Young Professionals Need Estate Planning

December 28, 2022

Even those whose daily tasks bring them close to death on a daily basis can be reluctant to consider having an estate plan done. However, young professionals, or high-income earners, needs estate planning to protect assets and prepare for incapacity. Estate planning also makes matters easier for loved ones, explains a recent article titled “Physician estate planning guide” from Medical Economics. An estate plan gets your wishes honored, minimizes court expenses and maintains family harmony.

Having an estate plan is needed by anyone, at any age or stage of life. A younger professional may be less inclined to consider estate planning. However, it’s a mistake to put it off.

Start by meeting with an experienced estate planning attorney in your home state. Have a power of attorney drafted to give a trusted person the ability to make decisions on your behalf should you become incapacitated. Not having this legal relationship leads to big problems. Your family will need to go to court to have a conservatorship or guardianship established to do something as simple as make a mortgage payment. Having a POA is a far better solution.

Next, talk with your estate planning attorney about a last will and testament and any trusts you might need. A will is a simpler method. However, if you have substantial assets, you may benefit from the protection a trust affords.

A will names your executor and expresses your wishes for property distribution. The will doesn’t become effective until after death when it’s reviewed by the court and verified during probate. The executor named in the will is then appointed to act on the directions in the will.

Most states don’t require an executor to be notified in advance. However, people should discuss this role with the person who they want to appoint. It’s not always a welcome surprise, and there’s no requirement for the named person to serve.

A trust is created to own property outside of the estate. It’s created and becomes effective while the person is still living and is often described as “kinder” to beneficiaries, especially if the grantor owns their practice and has complex business arrangements.

Trusts are useful for people who own assets in more than one state. In some cases, deeds to properties can be added into one trust, streamlining and consolidating assets and making it simpler to redirect after death.

Irrevocable trusts are especially useful to any doctor concerned about being sued for malpractice. An irrevocable trust helps protect assets from creditors seeking to recover assets.

Young professionals need estate planning because not being prepared with an estate plan addressing incapacity and death leads to a huge burden for loved ones. Once the plan is created, it should be updated every three to five years. Updating the plan is far easier than the initial creation and reflects changes in one’s life and in the law. If you would like to read more about estate planning for business owners, please visit our previous posts.

Reference: Medical Economics (Nov. 30, 2022) “Physician estate planning guide”

What Is the Purpose of a Guardian?

October 18, 2022

The most frequently asked questions about guardianship concern when it’s needed, how the process works and is there a way to avoid it. The idea of guardianship may feel troubling if you’ve never known anyone who needed a guardian, says a recent article “Guardian process can be lengthy, difficult” from The News-Enterprise. What is the purpose of a guardian, exactly?

Simply put, guardianship is a court proceeding restricting or removing the right of a person to manage their own financial, legal and medical affairs.

Guardianship is not exclusive to elderly individuals, as it is often used to protect adults and older children with disabilities. The purpose of a guardian is mainly when the person is unable to manage their own finances, incapable of understanding the scope and consequences of making their own medical decisions or is at risk of exploitation due to diminished capacity.

The process for obtaining guardianship for another person is complicated and takes at least several months before a guardianship order is entered into the legal record.

The first step is for the person who seeks guardianship for another person to file a petition with the District Court in the county where the impaired person lives. The person who files the petition is known as the petitioner and the person who needs the guardianship is known as the respondent. The petitioner is usually a family member but may also be a concerned person or an institution, like a nursing facility.

The petition is often paired with a request for emergency guardianship pending a trial. If the court doesn’t order the emergency order immediately, a short trial may be needed to get an emergency order. The court then sets a trial date and issues an order for an evaluation.

Different states have different requirements, which is why the help of an experienced estate planning attorney is needed. In some states, reports from three independent team members are needed: a healthcare professional, which is typically the respondent’s primary care physician; a mental health professional and a social worker, often from Adult Protective Services.

Each person from the team must conduct an independent evaluation and submit a separate report to the court with their findings and a recommendation. In some states, the guardianship moves to a trial, while in other states the trial is held in front of a judge.

If the guardianship is granted, by trial or by the judge, a guardian is appointed to make decisions for the person and a conservator is named. The conservator is in charge of the person’s finances. Both the guardian and conservator are required to file reports with the court concerning their actions on behalf of the respondent throughout the duration of their roles.

How can guardianship be avoided? It’s far simpler and less costly for the family to work with an estate planning attorney to have Durable Powers of Attorney and Health Care Power of Attorney documents created in advance of any incapacity. Paired with fully funded revocable living trusts, the family can have complete control over their loved one without court intervention.

These documents cannot be prepared after a person is incapacitated, so a pro-active approach must be taken long before they are needed. Consult with an experienced estate planning attorney who will help you understand the purpose and expectations of a guardian. If you would like to learn more about guardianship, please visit our previous posts.

Reference: The News-Enterprise (Sep. 24, 2022) “Guardian process can be lengthy, difficult”

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How Divorcing over Fifty effects Estate Planning

May 23, 2022

If you are and older couple considering a divorce, take care to consider how divorcing over fifty effects estate planning. According to the Pew Research Center, the divorce rate has more than doubled for people over 50 since the 1990s. The Pandemic is also adding to the uptick, says AARP’s recent article entitled “Getting Divorced? It’s Time to Update Your Caregiving Plan.”

A divorce can be financially draining. Moreover, later-in-life divorces frequently impact women’s finances more than men’s. That is because in addition to depressed earnings from time spent out of the workforce raising children, women find themselves more financially vulnerable post-divorce and more likely to serve as caregivers again in the future. Even so, for partners of all genders, it is important to consider the longer-term financial outlook, not just the financial situation you’re in when you are actually dissolving the marriage.

You and your spouse will be dividing assets and liabilities and the responsibilities regarding spousal support. How one of you will live if the other gets sick or passes away should also be part of this conversation.

Consider where you’ll need to make changes. One may be removing your spouse from beneficiary designations on all your accounts. (In some states, this is automatic.) Your divorce agreement may also include buying life insurance or maintaining a trust or beneficiary designations for one another.

Create or update your estate plan immediately. You should also ask your estate planning attorney to review your marital agreement. They will have suggestions about how to align your estate plan with your divorce obligations. If you and your ex are co-parenting children, your estate plan should address who their guardians will be, if both biological parents pass away. It is also important to address who will manage any inheritance, if you don’t want your ex-spouse handling assets you may leave to your children.

Create your life care plan, which means naming health care proxies or surrogates (who will take care of your medical affairs, if you’re in need of caregiving), designating a financial power of attorney (who will take care of your finances and legal affairs), and naming a guardian for yourself if you’re incapacitated.

Consider the way in which your divorce will impact your children and extended family if you need caregiving. At a minimum, agree between yourselves what level of contact you can manage and, if you share children and loved ones, know that your lives will cross along the way.

While your marriage may not last, the connections will, so make a wise plan. Your estate planning attorney will help advise you on how divorcing over fifty effects your estate planning. If you would like to learn more about estate planning and divorce, please visit our previous posts.

Reference: AARP (Jan. 25, 2022) “Getting Divorced? It’s Time to Update Your Caregiving Plan”

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Documents you can use to Plan for Incapacity

May 4, 2022

There are a number of factors, such as illness or disability, that can cause someone to become incapacitated. You need to have a plan should the unthinkable happen. There are documents you can use to plan for incapacity. The chief reason for a Power of Attorney (POA) is to appoint an agent who can make decisions about business and financial matters if you become incapacitated, according to an article “Estate planning in case of incapacity” from The Sentinel-Record. For most people, the POA becomes effective at a later date, when the person signs a written authorization to act under the document, or when the person is determined to be incapacitated. This often involves having the person’s treating physician sign a notarized statement declaring the person to be incapacitated. This type of POA is referred to as a “Springing POA,” since it springs from a future event.

The challenge with a springing POA is that it requires reaching a point in the person’s life where it is clinically clear they are incapacitated. If the person has not yet been diagnosed with Alzheimer’s disease or another form of dementia, but it is making poor decisions or not able to care for themselves, it becomes necessary to go through the process of documenting their incapacity and going through the state’s process to activate the POA.

For a more immediate POA, your estate planning attorney may recommend creating and signing a Durable Power of Attorney. This allows you to appoint someone to manage personal and business affairs immediately. For this reason, it is extremely important that the person you name be 100% trustworthy, since they will have instant legal access to all of your property.

A Power of Attorney can be customized to include broad powers or limited to a specific transaction, like selling your home.

This is not the only way to allow another person to take over your affairs in the event of incapacity. However, it is easier than seeking guardianship or conservatorship. Another method is to place assets in a revocable trust, which allows you to maintain control of the assets while alive and of legal capacity. The trust includes a successor trustee, who takes over in the event you become incapacitated or die.

The successor trustee only has control of the assets owned by the trust, so if the purpose of the trust is planning for incapacity, many, if not all, of your assets will need to be retitled and put into the trust.

A properly created estate plan will often use both the Durable Power of Attorney and a Revocable Living Trust, when preparing for incapacity.

Sadly, many people fail to have these legal tools created. As a result, when they are incapacitated, the family must go to court to have a person appointed to manage their affairs. This is usually referred to as a “legal guardianship.” The proceeding to obtain a guardianship is lengthy and complicated. Once the guardianship is established, the guardian must file annual accountings with the court documenting how all of the funds are used. The guardian must also post a surety bond, designed to protect assets in case of improper use.

Guardianship and its costs and time-consuming tasks can all be avoided with a properly prepared estate plan, including planning for incapacity. Whether it be a POA, guardianship or conservatorship, make sure you plan to have documents prepared to use in case of incapacity. If you would like to learn more about POA and other incapacity documents, please visit our previous posts.

Reference: The Sentinel-Record (March 27, 2022) “Estate planning in case of incapacity”

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how to obtain a power of attorney for your parent

How to Obtain Power of Attorney for your Parent?

March 31, 2022

Since the beginning of the COVID 19 pandemic, people have become more aware of the need for a power of attorney should one become incapacitated. But it begs the question: how to obtain a power of attorney for your parent? Tyron Daily Bulletin’s recent article entitled “How to get power of attorney for a loved one” says the person granting you that power, known as the “principal,” must designate you as the agent (also known as attorney in fact) to have the powers specified in the POA document. it must be signed by the principal while he or she is sound of mind.

Talk to an elder law attorney so understand what your state laws say about powers of attorney. Note that you cannot get a POA if someone is already incapacitated because the principal of the POA must be able to sufficiently comprehend what a POA document represents and the effects of signing it. He or she must clearly communicate their intentions.

The agent of a POA must always act in the best interests of the principal. This can include managing the principal’s financial interests or overseeing the principal’s healthcare and may make decisions about their care and treatment.

There are several things as POA that you cannot do:

Create a contract to get paid for personal services provided to the principal
Vote in place of the principal
Create or alter the principal’s will
Designate another as the agent on behalf of the principal; and
Do anything that is not in the principal’s best interests.

Even if the principal is in good health now, it is smart to plan for potential challenges. You never know when an injury or illness may take away that person’s capacity to manage finances or make important decisions about medical care. The most opportune time to start considering power of attorney is before a parent or loved one requires any caregiving.

Talk with an elder law attorney about how to obtain a power of attorney for your parent. Remember, the principal must be part of the conversation and cannot be mentally incapacitated. If you would like to read more about powers of attorney, please visit our previous posts.

Reference: Tyron Daily Bulletin (March 7, 2022) “How to get power of attorney for a loved one”

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When Does Someone Need a Guardian?

February 23, 2022

When does someone need a guardian? When a person is legally deemed incapable of managing their own affairs and has not named a financial power of attorney to do so, a guardian or conservator may be needed. A family member may be appointed to the task, as explained in a recent article “What to Do When a Family Member Needs a Guardian” from Kiplinger.

Guardians are usually responsible for personal affairs, while a conservator is generally limited to financial matters. These terms vary by state, so ask the estate planning attorney which ones are most appropriate for your situation. In many cases, one person takes on both roles.

The control over another person’s life and money has been in the news a lot lately. The years-long battle between Brittney Spears and her father showed how things can go wrong, as did the movie “I Care a Lot,” about a professional guardian who steals life savings from elderly people.

It is better for an adult child to care for a parent through the use of Power of Attorney and Healthcare Power of Attorney than having to go to court to gain control through a guardianship. Having these documents prepared while the person still has legal capacity to execute them is far easier and less costly. Guardianship and conservatorship are last resorts when no prior planning has been done.

How does it work? Rules vary from state to state, but generally, a person—referred to as the petitioner—files a petition with a local court to seek guardianship. A judge holds a hearing to determine whether the person in question, known as the respondent, meets the state’s standards for needing a guardian. The respondent has a right to have an attorney represent them, if they do not feel they need or want to have a guardian.

Guardianship does more than give another person the right to make financial decisions for another person. Under guardianship, a person may lose the right to vote, marry, travel, or make certain medical decisions. Courts are often reluctant to take away all of these rights. In many states, courts are allowed to limit the guardian’s authority to managing bills and maintaining a home.

The least intrusive option is preferable, which would be using the Power of Attorney and Health Care Power of Attorney in the first place.

Another point—most courts will not grant a guardianship, if a person is physically disabled but mentally sharp. Making bad decisions, like handling money irresponsibly, or keeping company with people who are potentially preying on a senior, is not enough reason to put someone under guardianship. You cannot always protect someone from themselves.

However, the need for guardianship is clear if a person has suffered a stroke and is in a coma or is suffering from dementia. Other reasons are severe depression where a person cannot function or delirium, when a person is unaware of their environment and confused by everything around them. Delusional disorders are also reasons for guardianship.

When the person meets the standard of need, the courts typically prefer to appoint a family member. However, if there is no appropriate person, a public guardian paid by the state or a professional guardian paid by the family can be appointed.

Filing a guardianship petition can cost thousands of dollars, and a professional guardian can charge upwards of $250 an hour. Most guardians are well meaning, but often run into conflicts with family members. The guardian’s job is to protect the person, not serve the interest of the family. If the family’s sole interest is in protecting their inheritance, the guardian can find themselves in a difficult situation.

Family members serving as guardians can also find themselves in difficult situations. The guardian, whether a professional or family member, must keep meticulous records of any monies spent and the tasks performed on behalf of the person.

The process of determining when someone needs a guardian is complicated and time consuming. The best solution is to prepare in advance with a Power of Attorney, Healthcare Power of Attorney and all of the estate planning documents needed so the family can act without court intervention, the costs of applying for guardianship and the possibility of a professional guardian being appointed. If you would like to read more about guardianship, please visit our previous posts.

Reference: Kiplinger (Jan. 25, 2022) “What to Do When a Family Member Needs a Guardian”

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Understanding the Legal Terms in Estate Planning

February 17, 2022

Having a working understanding of the legal terms used in estate planning is the first step in working successfully with an estate planning attorney, says a recent article, “Learn lingo of estate planning to help ensure best outcome” from The News-Enterprise. Two of those key words:

Principal—the individual on whose behalf documents are prepared, and

Fiduciary—the person who signs some of these documents and who is responsible for making decisions in the best interest of the principal and the estate.

In estate planning and in business, the fiduciary is the person or business who must act responsibly and in good faith towards the person and their property. You’ll see this term in almost every estate planning or financial document.

Within a last will and testament, there are more: beneficiary, conservator, executor, grantor, guardian, testator, and trustee are some of the more commonly used terms for the roles people take.

The testator is the principal, the person who signs the will and on whose behalf the will was drafted.

Beneficiaries are individuals who receive property from the estate after death. Contingent beneficiaries are “back-up” beneficiaries, in case the beneficiaries are unable to receive the inheritance. In most wills, the beneficiaries are listed “or to descendants, per stirpes.” This means if the beneficiary dies before the testator, the beneficiary’s children receive the original beneficiary’s share.

In most cases, specific distributions are made first, where a specific asset or amount of money goes to a specific person. This includes charitable donations. After all specific distributions are made, the rest of the estate, referred to as the “residuary estate,” is distributed. This includes everything else in the probate estate.

The administrator or executor is the fiduciary charged with gathering assets, paying bills and making the distribution to beneficiaries. The executor is the term used when there is a will. If there is no will, the person in the role is referred to as the administrator and may be appointed by the court.

If a beneficiary is unable to take the inheritance because they are a minor or incapacitated, the court will appoint a conservator to act as fiduciary on behalf of the beneficiary.

A guardian is the person who takes care of the beneficiary, or minor children, and is named in the will. If there is no guardian named in the will, or if there is no will, a court will appoint a person to be the guardian. Judges do not always select family members to serve as guardians, so there should always be a secondary guardian, in case the first cannot serve. If the first guardian does not wish to serve or is unable to, naming a secondary guardian is better than a child being sent to foster care.

Finally, the trustee is the person in charge of a trust. The person who creates the trust is the grantor or settlor. It’s important to note the executor has no control or input over the trust. Only the trustee or successor trustee may make distributions and they are the trust’s fiduciary.

Having firm understanding of legal terms will make you feel more comfortable in your estate planning. It will make the process easier and help you understand the different roles and responsibilities involved. If you would like to learn more about estate planning, please visit our previous posts.

Reference: The News-Enterprise (Jan. 18, 2022) “Learn lingo of estate planning to help ensure best outcome”

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When should You Consult an Elder Law Attorney?

December 7, 2021

Elder law attorneys assist seniors or their family caregivers with legal issues and planning that related to the aging process. These attorneys frequently help with tax planning, disability planning, probate and administration of an estate, nursing home placement and many other legal issues. When should you consult an elder law attorney?

Forbes’ recent article entitled “Hiring an Elder Law Attorney,” explains that elder law attorneys are specialists who work with seniors or caregivers of aging family members on legal matters that older adults face as they age. Many specialize in Medicaid planning to help protect a person’s financial assets, when they have Alzheimer’s disease or another debilitating illness that may require long-term care. They can also usually draft estate documents, including a durable power of attorney for health and medical needs, and even a trust for an adult child with special needs.

As you get older, there are legal issues you, your spouse or your family caregivers face. These issues can also change. For instance, you should have powers of attorney for financial and health needs, in case you or your spouse become incapacitated. You might also need an elder law attorney to help transfer assets, if you or your spouse move into a nursing home to avoid spending your life savings on long-term care.

Elder law attorneys can help with a long list of legal matters seniors frequently face, including the following:

Preservation and transfer of assets
Accessing health care in a nursing home or other managed care environment and long-term care placements
Estate and disability planning
Medicare, Social Security and disability claims and appeals
Supplemental insurance and long-term health insurance claims and appeals
Elder abuse and fraud recovery
Conservatorships and guardianships
Housing discrimination and home equity conversions
Health and mental health law.

The matters listed above are all issues that should motivate you to consult an elder law attorney. Certified Elder Law attorney Melissa Donovan at Texas Trust Law can help! If you would like to learn more about elder law, please visit our previous posts.

Reference: Forbes (Oct. 4, 2021) “Hiring an Elder Law Attorney”

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understanding of how a conservatorship works

Understanding how a Conservatorship Works

October 7, 2021

Kiplinger’s recent article titled “Britney Spears’ Sad Song … Warning: This Could Happen to You” says that conservatorship is a topic that’s been in the news lately with Britney’s recent court battle. Most people do not have an understanding of how a conservatorship works.

In Britney’s case, while there has not been any evidence alleged of actual fraud or financial abuse in her conservatorship, she lost nearly all control over her finances, her business affairs and the most personal aspects of her life.

She also doesn’t want her father to be the person to hold that much power or control over her life.

A judge can take charge of an individual’s personal and financial decisions and appoint a third party to make decisions almost on an unlimited basis. These proceedings can exact a significant emotional toll and be tremendously expensive and time-consuming.

Conservatorship can happen to anyone, if and when you’re too disabled (due to an accident or illness) or too incompetent (due to infirmity of mind, old age or dementia, or a similar condition) to handle your own affairs.

If your estate plan addresses this with a chain of command to act on your behalf, no formal court proceedings would be required. Your wishes can be honored, and all the drama like that which Britney Spears has endured can be avoided.

If you are under age 60, there is a four to five times greater likelihood that you’ll become disabled, due to an accident or illness, for a period of more than one year, than your chances of dying. This is because modern medicine can often prevent death but not cure the illness or condition causing the disability. If you’re over age 60, there’s a 70% chance that, during your remaining lifetime, you’ll be too disabled or incompetent to act for yourself, for a period of at least two to 2½ years.

However, Britney Spears’ battle to end her court-ordered conservatorship took an unexpected turn recently, when her father and the conservator of her estate, Jamie Spears, filed a petition to end the arrangement. Mr. Spears cited his daughter’s pleas at two separate court hearings over the summer in his request to terminate the 13-year conservatorship.

“Recent events related to this conservatorship have called into question whether circumstances have changed to such an extent that grounds for establishment of a conservatorship may no longer exist,” the filing states. The bottom line is this: if you, or a loved one come to that point in life, understanding how a conservatorship works is the first step toward beginning that process – and avoiding some of the more difficult problems reflected in Britney Spears’ case.

If you would like to learn more about conservatorship, please visit our previous posts.

Reference: Kiplinger (July 14, 2021) “Britney Spears’ Sad Song … Warning: This Could Happen to You”

Difference between Conservatorship and Guardianship

September 14, 2021

It is common for people to misunderstand and confuse the difference between a conservatorship and a guardianship. A conservatorship is created to let one person manage another’s finances. The conservator is court- appointed and may be responsible for financial decisions, such as retirement planning, the purchase or sale of property and the transfer of other financial assets.

The laws for conservatorships and guardianships can vary widely in different states. A conservatorship or guardianship is typically necessitated by a disability or injury that prevents a person from caring for themselves.

US News & World Report’s recent article entitled “How Conservatorships Can Prop Up or Tear Down a Loved One” explains that once you have a conservator in place, the burden is on you to prove you no longer need it. The biggest issue in most cases is abuse of power or neglect. Either (the conservator) is doing something self-serving, such as spending money on something other than the senior’s care, or they’re not helping the conservatee, or providing the care they need.

Estate planning attorneys may recommend a conservatorship or guardianship in standard estate planning documents, like a power of attorney. A conservator can be any adult, possibly a family member, who is tasked with the responsibility of managing the person’s finances.

Because a conservator would be in charge of a person’s assets, it’s common for the same person to be named to serve as attorney-in-fact or agent with a power of attorney. However, because a guardian is in charge of the person themselves, it’s wise to nominate the same people who are named to serve as health care agents in the client’s health care proxy. Sometimes, these are the same, but if they’re different, it is important for that difference to be stated.

A guardianship is created in cases when a person can’t take care of themselves and requires another person to make some or all of their personal decisions. This might include decisions about his or her medical care, support services, housing, or finances. While a court appoints both a conservator and a guardian, a conservatorship is generally limited to financial decisions. In contrast, a guardianship deals with personal decisions, like medical care, and may, in some instances, also cover financial decisions.

Just about every state has laws designed to protect those placed in a conservatorship or guardianship. For example, in New York, individuals must satisfy medical requirements to be determined unable to care for oneself. The burden of proof to meet such restrictions is high.

In addition, individuals can seek professional help in preparing for future circumstances that may prevent them from managing their finances and personal affairs. This includes estate planning documents, such as wills, powers of attorney, beneficiary forms and health care proxies. An estate planning attorney can help you better understand the difference between a conservatorship and a guardianship, and advise you which is the best option for you and your family.

If you would like to learn more about conservatorship and guardianship, please visit our previous posts.

Reference: US News & World Report (Aug. 19, 2021) “How Conservatorships Can Prop Up or Tear Down a Loved One”

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Category: Conservatorship

Young Professionals Need Estate Planning

What Is the Purpose of a Guardian?

How Divorcing over Fifty effects Estate Planning

Documents you can use to Plan for Incapacity

How to Obtain Power of Attorney for your Parent?

When Does Someone Need a Guardian?

Understanding the Legal Terms in Estate Planning

Understanding how a Conservatorship Works

Difference between Conservatorship and Guardianship

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