Category: Powers of Attorney

How the Guardianship Process Works

How the Guardianship Process Works

For family members of the estimated 6.5 million dementia patients in the U.S., it is crucial to understand whether guardianship may be an option for their loved one. A recent article from Next Avenue titled “Thinking of Becoming a Guardian?” explains how the guardianship process works and what factors go into the decision-making process.

Guardianship is the position of being responsible for someone else. State courts usually appoint a guardian to make decisions for a person, if the court finds that person to be incapacitated or unable to make safe and reasonable decisions for themselves. People who are placed under guardianship, known as “wards,” often lose their independence in making financial, legal and health care decisions.

If full guardianship is awarded, the person cannot make decisions about whether they may vote, marry, where they live, or make their own end-of-life decisions.

Two tasks that are evaluated when considering guardianship are a person’s ability to manage personal finances and to take medications as prescribed.

The court may call on a geriatrician or psychiatrist to evaluate the person’s functional behavior, cognitive function, disabling conditions and ability to meet their essential needs.

There are benefits to guardianship for someone who is not able to care for themselves. It ideally creates a safety net for a person who cannot make informed decisions for themselves.

this, of course, assumes that the guardian is honest and accountable, which is not always the case. The inconsistencies plaguing the guardianship system include minimum standards for guardians, lack of regular independent reviews of the need for guardianship and lack of educational requirements for guardians.

Once guardianship is assigned, there is a tendency for the person to become lost when no follow-up is done. The very same person who lacks capacity to care for themselves is not going to be able to advocate for themselves, contact an attorney or access funds for court proceedings.

There is also a tendency to assign full guardianship for a person, rather than less restrictive alternatives.

There are alternatives, but they require planning and discussion. More than 40% of Americans have not discussed their wishes for end-of-life care with their loved ones, according to an article in the Journal of the American Geriatrics Society. Families should have a conversation at the first sign of memory loss or when preparing for retirement regarding wishes for end-of-life care and write them down as part of an Advanced Directive—also known as a Living Will and Health Care Power of Attorney—when preparing their estate plan.

Another important document, although not legally binding, is a “Value History,” where you share your values and beliefs as they may impact care choices.

Designate a Power of Attorney and list two or even three back-up candidates. This person will be responsible for financial, legal and personal matters, avoiding the need for guardianship.

Appointing a family member or friend as a guardian is the ideal solution. However, there are instances when the best person to be a guardian is not a family member, but a court-appointed outsider. This relieves the family of being the ones who need to inform a person suffering from dementia with the news of having to move into a nursing home facility or sifting through financial records to learn that the family home is in foreclosure. The family can focus on being supportive and loving, while the guardian deals with the sometimes harsh realities of the person’s life.

Speak with your estate planning attorney to learn about how the guardianship process works, and whether it may be the right move for your family. If you would like to learn more about guardianships, please visit our previous posts.

Reference: Next Avenue (Dec. 23, 2022) “Thinking of Becoming a Guardian?”

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A Durable Power of Attorney is Essential

A Durable Power of Attorney is Essential

A durable power of attorney is essential to a comprehensive estate plan. A power of attorney is a legal document in which you authorize another person (called an agent) or financial institution to act on your behalf to execute certain financial transactions in the event that you’re unable to do so. Transaction might include paying bills, handling insurance claims, selling real estate and filing a tax return.

WMUR’s recent article entitled “Reasons you may need a durable power of attorney” reminds us that this is a cumbersome, time-consuming and potentially expensive process at a time of immediate needs and emotional stress.

Your spouse can probably do the basic bill paying. However, many financial transactions—like the sale of an investment or home—require both spouses’ signatures. You may have some assets in only your name. That means your spouse would have no access to those assets should they be needed to pay the medical expenses due to the disability that’s preventing you from handling your own finances.

Some types of powers of attorney are simply convenience documents that are used for specific transactions or to manage finances for a limited time while a person is out of town. However, there’s also a durable power of attorney for medical care. With this document, you name someone to make medical decisions on your behalf should you be incapacitated. It’s a separate document.

Most commonly, a “durable” financial power of attorney goes into effect upon signing and remains in effect through any incapacity and until your death unless you revoke it. This power of attorney typically allows the agent to perform a broad range of financial transactions on behalf of the person.

A durable power of attorney is essential to a comprehensive estate plan. Ask an experienced estate planning attorney to draft the power of attorney, because to be effective, it needs to meet state law. These laws vary from state to state.

In addition to granting broad powers, the POA must be specific about certain rights granted to the agent. For example, the grantor may give an agent the right to make gifts on behalf of the grantor, the right to complete and sign your tax returns, exercise stock options, or sue a third party.

However, you might want to add some restrictions, such as the conditions in which your assets can be sold. Your attorney may also retain the document for you pending release, if you should become incapacitated. If you would like to learn more about powers of attorney, please visit our previous posts. 

Reference: WMUR (May 5, 2022) “Reasons you may need a durable power of attorney”

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Young Professionals Need Estate Planning

Young Professionals Need Estate Planning

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”

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Guardianship is a Valuable tool to Protect Loved Ones

Guardianship is a Valuable tool to Protect Loved Ones

Guardianship is a valuable tool to protect loved ones. It is usually an act of last resort, embarked upon when there is no lesser restrictive means of protecting a person. There are steps to be taken to avoid being placed under guardianship, including signing a durable financial power of attorney and a medical power of attorney to allow someone of your choosing to make important decisions for you.

If you have these documents and later become incapacitated, there won’t be a need for guardianship because you’ll have an agent or agents in place to act on your behalf.

It is when there has been no advance planning and you develop a significant cognitive impairment when guardianship becomes necessary, according to a recent article, “Guardianship gone good: Protections afforded by guardianship may be necessary,” from The Dallas Morning News.

What if the powers of attorney you had so diligently prepared became invalid? It is possible but can be easily avoided if you take the right preventive steps.

First, make sure to review these documents every now and then. If someone you named to serve in one of these roles has moved far away, they may not be able to serve. Do you have a second person named for financial or medical POA? The same could occur if the person named became incapacitated, died, or declined to serve.

Second, you could have an agent who does not act in your best interest, often referred to as a “rogue” agent. This could be worse than having no agent.

Third, if you are acting against your own best interest, there’s not much a power of attorney can do to protect you from yourself. If your incapacity leads you to making bad decisions which jeopardize your own welfare, a court may create a guardianship to protect you from yourself.

This is why guardianships are nuanced, with every situation requiring a different solution.

For example, levels of incapacity vary. If the cognitive impairment is mild, you may not need someone to act for you. If your impairment is severe and leads to self-harm, violent outbursts or harm to others, a guardianship may become necessary.

Another concern for families whose loved ones have become incapacitated is their vulnerability to scammers.

While guardianship receives a lot of negative coverage in the media, it is, in many instances, a useful and valuable tool used to protect loved ones. If you would like to learn more about guardianships, please visit our previous posts.

Reference: The Dallas Morning News (Nov. 13, 2022) “Guardianship gone good: Protections afforded by guardianship may be necessary”

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Take Care When Naming a Co-Trustee

Take Care When Naming a Co-Trustee

It is important to take care when naming a co-trustee. If you’ve already created a revocable trust, congratulations—that means you’ve taken steps to protect the people important to you and eliminated concerns they may have about what will happen when you’re gone. A recent article, “3 Things to Consider when Naming Co-Trustees,” from The Street, asks if you should name an adult child as your co-trustee.

Most people name themselves as a trustee of a revocable living trust, allowing themselves to maintain control over how the funds are managed. As children become adults, you may start including them in your estate planning discussions, which may lead them to propose a relatively straightforward idea: letting them serve alongside you, by being named as co-trustees.

This might make sense. However, it may not. You need to ask some hard questions.

First, are you and your adult child in alignment on financial matters? If you are conservative when it comes to money and investing, but your child is a free-wheeling, come-what-may person, then you definitely don’t want to have them as a co-trustee. Not only will you disagree on how assets are to be used, you may also find yourself in a situation where your assets are funding a lot of fun, which is likely not what you have in mind for assets in a revocable trust.

As the primary trustee of the revocable trust, you have the legal power to fire a co-trustee. This presents another obstacle. Firing your child, especially if you’re firing one child and replacing them with another child, could lead to a lot of family friction. Many estate planning attorneys have seen what happens when parents are reluctant to act, even when it is crystal clear they need to be fired.

Second, does their logistical status make this person a good co-trustee candidate? Location and even time zones are not as confining as they used to be. However, there is a real benefit to being able to show up in person if something goes wrong. What if there’s an issue processing something and the bank will not accept a document sent by email or fax, but requires an in-person signature?

Your trust might include language allowing each co-trustee to act independently of the other. However you need to take care, this opens the door to the person you are naming a co-trustee being able to act unilaterally. If you’re still able to manage your own finances, you may not want to give up this amount of control to an adult child.

Would a co-trustee role with a child require you to revise the entire estate plan? For some trust creators, making one adult child their revocable living trust co-trustee means they need to change their estate plan to be fair to their other children. Sometimes they feel that another child should be named as a Power of Attorney or Health Care Power of Attorney.

“Fairness” or “keeping the peace” should never, ever, be a reason for children or other individuals to be named for estate planning roles. Each agent has a task to do in carrying out your wishes as directed by your last will and testament, POAs and trust documents. Naming a kid who’s a financial disaster as a co-trustee is asking for trouble. Naming someone who doesn’t share your beliefs about end-of-life treatment means your wishes are not likely to be followed.

However, it is possible to have your estate planning attorney create a workable co-trustee arrangement between you and an adult child. If they live close by, you mainly agree on financial matters and they can be available to you on short notice, it’s likely the arrangement will work. If there is no one who could serve, speak with your estate planning attorney about alternatives. For instance, making an adult child a successor trustee will let them step in if and when you are not able to manage your affairs, while you retain full and complete authority while you are still able to do so. The bottom line is this: Take care when naming a co-trustee. The last thing you want to do is jeopardize your legacy. If you would like to learn more about trusts, please visit our previous posts.  

Reference: The Street (Oct. 11, 2022) “3 Things to Consider when Naming Co-Trustees”

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Advance Directives are Critical to your Planning

Advance Directives are Critical to your Planning

Advance directives address the type of healthcare and medical treatment you’d want if you become incapacitated. MarketWatch’s recent article entitled “What happens if you’re incapacitated? How to get your advance directives in order” says if you don’t make these decisions now—and complete the necessary forms to state your wishes—someone else will make the decisions for you down the road. Advance directives are critical to your planning.

Advance directives typically consist of a living will and a power of attorney for healthcare. Each state has its own statutory advance directive form. Because these state forms are legal documents, the wording can be pretty formal. People will sometimes forget they’ve filled out the forms. They also forget where they put them.

After completing the proper forms, you must get them to your medical providers, so they know whether to resuscitate you during a medical emergency or administer artificial feeding or hydration.

Make sure you have a discussion with your physician, family and close friends about your values, goals and fears concerning advance care planning.

You should tell them what forms of medical intervention you’d find acceptable and unacceptable—and what level of life-sustaining treatment you’d like if you’re deemed permanently unconscious. That may include considering these types of situations:

  • If I am unconscious, in a coma, or in a vegetative state and there is little or no chance of recovery
  • If I have permanent, severe brain damage that makes me unable to recognize my family or friends (for example, severe dementia)
  • If I need to use a breathing machine and be in bed for the rest of my life
  • If I have a condition that will make me die very soon, even with life-sustaining treatments
  • If I have pain or other severe symptoms that cause suffering and can’t be relieved
  • If I have a permanent condition where other people must help me with my daily needs (for example, eating, bathing, toileting).

When sharing your end-of-life wishes with your physician, he or she may enter your comments into your electronic health record. That way any other healthcare provider with access to those records (such as a hospital system) can retrieve them. Advance directives are critical to your planning. Work closely with your estate planning attorney, who will have the experience to help you navigate these decisions. If you would like to learn more about advance directives, please visit our previous posts. 

Reference: MarketWatch (Oct. 14, 2022) “What happens if you’re incapacitated? How to get your advance directives in order.”

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Factors to Consider when Picking Trustee

Factors to Consider when Picking Trustee

Having your estate planning documents created with an experienced professional is important, as is naming the people who will be putting your plan into action. A key sticking point is often deciding who is the right person for the role, says an article from Nasdaq titled “Estate Planning: 5 Tips to Pick Trustees, Executors and POAs.” It helps to stop thinking about how people will feel if they are not selected and focus instead on their critical thinking and decision making abilities. There are some factors to consider when picking a trustee, executor or power of attorney.

Consider who will have the time to help. Having adult children who are highly successful in their professions is wonderful. However, if they are extremely busy running a business, leading an organization, etc., will their busy schedules allow the flexibility to help? A daughter with twins may love you to the moon and back. However, will she be able to handle the tasks of estate administration?

Take these appointments seriously. Selecting someone on an arbitrary basis is asking for trouble. Just because one child is older doesn’t necessarily mean they are capable of managing your estate. Making a decision based on gender can be equally flawed. Naming agents and executors with financial acumen is more important than giving your creative child the chance to learn how to manage money through your estate.

Don’t make the process more complicated. There are many families where parents name all the siblings to act on their behalf, so no one feels left out. This usually turns into an estate disaster. An odd number of siblings can lead to one group winning decisions by sheer numbers, while aggressive, win-at-all-costs siblings—even if it’s just two of them—can lead to delayed decisions and family divisions.

Name the right person for right now. Younger people who don’t yet have children often aren’t sure who their best agent might be. Picking a parent may become problematic, if the parent becomes sick or dies. Naming a close friend in your thirties may need updating if your friendship wanes. Make it simple: appoint the best person for today, with the caveat of updating your agents and documents as time goes on and circumstances change. Remember, circumstances always change.

Consider the value of a professional trustee or fiduciary. The best person to be a trustee, executor or power of attorney may not always be a family member or friend. If a trustee is one sibling and the beneficiary of the trust is another sibling who can’t manage money, the relationship could suffer. If a large estate includes generational trusts and complex ownership structures, a professional may be better suited to deal with management and tax issues.

The value of having an estate plan cannot be overstated. However, the importance of who will be appointed to oversee and administer the estate is equally important. The success of an estate plan often rests on the people who are assigned to handle their respective tasks.

Consider these factors seriously when picking a trustee or executor. Be candid when speaking with an experienced estate planning attorney about the people in your life and their abilities to manage the roles. If you would like to learn more about the role of a trustee or executor, please visit our previous posts. 

Reference: nasdaq (Sep. 4, 2022) “Estate Planning: 5 Tips to Pick Trustees, Executors and POAs”

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College Kids Need an Estate Plan

College Kids Need an Estate Plan

When it comes to estate planning, we usually think of older adults. However, even college kids need an estate plan.

WDIO’s recent article entitled “Estate planning is for college students too” reminds us that there’s a number of documents you can put into place in the case of an emergency.

Power of Attorney. There are two types of POAs. The financial power of attorney allows a named agent to make financial decisions on behalf of the college student, in the event they are unable to do so. A medical power of attorney names a healthcare agent.

These can have HIPAA language written into them that authorizes their medical provider to release information about them. Remember, if your student travels away from home for college, you may need a POA for that state.

Will. A typical college student might not have a lot of money. However, they do have their own stuff, and someone needs to make the decision regarding what happens to that stuff. Ask the student to name the parents as the executor of his or her will.

FERPA Waiver. FERPA stands for the Family Educational Rights and Privacy Act. Without this waiver, a parent has no authority to call the college and request information about your student if they’re over 18. With a waiver, you can request a transcript and student loan information.

HIPAA Waiver. A HIPAA waiver allows an adult child’s health information to be disclosed. It’s usually for medical facilities, doctors, schools, or any other person where they are in possession of the health information of a person where that individual authorizes the release of the information to a designated person.

Even college kids need an estate plan and it does not have to be complicated. If you already have planning done for yourself, sit down with your estate planning attorney to discuss how you can begin the process for your college age student. If you would like to learn more about estate planning for young adults, please visit our previous posts. 

Reference: WDIO (Sep. 28, 2022) “Estate planning is for college students too”

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What Is the Purpose of a Guardian?

What Is the Purpose of a Guardian?

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 are a Living Will and Advance Directive Different?

How are a Living Will and Advance Directive Different?

A comprehensive estate plan contains far more than a last will and testament. It also contains a number of documents to communicate wishes for decisions to be made during life. These include a living will, an advance directive and a healthcare power of attorney, as explained in the article “What Is a Living Will and Do I Need One?” from healthline. It is a common mistake to think that a living will and an advance directive are the same. They are not. How are a living will and an advance directive different?

What is a living will? A living will is a document providing instructions for medical care, or in some circumstances, for the termination of medical support. They indicate wishes for the use or discontinuation of life-sustaining medical treatments. The living will is used if the individual becomes incapacitated and cannot communicate normally. Incapacitation is determined and certified by a medical professional. Living wills address such treatments as resuscitation, hydration, a feeding tube and pain management.

Each state has its own rules for creating a legally valid living will. The information required in most states is:

  • Legal name and any aliases or nicknames.
  • The current day, month and year.
  • A statement attesting to being of sound mind and body.
  • Healthcare instructions for events with no reasonable expectation for recovery or quality of life, which may include CPR, DNR (do not resuscitate) and do not intubate (DNI).
  • The name of your healthcare proxy, the person who you want to communicate and state your wishes and the name of an alternate healthcare proxy, if you have one.
  • Witness statements indicating you willingly and rationally signed this document (the number of witnesses varies by state).
  • Your legal signature.

An advance directive is not the same thing but can include a living will. The advance directive has two parts: the living will and the healthcare power of attorney. These documents don’t address finances, property distribution, guardianship of children or any non-medical matters. For those, you need a last will and testament.

The healthcare power of attorney is a document identifying the person named to make healthcare decisions for you. It’s sometimes called a durable medical power of attorney. The person you name to make decisions is called your healthcare proxy, healthcare agent, or healthcare surrogate. This document does not address end-of-life care, but instead grants legal permission to the person to make decisions for you.

The living will, advance directive and healthcare power of attorney work together to allow someone else to represent you during a medical crisis. These documents should be created by an experienced estate planning attorney and shared with the people you choose, so they may act on your behalf. Unfortunately, we never know when a medical crisis or accident will occur, so these documents are needed at any age and stage of life. An experienced estate planning attorney can help you better understand how a living will and an advance directive are different. If you would like to learn more about drafting a comprehensive estate plan, please visit our previous posts.

Reference: healthline (Sep. 1, 2022) “What Is a Living Will and Do I Need One?”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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