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Law Office of Michael D. DellaMonaca

Have a Plan for Life

The Big Problem with Do-It-Yourself Wills

An estate planning attorney would much rather not see a family undergoing unnecessary stress and expenses. Do-it-yourself wills and on-line wills very often create problems for families, as reported in Next Avenue’s aptly-named article “The Problems With Do-It-Yourself Online Wills.”

The article reports that one DIY estate planning service had three different “packages” that consisted of the same document, just with different names. Those packages were also missing a key estate planning document that the average person would not know to ask about. Even attorneys who do not practice estate planning law, know to work with an estate planning attorney for their wills.

For those with complex financial and personal lives, a DIY service may not be able to address the estate planning issues. If you have over a certain level of assets, do you want to risk making a costly blunder that would easily be prevented by working with a skilled professional?

Think of it this way: there are some people who can have their taxes done online, because they receive simple tax forms from their employer. If there’s a mistake, the IRS sends a letter and they may have to pay a penalty or pay the taxes that were not paid properly. Simple, right?

If your estate plan doesn’t work, you’ll never know. However, your loved ones will, and they’ll be the ones to have to make things right.

Good estate planning is all about expressing our wishes. The documents that are prepared and the process of decisions about our wishes accomplish a number of tasks:

  • Avoids court intervention in your family’s life,
  • Reduces administrative confusion, and
  • Reduces or eliminates unnecessary fees and delays.

The four basic planning documents are: a will, power of attorney for financial matters, an advance health care directive and if needed, a trust. If you expect to use any of these through a DIY website, expect to use a “fill in the blank” approach. Remember that every state has its own laws governing probate. Are you sure that the forms you are filling out are acceptable in your state?

Other DIY sites have some documents, but only if you purchase a high-end package. Others offer attorney consultations, but some consider an attorney consultation to be a series of questions and answers through an online app with pre-written responses, and not a real attorney.

The problem with DIY wills, is that we don’t know what we don’t know. We may know who we would like to receive our assets, but not what our state law requires to make that happen. Case law about estate distribution and probate is not something an average person knows. That’s why it makes more sense to speak with an experienced estate planning attorney. They will be able to create an estate plan based on knowledge and skills, that come about only after practicing in this area of law.

Reference: Next Avenue (March 29, 2019) “The Problems With Do-It-Yourself Online Wills.”

 

Who Can I Name as a New Executor of My Will?

MoneySense’s recent article, “Should the sole recipient of an estate be the executor too?” explains that naming someone as an executor is an extremely important duty. The task carries a lot of responsibility. With new rules that have been passed in the last year, the tax reporting and understanding of the assets in an estate is extremely important.

There are several factors to consider, when you think about whom you might name as an executor. First, is age. It’s smart to choose a person who’s younger than you. Although that doesn’t guarantee that person will outlive you, it certainly will up the odds. Ideally, you should try to find a person who is comfortable with the areas of money and tax and doesn’t easily get overwhelmed by paperwork. Since the role of estate executor can be an intense issue that takes a great amount of time, the person you choose ideally will be retired or have the bandwidth to dedicate the substantial time commitment required to do the job properly.

Based on the complexity of the assets in the estate—and the amount of planning the deceased has done to make the job a little bit easier—the winding up of an estate can take more than a year. If the assets must be probated, you’ll want the person you appoint to understand the process and liability that she’s accepting. There are multiple tax returns and filings that must be completed and filed at specific times.

There are banks that offer trust services, but these can be expensive and will take a chunk out of the estate in fees, until the last tax filing is completed. An attorney is also a good choice, but not many lawyers will take on the liability and have the time to act as an executor.

Many people ask a family member who’s either performed these duties in the past or is willing and knowledgeable enough to do things in a conscientious manner and follow through. Remember, the more estate planning that’s done in advance, the easier it makes it for an executor.

Another option is to have two or more adult children act as an executor. However, this can add some complexity to the process, because first they have to both be in agreement on every issue; second, they must both be available to make decisions and sign documents at the same time. These days you can have siblings living from Maine to Oregon, and people can travel all over the world at any time.

Make sure the person you’re considering is aware of not only your thoughts but also of the time commitment and process involved. An executor—unhappy with their role—can ask the court to remove them. However, this can result in the estate being tied up for a long time. Also, make sure you use a reputable estate planning attorney.

Reference: MoneySense (March 27, 2019) “Should the sole recipient of an estate be the executor too?”

 

Why Are Wills So Important?

Drafting a last will and testament is an important part of estate planning. However, even with the critical importance of having a will, a recent AARP survey found that 20% of Americans over the age of 45 don’t have one.

Detailing your wishes helps to eliminate unnecessary work and potential stress and anxiety, when a loved one dies. Wills let your heirs act with the decedent’s wishes in mind, and a will can make certain that assets and possessions wind up in the right hands.

The Oakdale Leader’s recent article, “Things People Should Know About Creating Wills” says that when you meet with an experienced estate planning attorney, he or she will discuss the following topics with you:

Assets: Create a list of known assets and determine which assets are covered by your will and which are to be passed through joint tenancy, beneficiary designation, or a living trust. For instance, life insurance policies or retirement plan proceeds will be distributed directly to the named beneficiaries. A will also can cover other assets, such as photographs, personal items, autos and jewelry.

Guardianship: Parents’ wills should include a clause that states who they want to become guardians of their minor children.

Pets: Some people use their will to state the guardianship for their pets and to leave money or property to help care for them. However, it is important to remember that pets don’t have the legal capacity to own property, so don’t give money directly to pets in your will. In some states, you can establish a pet trust.

Funeral directions: Probate won’t occur until after the funeral, so funeral wishes in a will often go unnoticed. You can let your executor know your wishes in a separate document.

Executor: An executor is a trusted person who will carry out the terms of your will. He or she should be willing to serve and be capable of executing the will.

People who die without a valid will become intestate, which means the estate will be settled based on the laws of where that person lived. The court will appoint an administrator to transfer property. However, the administrator is bound by law and may make decisions that go against the decedent’s wishes. To avoid this, make sure you have a valid will and other estate planning documents.

Reference: Oakdale (CA) Leader (March 27, 2019) “Things People Should Know About Creating Wills”

 

Protect Yourself – Not Just Your Heirs – With Your Estate Plan

Experts urge people to develop estate plans to make sure you get to choose who will inherit from you and how much, and to select additional options that are available through legal documents, like trust agreements. It can be easy to procrastinate about putting the time and effort into going through this process, if you do not see a direct benefit to yourself. However, having an estate plan can also have a dramatic effect on your life. You can protect yourself – not just your heirs – with your estate plan.

Living the Dream

You can have your elder law attorney draft documents that can make it possible for you to live your dream life, without a care in the world. Let’s say that you want to sail around the world for a few years or serve a tour of duty in the 50+ section of the Peace Corps. You cannot unplug 100 percent from the everyday world. Someone will have to pay your unavoidable bills, file your taxes and manage your money, when you are away and out of reach.

If you know someone whom you can trust without reservation, your lawyer can draft a financial power of attorney for the person you designate (your agent) to handle as many or as few business matters as you specify. You can revoke the power of attorney whenever you want, as long as you have the legal capacity to do so.

In other words, if the law would allow you to draft a valid power of attorney now, you have the legal capacity to revoke one. If you have become incompetent, for example, from an illness or injury, you cannot change the power of attorney, until or unless you regain competency.

Planning for the Worst

Your power of attorney will automatically expire, if you become incapacitated, unless you make sure that the document is a “durable” power of attorney. Being durable means that, at the time that you signed the paper, you intended for the document to continue in effect, if you could not manage matters for yourself.

If you do not have a durable power of attorney and one day you have a stroke or a catastrophic car crash, by way of example, the courts will decide who will make your financial decisions for you. Your family will have to file a request with the court (and pay the court costs to do so), wait for a hearing date, and get a ruling from a judge – a person who has never met you or your family. By the way, the judge will be required to appoint an independent attorney to represent you against your family, to protect your interests. If you prefer to have control over this decision rather than a total stranger, get a durable power of attorney.

Trusts are for the Living

Many people think of setting up a trust as a way to pass their assets to their loved ones privately and quickly, without having to go through the probate courts. While that is one of the purposes for trusts, you can also set up a living trust to stipulate how you want your assets, investments and other financial matters handled, if you become incapacitated.

You can even lay out how you want your business run, if you own a company. You can name someone to serve as your guardian and name a conservator who will manage your finances. You can also let a total stranger make these decisions.

Be sure to talk with an elder law attorney in your area, because this article is about the general law.  Your state’s rules might vary from the general law.

 

American Bar Association. Power of Attorney. (Accessed April 4, 2019) https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/power_of_attorney/

 

How Do I Make the Right Estate Planning Moves When I Divorce?

The Journal Enterprise explains in its recent article, “5 Estate Planning Moves If You Are Getting Divorced,” that the following tips will help you get your plans in order, so your final wishes will be carried out later.

Medical Power of Attorney. This is also called a healthcare proxy. This person is named to make decisions on your medical care, if you’re ill or injured and can’t state your medical care decisions. Unless you make the change, your ex-spouse will have this right.

Financial Power of Attorney. Like a healthcare proxy, this is someone you select to take charge, if you become incapacitated. This person has authority over your financial decisions, and it means they have the authority to pay your bills, access your bank and investment accounts, collect and cash your paychecks and make financial decisions for you. You want to be certain that your assets are protected, and your financial obligations are met, while you’re unable to act on your own behalf. Most people name a spouse, but if you get divorced and don’t switch this designation, your spouse will still be your financial power of attorney and will retain access to your finances.

Create a List of Things to Change After Your Divorce. A divorce can freeze some assets and accounts, which remains in effect until it’s finalized. Therefore, you won’t be able to change the beneficiary on life insurance policies, pensions and other types of accounts. Ask your estate planning attorney to find out exactly what accounts will be affected. Once you know which ones are frozen, you should make a list to ensure you won’t neglect to change them, when the divorce is finalized.

Modify Your Will. In some states, you may not be permitted to create a new will, but your attorney should still be able to help you make the necessary changes. You’ll want to review your heirs. If you do have minor children and you have sole custody, you may want to designate another person as their guardian. If you named your spouse as executor of your will, you may want to consider changing that.

Modify Your Trust. You may have a revocable living trust, in addition to a will. One of the advantages of a revocable trust is that it doesn’t go through probate, so your heirs get a bigger inheritance more quickly. If you have a revocable trust, talk to your estate planning attorney about changing it after your divorce.

If you don’t make these changes at the time of your divorce, your assets may not go to the right beneficiaries, or your ex-spouse may end up with rights you didn’t intend.

Reference: Journal Enterprise (March 20, 2019) “5 Estate Planning Moves If You Are Getting Divorced”

Suggested Key Terms: Estate Planning Lawyer, Wills, Capacity, Guardianship, Executor, Probate Court, Inheritance, Power of Attorney, Healthcare Directive, IRA, 401(k), Beneficiary Designations, Life Insurance,

Wills v. Trusts: What’s Right for You?

It’s a good idea to take the time and make the effort to create an estate plan to take care of your estate — no matter if it’s a condo apartment and a housecat or a big house and lots of money in the bank — just in case something unexpected occurs tomorrow. That’s the advice from AZ Big Media in the article “The pros and cons of wills vs. trusts.”

Estate planning is the area of the law that focuses on the disposition of assets and expenses, when a person dies. The goal is to take care of the “business side” of life while you are living, so your family and loved ones don’t have to pick up the pieces after you are gone. It’s much more expensive, time-consuming and stressful for the survivors to do this after death, than it is if you plan in advance.

You have likely heard the words “trust” and “will” as part of estate planning. What are the differences between the two, and how do you know which one you need?

A will is the most commonly used legal document for leaving instructions about your property after you die. It is also used to name an executor — the person who will be in charge of your assets, their distribution, paying taxes and any estate expenses after you die. The will is very important, if you have minor children. This is how you will name guardians to raise your children, if something unexpected occurs to you and your partner, spouse or co-parent. The will is also the document you use to name the person who you would like to care for your pets, if you have any.

Burial instructions are not included in wills, since the will is not usually read for weeks or sometimes months after a person passes. It’s also not the right way to distribute funds that have been taken care of through the use of beneficiary designations or joint ownership on accounts or assets.

Another document used in estate planning is a trust. There are many different types of trusts, from revocable trusts, which you control as long as you are alive, and irrevocable trusts, which are controlled by trustees. There are too many to name in one article, but if there is something that needs to be accomplished in an estate plan, there’s a good chance there is a special trust designed to do it. An estate planning attorney will be able to tell you if you need a trust, and what purpose it will serve.

Trusts can be used by anyone with assets or property.

A will can be a very simple document. It requires proper formats and formalities to ensure that it is valid. If you try to do this on your own, your heirs will be the ones to find out if you have done it properly.  If it is not done correctly, the court will deem it invalid and your estate will be “intestate,” that is, without a will.

Many people believe that they should put all their assets into a trust to avoid probate. In some cases, this may be useful. However, there are many states where probate is not an onerous process, and this is not the reason for setting up trusts.

A trust won’t eliminate taxes completely, nor will it eliminate the need for any estate administration. However, it may make passing certain assets to another person or another generation easier. Your estate planning attorney will be able to guide you through this process.

Whether you use a will or a trust, or as is most common, a combination of the two, you need an estate plan that includes other documents, including power of attorney and health care power of attorney. These two particular documents are used while you are living, so that someone you name can make financial decisions (power of attorney) and medical health decisions (health care power of attorney) if you should become incapacitated, through illness or injury.

Speak with an estate planning attorney. Every person’s situation is a little different, and an estate planning attorney will create an estate plan that works for you and protects your family.

Reference: AZ Big Media (March 21, 2019) “The pros and cons of wills vs. trusts”

Suggested Key Terms: Estate Plan, Will, Trusts, Power of Attorney, Health Care, Incapacitated, Executor,

Surviving Spouse Needs An Estate Plan

When one spouse dies after meticulously titling assets to pass through joint tenancy to the surviving spouse, estate planning attorneys flinch. There are occasions when everything works smoothly, but they are the exception. As this article from the Santa Cruz Sentinel warns “After husband’s death, wife needs to create revocable trust.” Actually, she needs more than a revocable trust: she needs an estate plan.

Most of the assets in the plan created by her husband, in this case, did pass to the wife outside of probate. However, there are a number of details that remain. She needs to obtain date-of-death values for any non-IRA securities the couple owned, and she should also have their home’s value determined, so that a new cost basis for the house will be established. She also needs an appointment with an estate planning attorney to create a will and an estate plan.

If she dies without a will, her children will inherit the estate in equal shares by intestate succession. However, if any of her children pass before she does, the estate could be distributed to her grandchildren. If they are of legal age, there is no control over how the assets will be managed.  Making matters worse, if a child or grandchild is disabled and receiving government benefits, an inheritance could make them ineligible for Social Security and Medicaid benefits, unless the inheritance is held within a Special Needs Trust.

Another reason for an estate plan: a will details exactly how assets are distributed, from the set of pearls that great aunt Sarah has kept in the family for decades to the family home. A durable power of attorney is also part of an estate plan, which lets a named family member or trusted friend make financial decisions on your behalf, if you become incapacitated. An estate plan also includes an advance health care directive, so a loved one can make medical decisions on your behalf if you are not able.

These are the basics of an estate plan. They protect loved ones from having to go to court to obtain the power to make decisions on your behalf, as well as protect your family from outsiders making claims on your estate.

A revocable trust is one way to avoid probate. An estate planning attorney will be able to evaluate your own unique situation and determine what the best type of trust would be for your situation, or if you even need a trust.

You may be thinking of putting your home, most families’ biggest asset, into joint tenancy with your children. What if one or more of your children have a divorce, lawsuit or bankruptcy? This will jeopardize your control of your home. A revocable trust will allow your assets to remain in your control.

The last piece in this estate is the IRA. If you are the surviving spouse, you’ll want to roll over your spouse’s IRA into your own. Make sure to update the beneficiary designation. If you neglect this step and the IRA pays into your estate when you pass, then the IRA has to be cashed in within five years of your death. Your children will lose the opportunity to stretch IRA distributions over their lifetimes.

An estate planning attorney can help guide you through this entire process, working through all the details. If your goal is to avoid probate, they can make that happen, while protecting you and your loved ones at the same time.

Reference: Santa Cruz Sentinel (March 24, 2019) “After husband’s death, wife needs to create revocable trust”

 

Virginia Passes New Law to Thwart Elder Abuse

“Elder abuse is a growing epidemic in our Commonwealth, yet these cases are under-reported and remain very difficult to prosecute for various reasons,” says Chuck Slemp III, commonwealth’s attorney for Wise County and the City of Norton.

The Southwest Times’ recent article, “Law boosts tools to fight elder abuse,” reports that Slemp requested the new legislation. This law goes into effect July 1 and will help protect adults age 60 and older and physically or mentally incapacitated adults age 18 and older. The legislation provides a framework for local departments of social service and commonwealth attorneys to create one or separate multidisciplinary teams to review cases at all stages of investigation and prosecution. The teams would be made up of professionals from diverse disciplines. The team goals would be as follows:

  • To help identify abused, neglected and exploited individuals;
  • To coordinate medical, social and legal services for these people and their families;
  • To develop programs to detect and prevent abuse, neglect and exploitation; and
  • To promote community awareness of the problem, and educate them on ways to prevent it.

Slemp said that he was thrilled that the bill will become law to give the state additional tools in the effort to fight elder crimes and to establish a framework for a team-approach to review these situations. The Commonwealth’s attorney for Wise County and the City of Norton added that he was grateful to Senator Chafin and 4th District Delegate Todd Pillion (R-Abingdon), who introduced the House version of the legislation.

“Every day the elderly are taken advantage of financially and abused. It is our responsibility in the General Assembly to help protect the most vulnerable of our citizens. Commonwealth Attorneys and law enforcement need all of the tools available to effectively prosecute elder abuse and financial exploitation,” said Chafin. “Multidisciplinary response teams will aid in the prosecution of these crimes and will bring these criminals to justice.”

Pillion added, “With an aging population, particularly in rural areas, it’s critical we form the systems and processes needed to help safeguard people who may find themselves in abusive situations.” You may also seek help from a local attorney.

Slemp believes that the new bill will help localities to concentrate additional resources on the “epidemic” of elder abuse.

Reference: The Southwest Times (March 13, 2018) “Law boosts tools to fight elder abuse”

 

What Are the Common Myths of Powers of Attorney?

The Lubbock Avalanche-Journal’s recent article entitled “Five common myths about powers of attorney” explains away some misconceptions about powers of attorney.

  1. There’s just one uniform power of attorney document. No, there are many types. However, they can vary by state. Talk to an experienced estate planning attorney to draft a document to meet your specific needs.
  2. It’s OK to sign a power of attorney, even if I lack mental capacity. No, to be valid, the person granting the rights (the principal) must have mental capacity to execute the document. A power of attorney can be valid for an individual with mental incapacity, provided the document was signed before the occurrence. That’s a key reason to have a durable power of attorney in place.
  3. A durable power of attorney and healthcare power of attorney are the same thing. No, a durable power of attorney grants rights to an agent to act on your behalf, regarding your assets. These rights can be general to all assets for an unlimited time, or the POA can be limited as to the time frame and assets included. A medical power of attorney grants an agent the authority to make medical decisions on your behalf.
  4. Senior citizens are the ones who need a power of attorney. Not true, because accidents and unforeseen illness can strike at any age. You need to have a plan in place to ease the burden of one aspect of an already stressful and complicated situation. Don’t assume your spouse has automatic power to make decisions on your behalf. It can be much more difficult, unless you have given them the power of attorney.
  5. A power of attorney can be used to handle my relative’s estate at death. Again, not true. Although there are other ways to structure an estate to avoid probate, a power of attorney isn’t one of them. A power of attorney lets the agent to stand in the place of the principal to make decisions. It doesn’t continue beyond the death of the principal.

If you avoid these common misconceptions, a power of attorney prepared by an experienced estate planning attorney can be a very useful tool to meet your needs.

Reference: Lubbock Avalanche-Journal (March 15, 2019) “Five common myths about powers of attorney”

 

What is an Advance Directive and Do I Need One?

These are difficult questions to think about. However, they are very important, as every estate planning attorney knows. Should you ever become unable to speak for yourself, reports the Enid News & Eagle in the article “Veteran Connection: What you should know about advance directives” . An Advance Directive is a way to make a plan, so your wishes are known to another person and legally conveying them in advance, making sure you have a say, even when you don’t have a voice. Yes, you do need an Advance Directive.

The advance directive helps family members and your doctors understand your wishes about medical care. The wishes you express through these two documents described below, require reflection on values, beliefs, views on medical treatments, quality of life during intense medical care and may even touch on spiritual beliefs.

The goal is to prepare so your wishes are followed, when you are no longer able to express them. This can include situations like end-of-life care, the use of a respirator to breathe for you, or who you want to be in the room with you, when you are near death.

It should be noted that an advance directive also includes a mental health component, that extends to making decisions on your behalf when there are mental health issues, not just physical issues.

There are two types of documents: a durable power of attorney for health care and a living will.

The durable power of attorney for health care lets you name a person you trust to make health care decisions when you cannot make them for yourself. This person is called your health care agent and will have the legal right to make these decisions. If you don’t have this in place, your doctor will decide who should speak for you. They may rely on order of relationships: a legal guardian, spouse, adult child, parent, sibling, grandparent, grandchild or a close friend.

A living will is the document that communicates what kind of health care you want, if you become ill and cannot make decisions for yourself. This helps your named person and your doctor make decisions about your care that align with your own wishes.

Another very important part of this issue: the conversation with the people who you want to be on hand when these decisions have to be made. Are they willing to serve in this capacity? Can they make the hard decisions, especially if it’s what you wanted and not what they would want? Do you want a spouse to make these decisions on your behalf? Many people do that, but you may have a trusted family member or friend you would prefer, if you feel that your spouse will be too overwhelmed to follow your wishes.

An experienced estate planning attorney can prepare these important documents for you.

Reference: Enid News & Eagle (March 13, 2019) “Veteran Connection: What you should know about advance directives”