When Should an Estate Plan Be Reviewed?

If your parents don’t remember when they last reviewed their estate plan, then chances are it’s time for a review. Over the years, wishes, relationships and circumstances change, advises the recent article, “5 Reasons To Have Your Parents’ Estate Plan Reviewed,” from Forbes. An out-of-date estate plan may not achieve your parent’s wishes, or be declared invalid by the court. Having an estate planning attorney review the estate plan may save you money in the long run, not to mention the stress and worry created by an estate disaster. If you need reasons, here are five to consider.

Financial institutions are wary of dated documents. Banks and other financial institutions look twice at documents that are not recent. Trying to use a Power of Attorney that was created twenty years ago is bound to create problems. One person tried to use a document, but the bank insisted on getting an affidavit from the attorney who prepared it to be certain it was valid. While the son was trying to solve this, his mother died, and the account had to be probated. A “fresh” power of attorney would have solved the problem.

State laws change. Things that seem small become burdensome in a hurry. For example, if someone wants to leave a variety of personal effects to many different people, each and every one of the people listed would need to be located and notified. Many states now allow a separate writing to dispose of personal items, making the process far easier. However, if the will is out of date, you may be stuck with a house-sized task.

Legal document language changes. The SECURE Act changed many aspects of estate planning, particularly with regard to retirement accounts. If your parents have retirement accounts that are payable to a trust, the trust language must be changed to comply with the law. Not having these updates in the estate plan could result in an increase in income taxes or costly fees to fix the situation.

Estate tax laws change. In recent years, there have been many changes to federal tax laws. If your parents have not updated their estate plan within the last five years, they have missed many changes and many opportunities. It is likely that your parents’ assets have also changed over the years, and the documents need to reflect how the estate taxes will be paid. Are their assets titled so that there are enough funds in the estate or trust to cover the cost of any liability? Here’s another one—if all of the assets pass directly to beneficiaries via beneficiary designations, who is going to pay for the tax bills –and with what funds?

Older estate plans may contain wishes from decades ago. For one family, an old will led to a situation where a son did not inherit his father’s entire estate. His late sister’s children, who had been estranged from him for decades, received their mother’s share. If the father and son had reviewed the will earlier, a new will could have been created and signed that would have given the son what the father intended.

These types of problems are seen daily in your estate planning attorney’s office. Take the time to get a proper review of your parent’s estate plan, to prevent stress and unnecessary costs in the future.

Reference: Forbes (May 25, 2021) “5 Reasons To Have Your Parents’ Estate Plan Reviewed”

 

What Do I Need to Know about Estate Planning?

Your idea of planning for the future may include vacations and visits to family and friends—estate planning, not so much. However, it should, advises Real Simple in the article “Everything You Need to Know About Estate Planning—and Why You Should Start Now.” Estate planning concerns decisions about distributing your property when you die, and while that’s not as much fun as planning a trip to an adventure park, it’s become increasing important for adults of all ages.

A survey by caring.com found that the number of young adults with a last will (ages 18-34) increased by 63 percent since 2020. Many tough lessons were learned through the pandemic, and the importance of having an estate plan was one of them.

An estate plan is more than documents for when you die. There are also documents for what should happen, if you become disabled. The last will is one piece of the larger estate plan. An estate plan is also an opportunity to plan for wealth accumulation and building generational wealth, at any level.

Estate planning is for everyone, regardless of their net worth. People with lower incomes actually need estate planning more than the wealthy. There’s less room for error. Estate planning is everything from where you want your money to go, to who will be in charge of it and who will be in charge of your minor children, if you have a young family.

It may be rare for both parents to die at the same time, but it does happen. Your last will is also used to name a guardian to raise your minor children. With no last will, the court will decide who raises them.

If you’ve filled out 401(k) and life insurance paperwork at work, you’ve started estate planning already. Any document that asks you to name a beneficiary in case of your death is part of your estate plan. Be certain to update these documents. Young adults often name their parents and then neglect to change the beneficiaries, when they get married or have children.

For single people, estate planning is more important. If you have no estate plan and no children, everything you own will go to your parents. What if you have a partner or best friend and want them to receive your assets? Without an estate plan, they have no legal rights. An estate planning attorney will know how to plan, so your wishes are followed.

Estate planning includes planning for disability, also known as “incapacity.” If you become too sick to manage your affairs, bills still need to be paid. Who can do that for you? Without an estate plan, a family member will need to go to court to be assigned that role—or someone you don’t even know may be assigned that role. Your last will names an executor to manage your affairs after you die.

Work with an experienced estate planning attorney to have your last will, Power of Attorney, Medical Power of Attorney and other parts of your estate plan created. The court system and processes are complex, and the laws are different in every state. Trying to do it yourself or using a template that you download, could leave you with an invalid last will, which will cause more problems than it solves.

Reference: Real Simple (May 12, 2021) “Everything You Need to Know About Estate Planning—and Why You Should Start Now”

 

Your Will and Estate Planning Checklist

Dying without a last will creates additional costs and eliminates any chance your wishes for loved ones will be followed after your death. Typically, people think about last wills when they marry or have children, and then do not think about last wills or estate plans until they retire. While a last will is important, there are other estate planning documents that are just as important, says the recent article “10 Steps to Writing a Will” from U.S. News & World Report.

Most assets, including retirement accounts and insurance policy proceeds, can be transferred to heirs outside of a will, if they have designated beneficiaries. However, the outcome of an estate may be more impacted by Power of Attorney for financial matters and Medical Power of Attorney documents.

Here are ten specific tasks that need to be completed for your last will to be effective. Remember, if the will does not comply with your state’s estate law, it can be declared invalid.

  1. Find an estate planning attorney who is experienced with the laws of your state.
  2. Select beneficiaries for your last will.
  3. Check beneficiaries on non-probate assets to make sure they are current.
  4. Decide who will be the executor of your last will.
  5. Name a guardian for minor children, if yours are still young.
  6. Make a letter describing possessions and who you want to receive them. Be very specific.

There are also tasks for your own care while you are living, in case of incapacity:

  1. Name a person for the Power of Attorney role. They will be your representative for legal and financial matters, but only while you are living.
  2. Name a person for the Medical Power of Attorney to make decisions on your behalf, if you cannot.
  3. Create an Advance Directive, also known as a Living Will, to explain your wishes for medical care, particularly concerning end-of-life care.
  4. Discuss these roles and their responsibilities with the people you have chosen, and make sure they are willing to serve.

Be realistic about the people you are naming to receive your property. If you have a child who is not good with managing money, a trust can be set up to distribute assets according to your wishes: by age or accomplishments, like finishing college, going to rehab, or maintaining a steady work history.

Do not forget to tell family members where they can find your last will and other estate documents. You should also talk with them about your digital assets. If accounts are protected by passwords or facial recognition, find out if the digital platform has a process for your executor to legally obtain access to your digital assets.

Finally, do not neglect updating your last will every three to four years or anytime you have a major life event. An estate plan is like a house: it needs regular maintenance. Old last wills can disinherit family members or lead to the wrong person being in charge of your estate. An experienced estate planning attorney will make the process easier and straightforward for you and your loved ones.

Reference: U.S. News & World Report (May 13, 2021) “10 Steps to Writing a Will”

 

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?”

 

How to Protect Loved Ones from Elder Abuse

Predators had an open season on the elderly during the pandemic, as isolation necessitated by COVID severely limited family member’s ability to visit in person. In some instances, caregivers themselves were the predators, and manipulation on important legal documents, including durable power of attorney, trusts, wills and ownership of homes has occurred. All this was reported the article “Warning: Isolation Of Your Aging Parent May Be A Red Flag” from Forbes. The enforced isolation has created worrisome situations for all concerned.

If you haven’t seen your parents or grandparents for a year or more, and are all fully vaccinated, one expert strongly encourages visitation, as soon as is possible. Use the visit to review all of their legal matters and talk about how to increase engagement and end the isolation.

Consider the following a checklist of what needs to be done at that first visit:

Look for any signs that anyone who had access to loved ones may have taken advantage of their isolation during the past year. Don’t assume the best behavior of everyone around them. It’s not how we like to think, but caution needs to be exercised in this situation.

Check on their will and trusts. The pandemic has reminded everyone that life is fragile, and it’s important to go over legal documents or, if they don’t exist, create them. Find out if anyone has pressured family members to change legal documents—if they have been changed in the last year and you weren’t told about it, find out what happened.

If aging parents do not have a will or trusts, or these documents were altered in your absence, speak with an estate planning attorney who can create a new estate plan. Make sure all copies of older wills are destroyed. At the same time, this would be a good time to have their powers of attorney, healthcare proxy and living wills updated.

If your parent or grandparent lives on their own, find out if they are now in need of any caregiving. A year is a long time, and elderly people who started out fine during the epidemic may have had changes in their health or ability to live independently. Go see for yourself how they are managing. Is the house clean? Are the stairs too steep to be managed?  Not everyone will be able to return to “normal” without some help. Senior centers, gyms and recreational facilities have been shut down for a long time. They may need some help getting back into a routine of socializing and exercising.  The end of enforced isolation can also mean the end of an easy cover for anyone who was using isolation as a protection for financial elder abuse or any other type of abuse.

Isolation itself is a form of abuse, including not allowing others to visit in person or speak with a parent alone. You can overcome this by being engaged with family members on a regular basis, by phone, video visits or, if you are able to, more frequent in person visits.

Reference: Forbes (April 23, 2021) “Warning: Isolation Of Your Aging Parent May Be A Red Flag”

 

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”

 

What Is the Purpose of an Estate Plan?

No one wants to think about becoming seriously ill or dying, but scrambling to get an estate plan and healthcare documents done while in the hospital or nursing home is a bad alternative, says a recent article titled “The Essentials You Need for an Estate Plan” from Kiplinger. Not having an estate plan in place can create enormous costs for the estate, including taxes, and delay the transfer of assets to heirs.

If you would like to avoid the cost, stress and possibility of your spouse or children having to go to court to get all of this done while you are incapacitated, it is time to have an estate plan created. Here are the basics:

A Will, a Living Will, Power of Attorney and a Beneficiary Check-Up. People think of a will when they think of an estate plan, but that’s only part of the plan. The will gives instructions for what you want to happen to assets, who will be in charge of your estate—the executor—and who will be in charge of any minor children—the guardian. No will? This is known as dying intestate, and probate courts will make all of these decisions for you, based on state law.

However, a will is not enough. Beneficiary designations determine who receives assets from certain types of property. This includes life insurance policies, qualified retirement accounts, annuities, and any account that provides the opportunity to name a beneficiary. These instructions supersede the will, so make sure that they are up to date. If you fail to name a beneficiary, then the asset is considered part of your estate. If you fail to update your beneficiaries, then the person you may have wanted to receive the assets forty years ago will receive it.

Some banks and brokerage accounts may have an option of a Transfer on Death (TOD) agreement. This allows you to plan out asset distribution outside of the will, speeding the distribution of assets.

A Living Will or Advance Directive is used to communicate in advance what you would want to happen if you are alive but unable to make decisions for yourself. It names an agent to make serious medical decisions on your behalf, like being kept on life support or having surgery. Not having the right to make medical decisions for a loved one requires petitioning the court.

Financial Power of Attorney names an attorney in fact to manage finances, paying bills and overseeing investments. Without a POA, your family can’t take action on your financial matters, like paying bills, overseeing the maintenance of your home, etc. If the court appoints a non-family member to manage this task, the family may see the estate evaporate.

Creating a trust is part of most people’s estate plan. A trust is a means of leaving assets for a minor child, or someone who cannot be trusted to manage money. The trust is a legal entity that inherits money when you pass, and a trustee, who you name in the trust documents, manages everything, according to the terms of the trust.

Today’s estate plan needs to include digital assets. You need to give someone legal authority to manage social media accounts, websites, email and any other digital property you own.  The time to create an estate plan, or review and update an existing estate plan, is now. COVID has awakened many people to the inevitability of severe illness and death. Planning for the future today protects the ones you love tomorrow.

Speak with an experienced estate planning attorney to assist you in preparing your documents.

Reference: Kiplinger (April 21, 2021) “The Essentials You Need for an Estate Plan”

 

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 Emergency Documents Do I Need in Pandemic?

With the threat of COVID-19, we’ve all come face-to-face with our mortality. However, are you prepared for the worst?, asks KSAT in its January 23 article entitled, “Important documents you need to have handy in case of an emergency.”

A consumer report recently found that just 7% of those ages 19 to 29 have an advance directive for health care emergencies, and even fewer have a will. Estate planning is one of the most worthwhile things we could do for ourselves or our loved ones.

The article explains that your estate is everything you own, and if it’s not protected, it could be taken away from your loved ones.  An extremely important document to have, in addition to a will, is a living will and a healthcare proxy or power of attorney. These documents let you designate the individual who will make decisions on your behalf if you cannot speak for yourself.

In addition, a HIPAA authorization permits an individual you trust to speak with your healthcare staff and receive your personal medical information.  Another key document is a financial power of attorney. This empowers you to designate an agent to handle your debts, contracts and assets. A financial power of attorney must be signed and notarized.

You should also consider payable on death and transfer on death designations, which transfer assets to designated beneficiaries without probate.

It is important to conduct a digital asset inventory to list your entire online presence and include all accounts, logins, passwords, social media, and professional profiles, and most importantly, a list of everything you have on autopay.

Last, you need a last will and testament. This lets you to name an executor or personal representative to handle your postmortem affairs. However, a last will does not keep assets out of probate. You should contact an experienced estate planning attorney to make sure that these documents are done correctly.

One last note: you can prepare a personal property memorandum to list the beneficiaries of any sentimental, non-monetary items.

Reference: KSAT (San Antonio) (Jan. 23, 2021) “Important documents you need to have handy in case of an emergency”

 

What can a Power of Attorney Do—or Not Do?

Power of attorney is an important tool in estate planning. The recent article “Top Ten Facts About Powers of Attorney” from My Prime Time News, explains how a POA works, what it can and cannot do and how it helps families with loved ones who are incapacitated.

The agent’s authority to powers of attorney (POA) is only effective while the person is living. It ends upon the death of the principal. At that point in time, the executor named in the last will or an administrator named by a court are the only persons legally permitted to act on behalf of the decent.

An incapacitated person may not sign a POA. Powers of Attorney can be broad or narrow. A person may be granted POA to manage a single transaction, for example, the sale of a home. They may also be named POA to handle all of a person’s financial and legal affairs. In some states, such as Colorado, general language in a POA may not be enough to authorize certain transactions. A POA should be created with an estate planning attorney as part of a strategic plan to manage the principal’s assets. A generic POA could create more problems than it solves.

You can have more than one agent to serve under your POA. If you prefer that two people serve as POA, the POA documents will need to state that requirement.

Banks and financial institutions have not always been compliant with POAs. In some cases, they insist that only their POA forms may be used. This has created problems for many families over the years, when POAs were not created in a timely fashion. In 2010, Colorado law set penalties for third parties (banks, etc.) that refused to honor current POAs without reasonable cause. A similar law was passed in New York State in 2009. Rules and requirements are different from state to state, so speak with a local estate planning attorney to ensure that your POA is valid.

Your POA is effective immediately once it is executed. A Springing POA becomes effective when the conditions specified in the POA are met. This often includes having a treating physician sign a document attesting to your being incapacitated. An estate planning attorney will be able to create a POA that best suits your situation. If you anticipate needing a trust in the future, you may grant your agent the ability to create a trust in your POA. The language must align with your state’s laws to achieve this.

Your agent is charged with reporting any financial abuse and taking appropriate action to safeguard your best interests. If your agent fails to notify you of abuse or take actions to stop the abuser, they may be liable for reasonably foreseeable damages that could have been avoided.

The agent must never use your property to benefit himself, unless given authority to do so. This gets sticky, if you own property together. You may need additional documents to ensure that the proper authority is granted, if your POA and you are in business together, for example.

Every situation is different, and every state’s laws and requirements are different. It will be worthwhile to meet with an estate planning attorney to ensure that the documents created will be valid and to perform as desired.

Reference: My Prime-Time News (April 10, 2021) “Top Ten Facts About Powers of Attorney”