not prepared by a professional. The father had properly filled in the blanks but used language that one of his sons felt left him the right to significant assets. The family became embroiled in expensive litigation, and became divided. The litigation has ended, but the family is still fractured. This was not what their father had intended.

Other issues that are created when forms are used: naming the proper executor, guardians and conservators, caring for companion animals, dealing with blended families, addressing Payable-on-Death (POD) accounts and end-of-life instructions, to name just a few.

Avoid the “repair” costs and meet with an experienced estate planning attorney in your state to create an estate plan that will suit your needs.

Reference: The Daily Sentinel (May 25, 2019) “What is wrong with using a form for my will or trust?”

 

Long-Term Care Costs and Your Estate Plan

There are many misunderstandings about long-term or nursing home care and how to plan from a financial and legal standpoint. The article “Five myths about nursing home costs and estate planning” from The Sentinel seeks to clarify the facts and dispel the myths. Some of the truths may be a little hard to hear, but they are important to know.

Myth One: Before any benefits can be received for nursing home care, a married couple must have spent at least half of their assets and everything but $120,000. If the person receiving nursing home care is single, they must spend almost all assets on the cost of care, before they qualify for aid.

Fact: Nursing homes have no legal duty to advise anyone before or after they are admitted about this myth.

Several opportunities to spend money on items other than a nursing home, include home improvements, debt retirement, a new car and funeral prepayment. An elder law attorney will know how to use a Medicaid-compliant annuity to preserve assets, without spending them on the cost of care, depending on state law.

There are people who say that an attorney should not help a client take advantage of legally permitted methods to save their money. If they don’t like the laws, let them lobby to change them. Experienced elder law and estate planning attorneys help middle-class clients preserve their life savings, much like millionaires use CPAs to minimize annual federal income taxes.

Myth Two: The nursing home will take our family’s home, if we cannot pay for the cost of care.

Fact: Nursing homes do not want and will not take your home. They just want to be paid. If you can’t afford to pay, the state will use Medicaid money to pay, as long as the family meets the eligibility requirements. The state may eventually attach a collection lien against the estate of the last surviving homeowner to recover funds that the state has used for care.

A good elder law attorney will know how to help the family meet those requirements, so that the adult children are not sued by the nursing home for filial responsibility collection rights, if applicable under state law. The attorney will also know what exceptions and legal loopholes can be used to preserve the family home and avoid estate recovery liens.

Myth Three. We’ve promised our parents that they’ll never go to a nursing home.

Fact: There is a good chance that an aging parent, because of dementia or the various frailties of aging, will need to go to a nursing home at some point, because the care that is provided is better than what the family can do at home.

What our loved ones really want is to know that they won’t be cast off and abandoned, and that they will get the best care possible. When home care is provided by a spouse over an extended period of time, often both spouses end up needing care.

Myth Four: I love my children equally, so I am going to make all of them my legal agent.

Fact: It’s far better for one child to be appointed as the legal agent, so that disagreements between siblings don’t impact decisions. If health care decisions are delayed because of differing opinions, the doctor will often make the decision for the patient. If children don’t get along in the best of circumstances, don’t expect that to change with an aging parent is facing medical, financial and legal issues in a nursing home.

Myth Five. We did our last will and testament years ago, and nothing’s changed, so we don’t need to update anything.

Fact: The most common will leaves everything to a spouse, and thereafter everything goes to the children. That’s fine, until someone has dementia or is in a nursing home. If one spouse is in the nursing home and receiving government benefits, eligibility for the benefits will be lost, if the other spouse dies and leaves assets to the spouse who is receiving care in the nursing home.

A fundamental asset preservation strategy is to make changes to the will. It is not necessary to cut the spouse out of the will, but a well-prepared will can provide for the spouse, preserve assets and comply with state laws about minimal spousal election.

When there has been a diagnosis of early stage dementia, it is critical that an estate planning attorney’s help be obtained as soon as possible, while the person still has legal capacity to make changes to important documents.

The important lesson for all the myths and facts above: see an experienced estate planning elder law attorney to make sure you are prepared for the best care and to preserve assets.

Reference: The Sentinel (May 10, 2019) “Five myths about nursing home costs and estate planning”

 

What Does ‘Getting Your Affairs in Order’ Really Mean?
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What Does ‘Getting Your Affairs in Order’ Really Mean?

That “something” that happens that no one wants to come out and say is that you are either incapacitated by a serious illness or injury or the ultimate ‘something,’ which is death. There are steps you can take that will help your family and loved ones, so they have the information they need and can help you, says Catching Health’s article “Getting your affairs in order.”

Start with the concept of incapacity, which is an important part of estate planning. Who would you want to speak on your behalf? Would that person be the same one you would want to make important financial decisions, pay bills and handle your personal affairs? Does your family know what your wishes are, or do you know what your parent’s wishes are?

Financial Power of Attorney. Someone needs to be able to pay your bills and handle financial matters. That person is named in a Financial Power of Attorney, and they become your agent. Without an agent, your family will have to go to court and get a conservatorship. This takes time and money. It also brings in court involvement into your life and adds another layer of stress and expense.

It’s important to name someone who you trust implicitly and whose financial savvy you trust. Talk with the person you have in mind first and make sure they are comfortable taking on this responsibility. There may be other family members who will not agree with your decisions, or your agent’s decisions. They’ll have to be able to stick to the course in the face of disagreements.

Health Care Directive, Health Care Proxy or Living Will. The name of these documents and what they serve to accomplish does vary from state to state, so speak with an estate planning attorney in your state to determine exactly what it is that you need.

Health Care Proxy. This is the health care agent who makes medical decisions on your behalf, when you can no longer do so. In Maine, that’s a health care advance directive. The document should be given to the named person for easy access. It should also be given to doctors and medical providers.

DNR, or Do Not Resuscitate Order. This is a document that says that if your heart has stopped working or if you stop breathing, not to bring you back to life. When an ambulance arrives and the EMT asked for this document, it’s because they need to know what your wishes are. Some folks put them on the fridge or in a folder where an aide or family member can find them easily. If you are in cardiac arrest and the DNR is with a family member who is driving from another state to get to you, the EMT is bound by law to revive you. You need to have that on hand, if that is your wish.

How Much Should You Tell Your Kids? While it’s really up to you as to how much you want to share with your kids, the more they know, the more they can help in an emergency. Some seniors bring their kids with them to the estate planning attorney’s office, but some prefer to keep everything under wraps. At the very least, the children need to know where the important documents are, and have contact information for the estate planning attorney, the accountant and the financial advisor. Many people create a binder with all of their important documents, so there are no delays caused in healthcare decisions.

Reference: Catching Health (May 28, 2019) “Getting your affairs in order.”

 

What Happens If I Write a Handwritten Will?

Aretha Franklin died last August, and it was first reported that she didn’t have a will.

However, recent news reports from Detroit say that, as her estate is being thoroughly reviewed, relatives have discovered a total of three different wills—one of which was located under some seat cushions!

Each of Aretha’s wills is handwritten. The three documents have been submitted as part of the probate process to have the court determine if any of them will have legal standing.

Aretha Franklin’s actions—or her lack of the right actions—may could cost her heirs a considerable amount of money in legal fees. It also will make the probate process longer and more stressful. In addition, the ultimate court decision concerning her estate may not be consistent with her wishes.

Fox Business’ recent article, “Aretha Franklin’s handwritten wills found: Big estate planning no-no,” asks what can we learn from the Queen of Soul’s Estate Planning blunders?

First, do it right and ask an estate planning attorney to help you draft your will. He or she will make sure that your will and estate plan comply with the laws on your state. Probate and estate laws may be slightly different in every state, so be certain your will reflects your location and circumstances to be valid.

Don’t make a handwritten or “holographic” will. A handwritten will is valid in a surprisingly large number of states: Alaska, Arizona, Arkansas, California, Colorado, Idaho, Kentucky, Maine, Michigan, Mississippi, Montana, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. However, talk to an experienced estate planning attorney in your state, if you have questions about a holographic will.

Spend the money and do it right. Hire a qualified estate planning attorney to make certain that everything is done correctly, so it’s the way you want it, and it will be upheld if questioned in court after you’re gone. That includes having the will witnessed and/or notarized.

Of course, while you can download a free form from the internet or pay $50 to buy a package, you should invest the extra funds to hire a legal professional to help can save your family a big expense in future extra legal fees.

Further, you should review your will at least every few years to make sure it accurately reflects your current wishes and to be certain that everything is consistent between the will and other documents, like beneficiaries listed on your insurance policies or investment accounts.

You also need to make sure your heirs can find the will. Hiding it in the sofa isn’t the recommended procedure, because who’s to say that Franklin didn’t stash a fourth or fifth handwritten will in a wardrobe or in the food pantry!

Lastly, be sure you let your family and loved ones know your wishes as you prepare these documents. Be proactive about estate planning and do it right.

Reference: Fox Business (May 22, 2019) “Aretha Franklin’s handwritten wills found: Big estate planning no-no”

 

How Do I Choose a Guardian in My Estate Plan?

Selecting a guardian to care for your minor child after you die isn’t a lot of fun. Who wants to think about a situation where their young children are left to mourn their parents and live with friends or relatives? However, choosing a guardian to raise your children and manage their inheritance is crucial. If you don’t do it, you leave the decision to the court.

U.S. News and World Report’s recent article “How to Choose a Guardian for Your Child” says that, at worst, forgetting to name a guardian can mean a long court proceeding. This can be expensive, cause stress in family relationships and put your children in guardianship limbo.

There are two types of guardianship to consider when deciding who will care for your children: guardian of the estate and guardian of the person. The guardian of the estate is a person who’ll manage the minor child’s inheritance on their behalf. It’s a fiduciary responsibility, and this guardian must make sure he or she carefully and appropriately manages accounts, keeps receipts, reports back to the court and doesn’t co-mingle the child’s assets with his or her own. Another option is for a parent is to set up a trust and have a trustee manage the funds for the child. This can allow the parent more control over how and when money is distributed, especially if you anticipate leaving a substantial inheritance.

The guardian of the person is the daily caretaker who’ll make sure your child gets health care, educational, housing and has all other needs met.

These two guardians can be the same person or different people, depending on the skills and abilities of your family members and friends. A separate person managing the estate can provide a series of checks and balances that can help, if you are concerned about the misuse of your child’s funds.

You may want the guardian of the estate to have good money-management skills. The guardian of the person may be someone who shares your same values, has the energy to raise a child, and is close by so that your child doesn’t have to lose the familiar comforts of their school and neighborhood.

You should also name backup guardians, in the event that the primary guardian is unable or unwilling to take on the responsibility. You should also be sure to speak with your guardians ahead of time and make certain they understand the responsibility and are willing to take on the task of helping care for your children, if you pass away.

In most states, you’ll need to name your guardian or guardians as part of your will.

Talk to an experienced estate planning attorney with any questions and draft a legal will with the terms of guardianship included, along with a power of attorney and health care proxy. If you need to create a trust for your children, don’t forget to fund it.

Reference: U.S. News and World Report (June 4, 2019) “How to Choose a Guardian for Your Child”

 

Power of Attorney: Why You’re Never Too Young

When that time comes, having a power of attorney is a critical document to have. The power of attorney is among a handful of estate planning documents that help with decision making, when a person is too ill, injured or lacks the mental capacity to make their own decisions. The article, “Why you’re never too young for a power of attorney” from Lancaster Online, explains what these documents are, and what purpose they serve.

There are three basic power of attorney documents: financial, limited and health care.

You’re never too young or too old to have a power of attorney. If you don’t, a guardian must be appointed in a court proceeding, and they will make decisions for you. If the guardian who is appointed does not know you or your family, they may make decisions that you would not have wanted. Anyone over the age of 18 should have a power of attorney.

It’s never too early, but it could be too late. If you become incapacitated, you cannot sign a POA. Then your family is faced with needing to pursue a guardianship and will not have the ability to make decisions on your behalf, until that’s in place.

You’ll want to name someone you trust implicitly and who is also going to be available to make decisions when time is an issue.

For a medical or healthcare power of attorney, it is a great help if the person lives nearby and knows you well. For a financial power of attorney, the person may not need to live nearby, but they must be trustworthy and financially competent.

Always have back-up agents, so if your primary agent is unavailable or declines to serve, you have someone who can step in on your behalf.

You should also work with an estate planning attorney to create the power of attorney you need. You may want to assign select powers to a POA, like managing certain bank accounts but not the sale of your home, for instance. An estate planning attorney will be able to tailor the POA to your exact needs. They will also make sure to create a document that gives proper powers to the people you select. You want to ensure that you don’t create a POA that gives someone the ability to exploit you.

Any of the POAs you have created should be updated on a fairly regular basis. Over time, laws change, or your personal situation may change. Review the documents at least annually to be sure that the people you have selected are still the people you want taking care of matters for you.

Most important of all, don’t wait to have a POA created. It’s an essential part of your estate plan, along with your last will and testament. Contact an experienced estate planning attorney to ensure that you have the correct power of attorney in place.

Reference: Lancaster Online (May 15, 2019) “Why you’re never too young for a power of attorney”

 

Will Contests May Be Rare, but They Do Happen

In an ideal world, wills and estate plans are created when people are sound of mind and body, just as the familiar legal phrase describes. The best way to avoid a will contest is to have a well-written will, prepared by a qualified estate planning attorney who can help avoid legal contest. However, there are times when this is not the case, says The Huntsville Item in the article “Legal Corner: Will contests while rare are messy.”

A will is contested, when the person challenging the will believes that it does not represent the true intent of the testator to pass the estate to the people he wanted.

A will must be written in the correct form and executed according to the law in order to be valid. This is why it is necessary to work with an estate planning attorney to create a will. A person may try to do it on their own, typing it out, downloading a form or copying a form, but because the law is very strict about the form and execution, many of these do-it-yourself wills end up being deemed invalid by the courts.

When the will is not valid, the laws of intestate are applied to the person’s estate. This is rarely in accordance with the person’s wishes, but at this point, it’s too late.

To make a will, the person must have “testamentary capacity.” That means that he or she knows what they are doing, what their estate includes and who the recipients of the estate will be. They also must not have been subject to undue influence. That means that the person making the will is so controlled and dominated by another person, that they were not able to make the will that they wanted.

When the sad day comes that a loved one passes, the family grieves. Each member will deal with the loss in their own way. For some people, the intense level of emotions can bring about conflicts. Sometimes these are the result of old battles that were never resolved. Sibling rivalry that’s been simmering for decades can emerge.  One of the goals of a properly prepared will, is to prevent any family fights after a loved one has passed.

Studies have found that the struggle over mom’s necklace or dad’s watch are not about the material items themselves, but over the symbolic meaning of those items. When families fight over inheritances, it’s rarely because of the actual item or even the money. As the family’s older member, you want to do anything you can to avoid fracturing the family after you’ve gone.

Unless you take the steps to create a will and a strong estate plan, your loved ones could be entrenched in a long inheritance conflict that lasts years and consumes more resources than anyone can spare.  However, with careful planning, you can avoid inheritance conflicts. After all, estate planning is more for those you love than for you.

Rely on the skill and knowledge of an experienced estate planning attorney and leave your family intact.

Reference: The Huntsville Item (May 26, 2019) “Legal Corner: Will contests while rare are messy”

 

Your Will Isn’t the End of Your Estate Planning

Even if your financial life is pretty simple, you should have a will. However, there’s more work to be done. Assets must be properly titled, so that assets are distributed as intended upon death.

Forbes’ recent article, “For Estate Plan To Work As Intended, Assets Must Be Properly Titled” notes that with the exception of the choice of potential guardians for children, the most important function of a will is to make certain that the transfer of assets to beneficiaries is the way you intended.

However, not all assets are disposed of by a will—they pass to beneficiaries regardless of the intentions stated in the will. Your will only controls the disposition of assets that fall within your probated estate.

An example of when a designated beneficiary controls the disposition of a financial asset is life insurance. Other examples are retirement accounts, such as a 401(k) or an IRA. When there’s a named beneficiary, assets will be distributed accordingly, which may be different than the intentions stated in a will.

The title of real estate controls its disposition. When property is jointly owned, how it is titled determines if the decedent’s interest in the property passes to the surviving partner, becomes part of the decedent’s estate, or passes to a third party. Titling of jointly owned property can be complicated in community property states.

In the same light, a revocable trust is an inter vivos or living trust that’s created during the grantor’s life, as part of an estate plan.

Such a trust can be used to ensure privacy, avoid the expenses and delays in the probate process and provide for continuity of asset management. A critical part of the planning is that the grantor must transfer (or retitle) assets to the trust.

Wills are very important in estate planning. To ensure that your estate plan fulfills your intentions, talk to an estate planning attorney about the proper titling of your assets.

Reference: Forbes (May 20, 2019) “For Estate Plan To Work As Intended, Assets Must Be Properly Titled”

 

What the Elder Law Attorney Needs to Know

If you went to a doctor’s office and did not tell the doctor what your symptoms were, it would be hard to get a good diagnosis and treatment. The same goes for a visit to the elder law estate planning attorney. Without all the necessary facts, advises the Times Herald-Record in the article “What you need to tell the elder law estate planning attorney,” the estate plan may need to be revised or created all over again, the inheritance may be given to people other than those you intended and there could be family conflicts.

Elder law is all about planning for disability and incapacity, to include identifying the people who would make decisions for you, if you become incapacitated and protecting your hard-earned assets from the cost of nursing home care.

Estate planning is focused on transferring assets to the desired people, the way you want, when you want, with minimal court costs, taxes, or unnecessary legal fees and avoiding disputes over an inheritance.

Here are some of the things your attorney will need to know, with full disclosure from you:

Family dynamics. If you have a child you haven’t seen in years, you need to discuss the child. They may have a legal claim to your estate, and that must be planned for. Perhaps you want to include the child in the estate, perhaps you don’t. If you disinherit a child in a will and you die without a plan, that child becomes a necessary party to probate proceedings and has the right to contest your will.

Health issues are important to disclose. If you don’t have long-term care insurance, you need five years to protect assets in a Medicaid Asset Protection Trust (MAPT). Therefore, now may be the time to start a plan. If you have a child who is disabled and receives government benefits, you can leave them money in a Special Needs Trust (SNT).

Full disclosure of all your assets, income, how assets are titled, who the beneficiaries are on your IRAs, 401(k)s and life insurance policies, are all the kinds of information needed to create a comprehensive estate plan. Keeping secrets during this process could lead to a wide variety of problems for your family. Your entire estate could be consumed by taxes, or the cost of nursing home care.

There’s no doubt of the seriousness of these issues. You or your spouse may experience some strong emotions, while discussing them with your attorney. However, creating a proper estate plan, preparing for incapacity and loved ones with special challenges will provide you with peace of mind.

One last point: an estate plan is like your home, requiring maintenance and updates. Once it is done, make a note in your schedule to review it every time there is a major life event or every three or four years. Laws change, and life changes. Your estate plan may also need to change so speak with an experienced elder law/estate planning attorney in your area who can assist you.

Reference: Times Herald-Record (May 25, 2019) “What you need to tell the elder law estate planning attorney”

 

Special Needs Families and Special Needs Trust

If nothing prepares a person for parenting, consider how much harder it is to be prepared to raise a child with special needs. Parents often sink in uncharted waters. It’s not just a matter of negotiating all of the day-to-day details, says Newsday in the article “Be ‘biggest advocate’: Parents plan future for adult children with special needs.” Special needs families need to plan for what will happen as the parents age, become ill or die.

As an adult child with disabilities ages, eventually there will be medical issues. If the parents are gone, who will be able to make medical decisions? Where they live, who will oversee their finances and who will be there for them to rely on in a parenting role? There are many questions and they all need answering.

For one family, raising their special needs daughter was a full-time challenge. Their daughter, now 24, has autism. The couple sought out others in their same situation, noting that often even their own family members could not relate to their daily experiences.

It takes a village for special needs families to do more than survive. That includes estate planning and elder law attorneys with deep experience in special needs planning, social workers, therapists and medical professionals. Here’s what needs to be top-of-mind:

Don’t wait to plan. Families often think they have time, but you never know when unexpected events occur. Have a plan in place for legal guardianship, finances and health care.

Work with experienced legal help. You want to work with an attorney who has a great deal of experience and knowledge in special needs law and estate planning. Someone who dabbles on the side of a real estate practice is not the right professional for the task.

Stay in control. When children turn 18, they are adults. Parents and guardians will need to go through probate court to become the child’s guardian. Unless that is done, the parents and guardians will have no legal rights about the child’s medical, financial or other affairs. A successor guardian also needs to be named, so that when the parents are no longer able to serve, someone is in place to care for the child.

Create a Special Needs Trust. A trusts attorney with experience in Special Needs planning will be able to work with the family to create and structure a Special Needs Trust (SNT). A disabled person usually cannot earn enough to support himself, or the caregiver who remains at home to care for them and care-related expenses. The SNT helps to meet current needs and plan for future needs. The trust is used to preserve eligibility for any means-tested state and federal benefits. It allows the individual to have a better quality of life, by providing for expenses that are not covered by their benefits.

It’s very important that no assets be left to the child in an inheritance. Any assets must be placed in the trust. A well-meaning relative could put their eligibility for aid in jeopardy.

Parents and guardians also need to name a trustee and a successor trustee. The person needs to be competent, good with money management, organized and focused on caring for the loved one. It cannot be an emotional decision.

Parents of special needs children are advised to create a Letter of Intent, a narrative that outlines their child’s likes and dislikes, strengths and weaknesses, activities and friends they enjoy and other details that will help them to continue an enjoyable life, when their parents are gone.

Parent’s own estate planning must be done with an eye to maintaining the SNT and caring for their other children. This is a case when assets need to be distributed in a realistic and fair manner. If one sibling is the successor trustee, for example, they may need a larger portion of an estate to help care for their sibling.

Reference: Newsday (May 9, 2019) “Be ‘biggest advocate’: Parents plan future for adult children with special needs.”