I’ve Been Appointed My Aging Parents’ Power of Attorney but What Now?

A durable power of attorney is frequently signed by aging parents. However, sometimes the elderly can misunderstand exactly what that entails, especially when it comes to the authority of the person given decision-making powers.

The person appointed (called the agent or attorney-in-fact) is also typically an adult child. Nevertheless, he or she may be unaware of the appointment or does not grasp what is permitted and when it is permitted. It can be very confusing.

Forbes’s recent article entitled “Let’s Get Clear: What Does It Mean To Be Appointed Aging Parents’ Power Of Attorney?” provides the answers to three frequently asked questions of many heard from families.

Question: Can my father, who’s in charge of our family finances but now has dementia, revoke his DPOA that he signed years ago and name a child to take over managing his money when he needs help?

Answer: Perhaps. If Dad has dementia, he needs to be evaluated by a doctor to see if he still has the capacity to make financial decisions. This is a legal determination with help from doctors and particularly psychologists, who can perform the evaluation and give standardized test results. If the parent is found to have financial capacity, he is permitted to revoke the durable power of attorney at any time. However, if he doesn’t have mental capacity, he’s no longer legally capable of revoking the document.

Question: What if my mother is found to be incapacitated for financial decisions? If I’m the appointed agent on the DPOA, when can I use this authority?

Answer: Provided you’ve met any requirements detailed in the DPOA document itself, you can immediately take over financial authority. Some durable power of attorney documents require that a doctor or even two doctors must say the parent no longer has capacity before you can act. Some durable powers of attorney say the document is effective immediately. The agent’s authority is contained in the document.

Question: Am I allowed to keep my father from recklessly giving away money or making imprudent decisions with his wealth, if I’m the appointed agent on his DPOA?

Answer: Yes. Usually, the durable power of attorney gives the agent full authority over all financial matters.

Speak with an experienced estate planning attorney to discuss this important document.

Reference: Forbes (June 22, 2021) “Let’s Get Clear: What Does It Mean To Be Appointed Aging Parents’ Power Of Attorney?”

 

What Is Elder Law?

With medical advancements, the average age of both males and females has increased incredibly.  The issue of a growing age population is also deemed to be an issue legally. That is why there are elder law attorneys.

Recently Heard’s recent article entitled “What Are the Major Categories That Make Up Elder Law?” explains that the practice of elder law has three major categories:

  • Estate planning and administration, including tax issues
  • Medicaid, disability, and long-term care issues; and
  • Guardianship, conservatorship, and commitment issues.

Estate Planning and Administration. Estate planning is the process of knowing who gets what. With a will in place, you can make certain that the process is completed smoothly. You can be relieved to know that your estate will be distributed as you intended. Work with an experienced estate planning attorney to help with all the legalities, including taxes.

Medicaid, Disability, and Long-Term Care Issues. Elder law evolved as a special area of practice because of the aging population. As people grow older, they have more medically-related issues. Medicaid is a state-funded program that supports those with little or no income. The disability and long-term care issues are plans for those who need around-the-clock care. Elder law attorneys help coordinate all aspects of elder care, such as Medicare eligibility, special trust creation and choosing long-term care options.

Guardianship, Conservatorship, and Commitment Matters. This category is fairly straightforward. When a person ages, a disability or mental impairment may mean that he or she cannot act rationally or make decisions on his or her own. A court may appoint an individual to serve as the guardian over the person or as the conservator the estate, when it determines that it is required. The most common form of disability requiring conservatorship is Alzheimer’s, and a court may appoint an attorney to be the conservator, if there is no appropriate relative available.

Contact a local estate planning or elder law attorney if you have questions.

Reference: Recently Heard (May 26, 2021) “What Are the Major Categories That Make Up Elder Law?”

 

Can My Family Fight the Gift of My Estate to Caregiver?

Family fights over an estate after someone dies is not uncommon, says nj.com’s recent article entitled “I’m leaving my estate to my caregiver. Can my family fight it?”

A family member could contest a power of attorney, a will, or a living will on the grounds that the principal (the person who appointed an attorney-in-fact or agent) was mentally incapacitated when the document was signed. A family member could also contest a power of attorney on the grounds that the agent abused his or her authority. Lastly, a will, a power of attorney and living will can be challenged on the grounds that the documents were not executed properly.

A power of attorney gives one or more persons the authority to act on your behalf as your agent or agent in fact or attorney in fact. The power may be limited to a particular activity, like closing the sale of your home. It may also be general in its application.  The principle may give temporary or permanent authority to act on your behalf.

All 50 states allow you to express your wishes as to medical treatment in terminal illness or injury situations, and to designate an individual to communicate for you, if you cannot communicate for yourself.

Depending on the state, these documents are known as “living wills,” “medical directives,” “health care proxies,” or “advance health care directives.”

Reasons for contesting an estate planning document include the fact that the document may not have been witnessed by the number of witnesses required by state law or notarized, if state law requires notarization.

You should work with an experienced estate planning attorney to try to limit the success of any challenges.  Estate planning is a process involving legal counsel familiar with your goals and concerns, your assets and how they are owned, along with your family structure. Estate planning covers the transfer of property at death, as well as a variety of other personal matters and may involve planning for taxes, business succession and legacy planning.

Reference:  nj.com (May 7, 2021) “I’m leaving my estate to my caregiver. Can my family fight it?”

 

Do Stepchildren Inherit?

When an individual passes away without a will, the state laws of intestacy instruct how the person’s probate estate will be distributed.  Only assets that would have passed through a person’s will are impacted by intestate succession laws. This typically includes only assets owned alone in his or her name.

For instance, in Nebraska, under intestate succession, who inherits depends on whether the deceased had living children, parents, or other close relatives, when he or she died.  In Nebraska, if the decedent was married and died without a will, what the decedent’s spouse will receive depends on whether the decedent had any living parents or descendants, such as children, grandchildren, or great-grandchildren. If the decedent did not, then his or her spouse inherits all of the intestate property.

Under New Jersey’s intestacy statute, when a decedent is survived by a spouse and children who are not children of the surviving spouse (stepchildren), the surviving spouse is entitled to the first 25% of the intestate estate, but not less than $50,000 nor more than $200,000– plus one-half of the remainder of the intestate estate.

However, nj.com’s recent article entitled “Who gets this house after spouse dies with no will?” explains that the laws of intestacy don’t control the distribution of assets that were jointly owned with a right of survivorship (like a house) or that have a beneficiary designation (like life insurance).

If the house was jointly owned as husband and wife in joint tenancy with the right of survivorship, the surviving spouse solely owns the entire house by operation of law, upon the death of the first spouse. The stepchildren do not have any right to the proceeds of the sale of the house.  However, if the decedent spouse owned the house only in his or her own name or the house was titled by the spouses as “tenants in common,” then the laws of intestacy would apply.

Tenancy in common is an arrangement where two or more people have ownership interests in a property.  The big difference between joint tenants and tenants in common is that joint tenants have the right of survivorship (which gives them ownership of the property when one owner dies), tenants in common do not.  With a tenancy in common, the tenants can own different percentages of the property. Tenants in common can also gift their share of the property to anyone upon their death.

Contact an experienced estate planning attorney in your area if you have questions.

Reference: nj.com (May 5, 2021) “Who gets this house after spouse dies with no will?”

 

Should I Create a Trust?

Most people know that a will instructs your executor regarding where to transfer your assets when you die. You may also want to consider a trust.

Nbcnew25.com’s recent article entitled “Elder law and estate planning: What you need to know” explains that a trust can give you peace of mind that your wishes will be carried out when you pass away. Your property won’t need to go through the probate process, if it’s in a trust. Your family can focus on the grieving process without having any problems with wrapping up your estate.

In addition, financial and health care powers of attorney should also be part of your estate plan. Ask an experienced estate planning or elder law attorney to help you draft these documents to save your loved ones the worry, if you must be moved into a nursing home and are unable to make decisions for yourself.

Having the correct documents in place before you or a loved one goes into a nursing home is extremely important. With a financial power of attorney, an elder law attorney could design a Medicaid plan for someone entering a nursing home to help protect their assets.

If the correct documents aren’t in place when a loved one enters a nursing home, it could create issues—one of which is the inability to protect their assets. In that case, you may also be required to appear in front of a judge to get permission for an elder law attorney to assist in protecting assets. That request could even be denied by the judge.

For a married couple, 100% of cash assets, plus the home, can be protected, and Medicaid would cover most of the nursing home cost. This is big because the cost of nursing homes can exceed be tens of thousands of dollars every month.

For married couples, in many instances, the income of the spouse who is entering the nursing home may be able to be transferred to the spouse who still lives at home. That’s important because the spouse at home may depend on the other spouse’s income to help make ends meet.

For singles, at least 60% to 70% of cash assets, plus the home, can be protected, so that Medicaid would cover most of the nursing home cost.

Moving a loved one into a nursing home can be stressful enough, without having to worry about the cost. Help yourself and your family, by preparing the proper documents ahead of time to eliminate some of the stress. Working with an elder law attorney who specializes in Medicaid planning is a wise move. Don’t wait until it is too late.

Have things in order, so you or a loved one can avoid any unnecessary stress and keep the assets that you’ve acquired during your lifetime. Contact an experienced estate planning attorney.

Reference: nbcnew25.com (April 30, 2021) “Elder law and estate planning: What you need to know”

 

Will My Power of Attorney Be Good Enough?

A general power of attorney is no longer effective when the principal becomes incompetent. However, a general durable power of attorney will remain in effect.

FedWeek’s recent article entitled “When a Durable Power of Attorney Might Be Preferred” explains that many states allow powers of attorney to be “springing.” These powers are executed today but don’t become effective until later, when some specified event occurs, like when the principal’s physician states in writing that the principal has become incapacitated.

Springing powers add an additional level of uncertainty at a time when clarity will be needed. some doctors also won’t want to go on record that someone is incapacitated, because of their potential liability.  When the principal goes in and out of incapacity also raises questions about the application of a springing power.

After you have a power of attorney drawn up, signed, and witnessed, you should file copies with the financial institutions where you do business. Make certain that your bank or brokerage firm will accept your power of attorney. If there’s a problem, and you know in advance, you can work with the institution to make sure that the document will be honored.  Many financial institutions also have their own power of attorney forms they prefer to be used. They may not accept one drafted by your estate planning attorney.

A power of attorney technically lasts forever. However, in reality, if the document looks to be stale, a financial institution may have issues with it.  As a result, a power of attorney should be reviewed every five years or so with an experienced estate planning attorney.

If there’s been a change in your circumstances, you may want to modify the document.

Reference: FedWeek (April 15, 2021) “When a Durable Power of Attorney Might Be Preferred”

 

What Should I Address Finances, If Diagnosed with Alzheimer’s?

Because of the debilitating nature of Alzheimer’s and related forms of dementia on a loved one’s ability to make sound financial decisions, the sooner you can get financial matters in order the better. The Statesville Record & Landmark’s recent article entitled “Financial steps to take when dealing with Alzheimer’s” lists four important steps to take:

Keep an eye out for signs of unusual financial activity. Early signs of cognitive challenges for a senior include difficulty paying a proper amount for an item, leaving bills unpaid. or making strange purchases. If you see signs of a loss in judgment related to financial matters, additional action may be required.

Identify and name a power of attorney. Many people are hesitant to cede control of their personal finances to another. Therefore, have an honest discussion with your loved ones and help them appreciate the importance of having a trusted person in a position to look out for their interests. One person should be designated as financial power-of-attorney, who is authorized to sign checks, pay bills and help keep an eye on the finances of the affected persons.

Ask an experienced estate planning attorney about helping you draft this important document.

Examine the costs of care and how it will be covered. A primary concern is to determine a strategy for how your loved one will be cared for, especially if their cognitive abilities deteriorate.

You will need to be able to determine whether specialized care will be needed, either in the home or in a nursing or assisted living facility. If the answer is yes, you’ll need to determine if there are resources or long-term care insurance policies in place to help deal with those costs, which will impact decisions on a care strategy. Ask an elder law attorney about trusts that can be established to provide for care for the disabled loved one, while still protecting the family’s assets.

Be proactive. Don’t delay too long in addressing financial issues after an Alzheimer’s diagnosis. This can compound an already stressful and emotional time.

Be prepared to take action to get on top of the situation as soon as you’re aware that it could be a problem. Even establishing a plan for addressing these issues before a form of dementia is firmly diagnosed can be helpful.

Ask an experienced elder law attorney for guidance on how to manage these challenging times.

Reference: Statesville Record & Landmark (April 11, 2021) “Financial steps to take when dealing with Alzheimer’s”

 

How can I Revoke an Irrevocable Trust?

Is there a way to get a house deed out of the trust?

Nj.com’s recent article entitled “Can I dissolve an irrevocable trust to get my house out?” says that prior to finalizing legal documents, it is important to know the purpose and consequences of the plan.

An experienced estate planning attorney will tell you there are a variety of trust types that are used to achieve different objectives.

There are revocable trusts that can be created to avoid probate, and others trusts placed in a will to provide for minor children or loved ones with special needs.

Irrevocable trusts are often created to shield assets, including the home, in the event long-term nursing care is required. Conveying assets to an irrevocable trust typically starts the five-year “look back” period for Medicaid purposes, if the trust is restricted from using the assets for, or returning assets to, the individual who created the trust (known as the “grantor”).

When you transfer assets to a trust, control of the assets is given to another person (the ‘trustee”).

This arrangement may protect assets in the event long-term care is required. However it comes with the risk that the trustee may not always act how the grantor intended.

For instance, the grantor can’t independently sell the house owned by the trust or compel the trustee to purchase a replacement residence, which may cause a conflict between the grantor and trustee. Because the trust is irrevocable, it could be difficult and expensive to unwind.

In light of this, it’s important to designate a trustee who will work with and honor the wishes of the grantor.

An experienced estate planning attorney retained for estate and asset planning should provide clear, understandable and thoughtful advice, so the client has the information needed to make an informed decision how to proceed.

Reference: nj.com (April 6, 2021) “Can I dissolve an irrevocable trust to get my house out?”

 

What Is a Guardianship?

We would like to think that all of our very responsible parents and relatives have their legal documents in order. However, that is not always the case. Florida Today’s recent article entitled “One Senior Place: What is guardianship and should I seek it?” explains that we need to have a serious discussion with our loved ones and determine if, in fact, “their affairs are in order.” If not, a guardianship may be in their futures.  That is because a guardianship is really a last step.

Guardianship is a legal process that is used to protect a senior who is no longer able to care for his or herself due to incapacity or disability. A court will appoint a legal guardian to care for a senior, who’s called a ward. A legal guardian has the legal authority to make decisions for the ward and represent his or her personal and financial interests. A court-appointed guardian can also be authorized to make healthcare decisions. In a guardianship, the senior relinquishes all rights to self-determination, so you can see how this is the choice of last resort.  If a suitable guardian isn’t found, the court can appoint a publicly financed agency that serves this role.

A doctor will examine a senior and determine if he or she is incompetent to make his or her own decisions. The judge will review the senior’s medical reports and listen to testimony to determine the extent of the alleged incapacity and whether the person seeking guardianship is qualified and responsible.

A guardian can be any competent adult, such as the ward’s spouse, another family member, a friend, or a neighbor. There are even professional guardians. The guardian will usually consider the known wishes of the person under guardianship.

Guardianship can be very costly and can involve a profound loss of freedom and dignity. As a result, speaking with an experienced elder law attorney is essential.

However, there are things that any competent adult can do to decrease the chances of ever needing guardianship. This includes:

  • Drafting a power of attorney for finances; and
  • Drafting an advance healthcare directive, which names a surrogate decision maker for your healthcare decisions, including the right to refuse or terminate life-sustaining medical care based on your wishes.

Moreover, talk about your wishes and all your estate planning documents with your family. That way they’ll know how to put your plan into action, if required in the future. Contact an experienced estate planning attorney or an elder law attorney to assist you.

Reference: Florida Today (March 23, 2021) “One Senior Place: What is guardianship and should I seek it?”

 

What Should I Do with My Valuable Beanie Baby Collection?

The Wealth Advisor’s recent article entitled “Estate Planning for Your Collections May Be a Smart Decision to Make” explains that the legacy we leave isn’t always a lot of money or real estate. Artifacts and collections have a value that goes beyond dollars and cents. The importance of hobbies and collections in a person’s estate plan should be noted.

Learning a foreign language, making wine and crafting are popular stay-at-home activities, there’s a new trend: childhood collections of baseball cards, comic books, video games, sneakers, model trains, and Barbie dolls are being uncovered and re-examined.

A collector should catalog their collection because an heir might have no idea what he’s holding. Is it a three-buck toy from the local department store or is it a Devi Kroell Barbie from 2010 that sells now for at least $1,100?  One way to start a catalog is to take photos on a smart phone and save them in a shared file called “My Collectible Barbies.”

Next, get an idea what your collection is worth. You can get some idea by looking at prices for similar items on eBay prices. You also should be aware of the “grade” of your pieces. Is your Devi Kroell Barbie still in its original packaging in pristine condition, or has your niece chewed on it for a few years as a baby? Of course, the condition makes a huge difference in the price.

You can gift a collection to a trust through a gift memorandum and specifically listed it on a trust’s Schedule A. If the collectible has its own title, like your 1954 Chevrolet Corvette Convertible, the title can be transferred to the trust. When it’s part of a trust, a collectible can be distributed or maintained the way other trust assets are governed.  Trusts avoid probate and let a collector have more flexibility to control how her collection is handled, appreciated and sold. Contact an estate planning attorney to discuss preparing a trust.

Without a specific bequest in a last will, something like a Beanie Baby collection worth thousands of dollars may only be mentioned as “personal property” in a catch-all category for non-financial accounts or real estate belonging to the decedent. As a result, it’s lumped in with clothing, furniture and household items. An executor who is unfamiliar with Beanie Babies or Barbies may not know enough to maximize the collection’s value.

Some collectors dispose of an unwanted collection while they’re still alive. That is because the owner is the one who understands the market for the collectibles. Obtaining the best prices and letting your heirs  use the windfall for their individual plans may be a win-win.

Contact an experienced estate planning attorney to prepare estate planning documents.

Reference: The Wealth Advisor (Feb. 2, 2021) “Estate Planning for Your Collections May Be a Smart Decision to Make”