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Category: Capacity

estate planning for a second marriage

Can I Revoke a Power of Attorney?

Can I revoke a power of attorney? The simple answer is yes. Here is a cautionary tale. The story takes an unpleasant twist, after Cindy’s stepsister Charlotte suggests that she be given power of attorney to help Cindy with her business matters. When Cindy agrees, Charlotte’s attorney creates a Statutory Durable Power of Attorney that names Charlotte as her agent. What happened next, according to the Glen Rose Reporter in the article “Guarding against the evil stepsister,” was a nightmare.

A few weeks later, Cindy’s brother Prince found that Charlotte had moved money from Cindy’s personal bank accounts into a completely different bank, setting up joint accounts in Cindy and Charlotte’s names and granting Charlotte right of survivorship (ROS). This made Charlotte the legal owner of the account at the time of Cindy’s passing. Charlotte had also contacted Cindy’s former employer and was attempting to wrest control of Cindy’s pension. It wasn’t clear whether she was attempting to obtain the entire amount in a lump sum, but she was attempting to gain control.

Cindy realized that Charlotte was not to be trusted. However, Charlotte had the power of attorney, and all of these actions were legal. Could the power of attorney that she had signed be revoked? The answer is yes, which is important to know.

There were two paths available to Cindy: she could immediately revoke the Statutory Durable Power of Attorney that had been used to give Charlotte authority, or have her attorney create a new power of attorney granting power of agency to another person. Either way, Charlotte would be stripped of the legal authority to act on Cindy’s behalf.

Cindy had a new POA created, naming her brother Prince as her agent. The new POA had to immediately be presented to all of the financial institutions she deals with. She contacted her former employer and gave them proper notice that Charlotte no longer had authority to represent her. The new joint accounts that Charlotte had opened were then closed and individual accounts in her name only were open, which also ended the ROS. She could have returned her accounts back to the old bank or stayed with the new bank where Charlotte had opened new accounts. Cindy decided to stay with the new bank.

Cindy had to anticipate another challenge—that Charlotte might attempt to have Cindy declared incompetent and have herself named as Cindy’s legal guardian. To protect herself, Cindy’s estate planning attorney drew up documents stating that in the event Cindy ever needed someone to be her guardian, she did not want Charlotte to be named. In addition, she named the person she would want to be her guardian, if that is necessary in the future. While a judge ultimately has final discretion, the courts generally prefer naming a guardian as requested by an individual.

Your estate planning attorney can revoke a power of attorney, if it becomes clear that the person you’ve named is not acting in your best interests. Having an estate plan in place in advance of any medical or mental challenges is always better, so that you are less vulnerable to anyone trying to take advantage of you during a difficult time.

If you would like to learn more about powers of attorney, and other estate planning documents, please visit our previous posts. 

Reference: Glen Rose Reporter (Sep. 10, 2020) “Guarding against the evil stepsister”

 

estate planning for a second marriage

Perfect Storm for the Financial Abuse of Seniors

The extended isolation and loneliness during the coronavirus pandemic is creating the perfect storm for the financial abuse of seniors, who are unable to visit with family members and friends, reports Fredericksburg Today in the article “SCC urges awareness of investment fraud among seniors due to increased pandemic isolation.” The unprecedented need to forgo socializing makes seniors who are already at risk, even more vulnerable.

In the past, scammers would deliberately strike during a health crisis or after the death of a loved one. By gathering data from obituaries and social media, even establishing relationships with support and social groups, scammers can work their way into seniors’ lives.

Social distancing and the isolation necessary to protect against the spread of the coronavirus has left many seniors vulnerable to people posing as their new friends. The perpetrators may not just be strangers: family members are often the ones who exploit the elderly. The pandemic has also led to changes in procedures in care facilities, which can lead to increased confusion and dependence for the elderly, who do not always do well with changes.

Here are a few key markers for senior financial abuse:

  • A new friend or caregiver who is overly protective and has gotten the person to surrender control of various aspects of their life, including but not limited to finances.
  • Fear or a sudden change in how they feel towards family members and/or friends.
  • A reluctance to discuss financial matters, especially if they say the new friend told them not to talk about their money with others.
  • Sudden changes in spending habits, or unexplained changes to wills, new trustees, or changes to beneficiary designations.
  • Large checks made out to cash, or the disappearance of assets.
  • Signatures on checks or estate planning documents that appear different than past signatures.

Not being able to visit in person makes it harder for family members to discern what is happening.  However, there are a few steps that can be taken by concerned family members. Stay in touch with the family member, by phone, video calls, texts or any means possible. Remind loved ones that scammers are always looking for an opportunity and may try to exploit them during the pandemic.

Every community has resources that can help, if senior financial abuse is a concern. An elder law estate planning attorney will be able to direct concerned family members or friends to local resources to protect their loved ones.

Reference: Fredericksburg Today (June 20, 2020) “SCC urges awareness of investment fraud among seniors due to increased pandemic isolation”

 

 

estate planning for a second marriage

What You Need to Know about Drafting Your Will

A last will and testament is just one of the legal documents that you should have in place to help your loved ones know what your wishes are, if you can’t say so yourself, advises CNBC’s recent article entitled, “Here’s what you need to know about creating a will.” In this pandemic, the coronavirus may have you thinking more about your mortality. Here’s what you need to know about drafting your will.

Despite COVID-19, it’s important to ponder what would happen to your bank accounts, your home, your belongings or even your minor children, if you’re no longer here. You should prepare a will, if you don’t already have one. It is also important to update your will, if it’s been written.

If you don’t have a valid will, your property will pass on to your heirs by law. These individuals may or may not be who you would have provided for in a will. If you pass away with no will —dying intestate — a state court decides who gets your assets and, if you have children, a judge says who will care for them. As a result, if you have an unmarried partner or a favorite charity but have no estate plan, your assets may not go to them.

The courts will typically pass on assets to your closest blood relatives, despite the fact that it wouldn’t have been your first choice.

Your will is just one part of a complete estate plan. Putting a plan in place for your assets helps ensure that at your death, your wishes will be carried out and that family fights and hurt feelings don’t make for destroyed relationships.

There are some assets that pass outside of the will, such as retirement accounts, 401(k) plans, pensions, IRAs and life insurance policies.

Therefore, the individual designated as beneficiary on those accounts will receive the money, despite any directions to the contrary in your will. If there’s no beneficiary is listed on those accounts, or the beneficiary has already passed away, the assets automatically go into probate—the process by which all of your debt is paid off and then the remaining assets are distributed to heirs.

If you own a home, be certain that you know the way in which it should be titled. This will help it end up with those you intend, since laws vary from state to state.

Ask an estate planning attorney in your area — to ensure familiarity with state laws—for help learning what you need to know about drafting your will and the rest of your estate plan.

Reference: CNBC (June 1, 2020) “Here’s what you need to know about creating a will”

 

estate planning for a second marriage

Alzheimer’s and other Brain Diseases Require Special Estate Planning Steps

There are certain steps that can be taken by individuals, loved ones and family members to make this challenging time safer and smarter, advises an article “Financial And Estate Planning Steps To Take Now: Special Considerations For Those With Brain Disease” from Forbes.

Anyone living with a neurologic condition needs to be sure their planning reflects not only their condition but their personal experience of the condition. The variability of each person’s experience of a brain disease, from symptoms and severity to the progression rate and future prognosis to the possibility of any recovery, affects how they need to plan.

For an Alzheimer’s patient, in early stages there may be no problems in signing legal documents and putting legal safeguards in place to protect finances. Most people are not aware that the degree of competency to sign legal documents varies, depending upon the complexity of the documents to be signed and the circumstances. A relatively low level of competency is required to sign a will. This is known as “testamentary capacity.” A higher level of competency is required to sign something like a revocable trust, investment policy statement, etc. Therefore, a person who may be legally able to sign a will may not have the legal capacity to sign other documents. Alzheimer’s patients need to get their entire estate plan in order, as soon as a diagnosis is received. Safeguards are extremely important, including having an independent person, like a CPA or trusted family member, receive copies of all monthly bank and brokerage statements, in case abilities decline faster than anticipated.

Patients living with peripheral neuropathy may experience issues with balance, burning sensations, dizziness, hypersensitive skin and pain that make wearing socks or shoes impossible. If the condition becomes so severe that the person becomes homebound, they need to make changes: set up accounts, so bills can be paid online, have income streams set to automatic deposit and simplify and consolidate accounts. It is important to have a Power of Attorney (POA) that is effective immediately or a revocable living trust with a co-trustee. In this way, you do not have to leave home to conduct your business.

Parkinson’s disease may not be well understood by professional advisors. You’ll need to explain that your facial expression—Parkinsonian masked face—does not mean that you are not responding to a conversation. They need to know that your handwriting may change, becoming small and cramped. This can result in a bank or other financial institution refusing to accept your signature on documents. Your attorney can prepare a document that confirms you are living with Parkinson’s disease and that micrographia is one of your symptoms. The document should include three or four different signatures to reflect the variations. Have each signature witnessed and notarized.

People living with MS (multiple sclerosis) face the possibility of an exacerbation that could leave them incapacitated at any time. A revocable trust to coordinate financial management, with trusted individuals as co-trustees should be in place.

For people with these and other brain illnesses, an emergency financial and legal road map needs to be prepared. It should include monthly recurring bills, non-recurring bills like life insurance, property taxes, etc. Contact information for key advisors, your estate planning attorney, CPA, financial advisor, banker, insurance agent, etc., needs to be shared. Your estate plan should be updated, if you haven’t reviewed it in three or four years. If you don’t have an estate plan in place, now is the time to have one created.

Reference: Forbes (May 17, 2020) “Financial And Estate Planning Steps To Take Now: Special Considerations For Those With Brain Disease”

 

estate planning for a second marriage

Digital Assets Need to Be Protected In Estate Plans

Most people have an extensive network of digital relationships with retailers, financial institutions and even government agencies. Companies and institutions, from household utilities to grocery delivery services have invested millions in making it easier for consumers to do everything online—and the coronavirus has made our online lives take a giant leap. As a result, explains the article “Supporting Your Clients’ Digital Legacy” from Bloomberg Tax, practically all estates now include digital assets, a new class of assets that hold both financial and sentimental value.

In the last year, there has been a growing number of reports of the number of profiles of people who have died but whose pages are still alive on Facebook, Linked In and similar platforms. Taking down profiles, preserving photos and gaining access to URLs are all part of managing a digital footprint that needs to be planned for as part of an estate plan.

There are a number of laws that could impact a user’s digital estate during life and death. Depending upon the asset and how it is used, determines what happens to it after the owner dies. Fiduciary access laws outline what the executor or attorney is allowed to do with digital assets, and the law varies from one country to another. In the US, almost all states have adopted a version of RUFADAA, the law created by the U.S. Uniform Law Commission. However, all digital assets are also subject to the Terms of Service Agreement (TOSAs) that we click on when signing up for a new app or software. The TOSA may not permit anyone but the account owner to gain access to the account or the assets in the account.

Digital assets are virtual and may be difficult to find without a paper trail. Leaving passwords for the fiduciary seems like the simple solution, but passwords don’t convey user wishes. What if the executor tries to get into an account and is blocked? Unauthorized access, even with a password, is still violating the terms of the TOSAs.

People need to plan for digital assets, just as they do any other asset. Here are some of the questions to consider:

  • What will happen to digital assets with financial value, like loyalty points, travel rewards, cryptocurrency, gaming tokens or the digital assets of a business?
  • Who will be able to get digital assets with sentimental value, like photos, videos and social media accounts?
  • What about privacy and cybersecurity concerns, and identity theft?

What will happen to your digital assets? Facebook and Google offer Legacy Contact and Inactive Manager, online tools they provide to designate third-party account access. Some, but not many, other online platforms have similar tools in place. The best way, for now, may be to make a list of all of your digital accounts and look through them for death or incapacity instructions. It may not be a complete solution, but it’s at least a start.

Reference: Bloomberg Tax (April 10, 2020) “Supporting Your Clients’ Digital Legacy”

Suggested Key Terms: Digital Assets, Legacy, Incapacity, Gaming Tokens, Estate Plan, Cybersecurity, RUFADAA

estate planning for a second marriage

What Should I Know about Guardianship?

In a perfect world, a child would be raised by its parents. However, this isn’t always possible, and legally enforceable decisions must sometimes be made to name the person who is best positioned to look after a child.

Guardianship is generally only needed when a person is incapable—whether legally or practically—of looking after their own affairs, says VENTS Magazine in the article “Legal Guardianship 101: What You Need to Know.”

Courts have the power to appoint guardians for adults and children. This is usually a person who is unable to make decisions for themselves.

It may be a disabled person, and guardians are appointed for children when parents consent to it, when their parental rights are removed by a court, or when both parents are dead or permanently incapacitated.

Guardians have duties as to both the protected person and their estate. The duties to the person include providing necessities, education and appropriate medical treatment, where necessary. As far as the estate of the protected person, the duties are to manage any funds properly and to spend them, pursuant to the protected person’s needs. Guardians must prepare an inventory of assets within 60 days of their appointment to the role.

Custody is only granted for children. When appointed, a custodian is given parental rights over the child. Guardianship does not bestow these rights.

A guardian is appointed to take care of a protected person and to safeguard their estate. Biological parents, if alive, keep their parental rights over the child.

To become a guardian, you must file a petition with the court. There will be a hearing on your application. You must present proof (from a doctor, for example) that guardianship is necessary under the circumstances.

Guardianship litigation can eb stressful, but it is frequently necessary, so engage an attorney to help you.

Reference: VENTS Magazine (April 13, 2020) “Legal Guardianship 101: What You Need to Know”