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Category: Incapacity

deciding who will serve as executor

Deciding Who will Serve as Executor

Perhaps the most important choice to make in crafting a will is deciding who will serve as executor. Executor, executrix or personal representative, whatever name you use, is the person who will be in charge of your estate and follow the directions in your last will and testament. The first thing clarified in a recent article titled “Estate Planning: Non-family member personal representatives” from nwi.com, is that the person does not have to be a family member.

This is often a surprise to people, who think an adult child or sibling is the only person who can take on this responsibility. This is not true. There is no requirement that a relative be named—anyone you decide may serve as executor.

There are some requirements, which vary from state to state. However, for the most part include the following: the person has to be a legal adult, must not be incapacitated, and cannot be a felon or an “undesirable” person. As long as they are an upstanding member of the community, they may serve.

What are your choices? Some people prefer a family member, even if it is a distant relative or someone with whom they do not have a great relationship. It may take some digging to identify distant relatives. You may also have no idea how someone you don’t know will manage your estate. You should also contact them to be sure they will accept the responsibility. Without having an established relationship, they may decline.

An alternative is a trusted friend, as long as they meet the criteria noted above.

Another option is an institution that holds trust powers, such as a bank’s trust department. Community banks and some national banks do offer traditional trust services, including estate administration. There will be fees, but the experienced and impartial management of your estate may make this a better choice.

Some estate planning law firms serve clients in this role. Talk with your attorney to see if this is a service the firm offers. If the firm does not do this, they may have relationships with other professionals or institutions that can help.

One final note: don’t delay creating an estate plan because you cannot decide who will serve as your executor. Selecting someone for this role is not always an easy or obvious choice, but your estate planning attorney will be able to help you make the decision. Not having an estate plan is far worse than not knowing who to name as your executor.

If you would like to learn more about the role of the executor in an estate plan, please visit our previous posts. 

Reference: nwi.com (April 18, 2021) “Estate Planning: Non-family member personal representatives”

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Understand the limits of a Power of Attorney

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. It is important to understand the limits of a Power of Attorney.

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.

It is important to understand the limits of a Power of Attorney. 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.

If you are interested in learning more about Powers of Attorney, please visit our previous posts. 

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

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assets not covered by a will

Can You Revoke a Power of Attorney?

Can you revoke a Power of Attorney? That is a question that come up often with estate planning attorneys. Spouses and partners chosen as POA by adult children often lead to estate planning challenges. In one case, a parent worries that a second husband may be a poor influence and wants to revoke the power of attorney originally granted to a daughter. How to do that legally and without any hurt feelings is examined in the article Estate Planning: Revoking a power of attorney” from nwi.com.

A Power of Attorney is a document that allows another person to act on your behalf. The person designated is referred to as the “Attorney in Fact” or the “Agent.”

The problem this family faces, is that any revocation of a POA must be in writing, must identify the person who is to be revoked as the POA and must be signed by the person who is revoking the POA. Here’s where the hurt feelings come in: the revocation is not legal, until and unless the agent has actual knowledge of the revocation.

You can’t slip off to your estate planning lawyer’s office, revoke the POA and hope the family member will never know.

Another way to revoke a POA is to execute a new one. In most states, most durable POAs include a provision that the new POA revokes any prior POAs. By executing a new POA that revokes the prior ones, you have a valid revocation that is in writing and signed by the principal.

However, a daughter who is duly appointed must be notified. If she is currently acting under the POA and has a copy of it, there’s no way to avoid her learning of the parent’s decision.

If, however, the daughter has never seen a copy of the POA and she is not currently acting on it, then you may be able to make a new POA without notifying her. However, it may create a sticky situation in the future. Notification may be your only option.

If the POA has been recorded for any reason, the revocation must reference the book, page and instrument number assigned by the recorder’s office and be recorded. If the POA has been provided to any individuals or financial institutions, such as banks, life insurance companies, financial advisors, etc., they will need to be properly notified that it has been revoked or replaced.

Two cautions: not telling the daughter and having her find out after the parent has passed or is incapacitated might be a painful blow, with no resolution. Telling the daughter while the parent can discuss the change may be challenging but reaching an understanding will at least be possible. A diplomatic approach is best: the parent wishes to adjust her estate plan and the attorney made some recommendations, this revocation among them, should suffice.

Not revoking the power of attorney correctly could also lead to an estate planning disaster, with the daughter challenging whoever was named as the POA without her knowledge.

So the answer to the original question: Can you revoke a Power of Attorney, is yes, carefully. Talk with your estate planning lawyer to ensure that the POA is changed properly, and that all POAs have been updated. If you would like to learn more about Powers of Attorney, please visit our previous posts. 

Reference: nwi.com (March 7, 2021) “Estate Planning: Revoking a power of attorney”

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living will is an important part of an estate plan

Living Will is an Important part of an Estate Plan

A living will is an important part of an estate plan. Living wills can be used to detail the type of healthcare you do or don’t want to receive in end-of-life situations, or if you become permanently incapacitated or unconscious. A living will tells your healthcare providers and your family what type of care you prefer in these situations, explains Yahoo Finance’s recent article entitled “How to Make a Living Will.” These instructions may address topics, such as resuscitation, life support and pain management. If you don’t want to be on life support in a vegetative state, you can state that in your living will.

A living will can be part of an advance healthcare directive that also includes a healthcare power of attorney. This lets your chosen healthcare proxy make medical decisions on your behalf, when you’re unable. A living will typically only applies to situations where you’re close to death or you’re permanently incapacitated; an advance directive can cover temporary incapacitation.

Ask an experienced estate planning attorney or elder care lawyer about the technical aspects of how to make a living will and include it in your estate plan. You should consider what to include. Every state is different, so your attorney will help you with the specifics. However,  you’ll generally need to leave instructions on the following:

  • Life-prolonging care, like blood transfusions, resuscitation, or use of a respirator;
  • Intravenous feeding if you are incapacitated and cannot feed yourself; and
  • Palliative care can be used to manage pain, if you decide to stop other treatments.

You will want to be as thorough and specific as possible with your wishes, so there is no confusion or stress for your family when or if the day arrives. You next want to communicate these wishes to your loved ones. You should also give copies of your living will to your doctor. If you’re drafting a living will as part of an advance healthcare directive in your estate plan, be certain that you get a copy to your healthcare proxy.

Review your living well regularly to make sure it’s still accurate because you may change your mind about the type of care you’d like to receive.

Ask your attorney to help you draft a living will along with a healthcare power of attorney, so all of the bases are covered as far as healthcare decision-making. When choosing a healthcare proxy, select a person on whom you can rely, to execute your wishes.

A living will is an important part of an estate plan and prepares your family for your death. If you would like to learn more about end-of-life care, please visit our previous posts.

Reference: Yahoo Finance (Feb. 18, 2021) “How to Make a Living Will”

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Ways to Recognize Signs of Dementia

More than 50 million people around the world have dementia, and 10 million more are diagnosed each year, according to the World Health Organization. In fact, one in 10 Americans 65 and older has Alzheimer’s dementia, according to the Alzheimer’s Association. There are ways to recognize signs of dementia.

KSL.com’s recent article titled “11 signs of dementia everyone should know” says that with numbers like these, the odds are good someone you know will be impacted by dementia at some point in your life. Let’s look at 11 signs of dementia you should look for in your aging loved ones:

  1. Memory loss that impacts daily life. The most commonly recognized sign of dementia is memory loss. However, this is more than mere forgetfulness. It is the type of memory loss that makes it hard to learn new information or remember important dates or events. Those with dementia-related memory loss will remember items they’ve previously forgotten, and it will disrupt their daily life in many ways.
  2. Issues with planning or solving problems. Deficits in executive functioning is a recognized sign of dementia. This can include a wide range of things, such as planning and problem-solving. People who have dementia might experience trouble with regular work tasks, trouble problem solving with minor issues, or difficulty planning a schedule. Some memory loss is expected in old age. However, impairment in problem-solving or with planning isn’t.
  3. Difficulty completing familiar tasks. A person may have trouble doing tasks they ordinarily do, like using the computer, making coffee, or following their normal work routine.
  4. New problems with words in speaking or writing. At first, it might be amusing to hear your loved one call a banana a donut or something else, but continued incidents of this behavior is worrisome and may be a symptom of dementia.
  5. Confusion as to time or place. Forgetting their location or how to get to or from familiar places is another common early signal of dementia. These can lead to danger for someone with dementia to run an errand or live on their own.
  6. Trouble with visual images and spatial relationships. Visuospatial abilities are the ability to understand what we see around us and interpret spatial relationships. Dementia can bring on a decline in visuospatial abilities, such as reading, judging distance, or trouble with depth perception.
  7. Misplacing things and losing the ability to retrace steps. People with dementia increasingly put things in strange locations and can’t find them. In fact, they may accuse others of stealing the items.
  8. Changing moods, personality, and judgment. These changes are due to damage in vital areas of the brain which can lead to depression, manic-like behaviors and frequent changes in emotions called emotional lability. Dementia causes damage to the frontal lobe systems, and it can result in a loss in the ability to make sound judgments about insignificant or substantial issues.
  9. Social withdrawal. While we all like some quiet time, with dementia, it’s important to recognize if there’s a change of behavior and withdrawal from social activities they’re enjoyed in the past.
  10. Difficulty concentrating. Background noise and loud environments can make it difficult for a person suffering from dementia to concentrate. It makes them frustrated and makes conversations difficult. There’s not much you can do about the concentration problems, but you can help make their environment less stimulating. Reducing distractions and using the person’s name often as you speak to him or her.
  11. Hallucinations. Finally, hallucinations are a symptom worth discussing with a healthcare provider. If you notice your loved one becoming upset about events that didn’t happen, talk with their doctor.

These are just a few ways to recognize signs of dementia in a loved one. It is vitally important to stay in close contact with your primary care physician. Take the time to consult with your family and an elder law attorney to ensure you have provided for your loved one as they decline.

If you would like to learn more about dementia and other forms of mental decline, please visit our previous posts.

Reference: KSL.com (Dec. 29, 2020) “11 signs of dementia everyone should know”

 

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What are the Steps to Take when Dementia Begins

Covid-19 has made travelling more difficult, so holiday visits this year may not be the same triggering event they were in the past. However, even an online holiday visit can reveal a great deal of change, reports a recent article “Elder Care: When the children don’t notice” from The Sentinel. What are the steps to take when dementia begins?

An elderly spouse caring for another elderly spouse may not notice that their loved one’s needs have increased. Caregiving may have started as the spouse needing a reminder to take a shower on a regular basis. As dementia begins, the spouse may not be able to shower by themselves.

This quickly becomes exhausting and unsafe. If one spouse suddenly does not recognize the other and perceives their spouse as an intruder, a dangerous situation may occur, repeatedly. It’s time to discuss this with the children, if they are not available to notice this decline in person.

People are often reluctant to tell out-of-town children about this problem because they don’t want the added stress of having the children come to the rescue and making decisions that may be overwhelming. The children may also think they can come out for a visit and fix everything in the space of a few days. It’s not an easy situation for anyone.

A first step to take, especially when early-stage dementia begins, is to get an estate plan in place immediately, while the person still has the capacity to sign legal documents. Anyone who is old enough for Medicare (and anyone else, for that matter) needs to have an updated last will and testament, durable financial power of attorney for financial matters and a health care power of attorney, including a living will.

The financial power of attorney document will be the most practical because the family will be able to access financial accounts and make decisions without having to petition the court to appoint a guardian. A professional guardian might be appointed, which is extremely expensive and there have been situations where the professional guardian makes decisions the family does not want. A family member who can act under the power of attorney may be a much better solution for all concerned.

Speak with your estate planning attorney to be sure the POA permits wealth preservation. If it contains the phrase “limited gifting,” you want to discuss this and likely change it. You should also be sure that there is a secondary and even a third backup agent, in case there are any issues with the people named as POA.

Spouses typically have wills that leave everything to their spouse, and then equally among their children, if the spouse dies first. However, what if your spouse is in a nursing home when you die? The cost of nursing home care can quickly exhaust all funds. If any family member is receiving government benefits and then inherits directly, they could lose important government benefits. These are all matters to discuss with your estate planning attorney.

Have a conversation with your children about your healthcare advance directive. It’s not an easy conversation, but when the children know what their parents want concerning end-of-life care decisions, it relieves an enormous burden for all. Get specific—do you want a feeding tube to keep you alive? What about if the only thing keeping them alive is a heart-lung machine? Better to have these conversations now, than in the hospital when emotions are running high.

Another important step to take when dementia begins is the HIPAA release. This permits healthcare providers to discuss and share information about your loved one’s medical care. Without it, even close family members are not legally permitted to be part of the conversation about health care, lab test results, etc.

If you would like to learn more about dementia and other elder care issues, please visit our previous posts. 

Reference: The Sentinel (Dec. 11, 2020) “Elder Care: When the children don’t notice”

 

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Business Owners May Need a Power of Attorney

Some business owners may need a power of attorney (POA). However, what type would be of benefit the most is the question. This article looks at the types of power of attorney and in what circumstances a business owner may need each of them.

Entrepreneur’s recent article entitled “Does Your Business Need a Power Of Attorney?” reports that the Consumer Financial Protection Bureau (CFPB) defines power of attorney as a legal document that permits a trusted agent the authority to act on your behalf. Accordingly, signing a power of attorney allows the business owner to authorize another person to conduct business in his stead. The person designated in the document is called the “agent” or sometimes the “attorney-in-fact.” There are three main types of power of attorney:

Financial Power of Attorney. This document allows the agent to deal with the financial responsibilities and functions of the “principal” (the person who signs the document), if the principal is unable to do so themselves. Some functions for the agent of a financial power of attorney include the following:

  • Delegation of the operation of your business
  • Hiring an attorney and making decisions in lawsuits
  • Filing and paying taxes
  • Conducting transactions with banks and other financial institutions
  • Making decisions on your investments and retirement plan
  • Entering into a contract
  • Purchasing of selling real estate or different types of property; and
  • Using your assets to pay for your living expenses.

Special Power of Attorney (or Limited Power of Attorney). A business owner may need to accomplish a task for the company, but she’s unable to be there because of other responsibilities. This document permits a particular agent to conduct business on her behalf, concerning a specific and clearly outlined event, like opening a bank account, settling a lawsuit, or signing a contract.

Healthcare Power of Attorney. An individual who is incapacitated and can’t communicate, can use this to permit an agent to make medical decisions on his behalf. Note that a healthcare power of attorney isn’t the same as a living will. A living will focuses on a person’s preferences for healthcare treatment, such as do-not-resuscitate and other religious or philosophical beliefs that they want to be respected. A healthcare power of attorney is more flexible and leaves the decisions regarding healthcare to the agent. A living will concerns end-of-life decisions only, where healthcare power of attorney applies in all medical situations.

Durable Power of Attorney. A POA usually becomes effective when a person is incapacitated and stops once they’re able to make their own decisions. However, a durable power of attorney or enduring power of attorney may be applied to any of the types mentioned above. As a result, the agent can make decisions on behalf of a business owner when they aren’t incapacitated.

Business owners may need a Power of attorney to provide protections that will help deal with regular operations, while the owner is unable to lead the company. If the business is an LLC or corporation, a power of attorney for the company may not be needed. However, it’s wise to have one for your own estate planning. Ask an experienced estate planning attorney about the types of power of attorney and how they might help your business.

If you would like to learn more about estate planning for business owners, please visit our previous posts.

Reference: Entrepreneur (Nov. 3, 2020) “Does Your Business Need a Power Of Attorney?”

 

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Two different types of Durable Power of Attorney

There are two different types of durable power of attorney, and they have very different purposes, as explained in the article that asks “Does your estate plan use the right type of Power of Attorney for you?” from Next Avenue. Less than a third of retirees have a financial power of attorney, according to a study done by the Transamerica Center for Retirement Studies. Most people don’t even understand what these documents do, which is critically important, especially during this Covid-19 pandemic.

There are two different types of Durable Power of Attorney for Finance. The power of attorney for finance can be “springing” or “immediate.” The Durable POA refers to the fact that this POA will endure after you have lost mental or physical capacity, whether the condition is permanent or temporary. It lists when the powers are to be granted to the person of your choosing and the power ends upon your death.

The “immediate” Durable POA is effective the moment you sign the document. The “springing” Durable POA does not become effective, unless two physicians examine you and both determine that you cannot manage independently anymore. In the case of the “springing” POA, the person you name cannot do anything on your behalf without two doctors providing letters saying you lack legal capacity.

You might prefer the springing document because you are concerned that the person you have named to be your agent might take advantage of you. They could legally go to your bank and add their name to your accounts without your permission or even awareness. Some people decide to name their spouse as their immediate agent, and if anything happens to the spouse, the successor agents are the ones who need to get doctors’ letters. If you need doctors’ letters before the person you name can help you, ask your estate planning attorney for guidance.

The type of impairment that requires the use of a Durable POA for finance can happen unexpectedly. It could include you and your spouse at the same time. If you were both exposed to Covid-19 and became sick, or if you were both in a serious car accident, this kind of planning would be helpful for your family.

It’s also important to choose the right person to be your POA. Ask yourself this question: If you gave this person your checkbook and asked them to pay your bills on time for a few months, would you expect that they would be able to do the job without any issues? If you feel any sense of incompetence or even mistrust, you should consider another person to be your representative.

If you should recover from your incapacity, your Durable POA is required to turn everything back to you when you ask. If you are concerned this person won’t do this, you need to consider another person.

Broad powers are granted by a Durable POA. They allow your representative to buy property on your behalf and sell your property, including your home, manage your debt and Social Security benefits, file tax returns and handle any assets not named in a trust, such as your retirement accounts.

The executor of your will, your trustee, and Durable POA are often the same person. They have the responsibility to manage all of your assets, so they need to know where all of your important records can be found. They need to know that you have given them this role and you need to be sure they are prepared and willing to accept the responsibilities involved.

Your advance directive documents are only as good as the individuals you name to implement them. Family members or trusted friends who have no experience managing money or assets may not be the right choice. Your estate planning attorney will be able to guide you to make a good decision.

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

Reference: Market Watch (Oct. 5, 2020) “Does your estate plan use the right type of Power of Attorney for you?”

 

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When Do We Need an Elder Law Attorney?

Dealing with a sudden decline in a loved one’s health can be overwhelming. Trauma such as a stroke or a brain injury can cause panic. Kiplinger’s article “When Elder Care Requires Legal Advice” explains that this is when a lot of panicked calls are made to elder law attorneys. These attorneys specialize in planning for the legal complications that can arise in old age. However, seldom do people think to consult one preemptively to avoid making that panicked phone call in the first place. So when do we need an elder law attorney?

Elder law attorneys work in the best interests of the older person, although how that is accomplished may differ. If the senior is competent and contacts the attorney, it can be fairly straightforward. However, if an adult family member or friend is an agent or has power of attorney for an elderly person—and asks for help, the attorney is representing the agent. In any event, anyone who has power of attorney has a fiduciary responsibility to do what is best for the elderly person granting them that authority.

If a power of attorney isn’t in place and the elderly parent is incapable of giving it, the family is required to go to court to have someone appointed as a guardian, which can be a time-consuming option. If a parent is cognitively capable and doesn’t want help, there’s nothing an elder law attorney can do about it.

Although state laws vary, elder law primarily concerns these topics:

  • The client’s wishes and health
  • Family dynamics; and
  • The client’s financial assets and income.

An elder care attorney will also make sure that all important documents are in place and up-to-date, according to state laws. This includes a will, a trust, a power of attorney and an advance directive that includes a health care proxy.

Elder law attorneys also help moderate tough decisions, like when family members can’t agree about how a loved one wanted to be buried.

In addition, elder care lawyers understand the complex laws for Medicaid and VA benefits. An elder care lawyer can speak to many other issues, ranging from long-term care insurance to capital gains taxes.

A key when meeting with an elder law attorney is that you feel comfortable, that you’re not rushed and that your questions are answered.

If you would like to learn more about elder law and how best to select an elder law attorney, please visit our previous posts. 

Reference: Kiplinger (Sep. 15, 2020) “When Elder Care Requires Legal Advice”