Important to Evaluate your Planning before a Second Marriage

August 7, 2023

Second marriage, goes the saying, is the triumph of hope over experience. It’s a happy event for everyone, but different from the first time around. You might have created an estate plan during your first marriage. Still, chances are your life is a lot more complicated this time, especially if you both have children from prior marriages and more assets than when you were first starting out as a young adult. It is important to evaluate your planning before a second marriage. This is why a recent article from The Bristol Press is aptly titled “Plan your estate before you remarry.”

Here are some pointers to protect you and your new spouse-to-be:

Take an inventory of all assets and liabilities. This includes assets and debts, life insurance policies, retirement plans, credit card debt and anything you own. It’s important to be open and honest about your debts and assets, so that both people know exactly what they are marrying. Once you are married, you may be liable for your partner’s debts. Your credit scores may be impacted as well.

Decide how you are going to handle finances. Once you know what your partner is bringing to the marriage, you’ll want to make clear, unemotional decisions about how you’ll address your wealth. Are you willing to combine all of your assets? Do you want to keep your investment accounts separate?

For example, if one person is selling a home to move into the home owned by the other person, what costs, if any, will they contribute to the cost of the house? If one person has significant debt, do you want to combine finances or make joint purchases? These are not always easy issues. However, they shouldn’t be ignored.

Decide what you want to happen when you die. You and your future spouse should meet with an experienced estate planning attorney to create a will, Power of Attorney, Health Care Proxy and other documents. This lets you map exactly where you want your assets to go when you die. If there are children from prior marriages, you’ll want to ensure they are not disinherited when you die. This can be addressed through a number of options, including creating a trust for your children, making them beneficiaries of life insurance policies, or giving children joint ownership of property.

Even if there are no children, there may be family heirlooms or items with sentimental value you want to keep in the family, perhaps passing to a cousin, nephew, or niece. Discuss this with your future spouse and ensure that it’s included in your will.

Meet with an estate planning attorney. You should take this step even if you don’t have many assets. If you have children, it’s even more important. You’ll want to update your will and any other estate planning documents. If you have significant assets, you may decide to have a prenuptial or postnuptial agreement. The estate planning attorney will also help you determine whether you need a trust to protect your children.

If you had planning done in the past, it is important to sit down with an estate planning attorney to evaluate it in before to a second marriage. If you would like to learn more about estate planning for blended families, please visit our previous posts.

Reference: The Bristol Press (July 14, 2023) “Plan your estate before you remarry”

Image by Lubov Lisitsa

Estate Plans Require Preparation for Success

June 13, 2023

Making wishes clear to family members is never enough to satisfy legal standards, according to a recent article, “Preparation is essential part of estate plan” from The News-Enterprise. Quite the opposite occurs when family members refuse to follow verbal requests, especially when personal grievances come to the surface during times of grief. Estate plans require preparation for success.

A second misconception concerns the spouse or children being able to step in and take action for a loved one whose health is declining solely based on the family relationship.

Many parents have children who would make poor agents, so many don’t name their children to act on their behalf. Even if you want your spouse or child to act on your behalf, you have to name them in the proper legal documents.

A third frequent misconception is that documents can be created when needed. Not so! Documents like Power of Attorney, Health Care Power of Attorney, Living Will and others must be created well in advance. An incapacitated person cannot sign legal documents, so if no planning has been done, the family will have to petition the court to name a guardian—an expensive, time-consuming and complicated process.

Every adult should have three basic documents while they are in good health: a Health Care Power of Attorney, a Durable Power of Attorney and a Last Will and Testament.

The Health Care Power of Attorney gives another person the right to make healthcare decisions for you if you are unable to do so. It also gives another person the right to access protected health care information, including medical and health insurance records. It may also be used to authorize organ and/or tissue donation and set limitations for donation. Finally, the document may direct end-of-life decisions regarding artificial life support.

The Durable Power of Attorney allows another person to handle legal and financial matters. It can be effective upon signing or upon incapacity. Without correctly executed Powers of Attorney, the family will need to apply for guardianship.

The Last Will and Testament determines who should receive any specific property and how your property is to be divided and distributed. Wills are only effective upon death, so any property in the will continues to be yours until death. Wills are also used to name the executor who will be responsible for administering the estate. It can also be used to set up additional protections for disabled beneficiaries, minor children and others who are not good with finances.

Speak with an experienced estate planning attorney to be certain to have these essential documents to prepare for the times when life doesn’t go as expected. Preparation is required for the success of your estate plan and those you love. If you would like to learn more about drafting an estate plan, please visit our previous posts.

Reference: The News-Enterprise (May 13, 2023) “Preparation is essential part of estate plan”

Photo by Oană Andrei

Durable Power of Attorney can Prevent Guardianship Issues

May 31, 2023

Guardianship or conservatorship documents are not easy to obtain and can take months to finalize, warns the article “Possible Guardianship Or Conservatorship in Your Future? Plan Ahead With A Durable Power of Attorney” from Idaho Senior Independent. However, there is a far easier way to plan for the future. A durable power of attorney can prevent guardianship issues.

Guardianship is a tool to solve the issue of a person who has become incapacitated and cannot make personal care, legal or financial decisions. With a durable power of attorney for health care decisions and a general durable power of attorney for financial matters, you can achieve the same level of control, with far less time, trouble and cost.

The ultimate goal is to gain the legal authority to make decisions for the incapacitated individual which will be honored by third parties, including financial institutions and health care providers and facilities.

Most estate planning attorneys advise married couples to give each other durable power of attorney (POA) for health care and finances. As long as the couple doesn’t die at the same time or become incapacitated at the same time, the well spouse can manage the couple’s health and assets. It may also be a good idea to give his legal authority to another person, usually one of their children.

Having an estate planning attorney create a comprehensive estate plan, which includes powers of attorney, health care powers of attorney, a last will and testament and other necessary legal documents, may seem like a lot to do. However, the alternative, pursuing guardianship or conservatorship, is just as lengthy, if not more so, and only solves one problem. A complete estate plan solves many, from care during incapacity to the distribution of assets after death.

Guardianship is needed if there is no durable health care POA for a loved one and they are unable to care for themselves or make medical decisions. This is especially true if they need some kind of housing assistance, such as assisted living or memory care. A conservatorship allows the named person to manage the loved one’s assets, including Social Security, investments and any property or vehicles they own. The POA also permits you to use their assets to pay for their care.

None of this can happen while going through the guardianship/conservatorship process, meaning you or someone else will have to pay the bills and time-sensitive decisions cannot be executed.

Achieving guardianship/conservatorship involves filing a petition with the court in the county where your loved one lives. In most cases, an estate planning attorney will advise the family member to obtain an appointment for their loved one with a physician who can evaluate the person’s ability to manage their life. A physician will need to provide a letter verifying the need for guardianship/conservatorship. The letter becomes part of the petition filed with the court.

The attorney will require a hearing based on the information provided.

Many courts require a different attorney to be retained to represent your loved one to avoid any conflict of interest. A different physician will, in many cases, also be required to evaluate the health of your relative. Courts also often require an assessment by a legal “visitor,” typically a licensed social worker who independently evaluates your relative and makes recommendations.

The visitor reports their findings to the court and to the attorneys. The guardianship/conservatorship applicant pays for the visit and subsequent reports, plus any attorney fees.

All of this takes time, although an attorney can request that the court grant temporary guardianship and conservatorship.

Having a legal, durable power of attorney for health and finances can prevent guardianship issues long before they will be needed. It is a far simpler way for you to care for loved ones, if and when they need it. If you would like to learn more about guardianship and elder law, please visit our previous posts.

Reference: Idaho Senior Independent (May 1, 2023) “Possible Guardianship Or Conservatorship in Your Future? Plan Ahead With A Durable Power of Attorney”

Use Estate Planning to Prepare for Cognitive Decline

May 18, 2023

Since 2000, the national median age in the U.S. has increased by 3.4 years, with the largest single year gain of 0.3 years in 2021, when the median age reached 38.8 years. This may seem young compared to the life expectancies of older Americans. However, the median age in 1960 was significantly lower, at 29.5 years, according to the article “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans” from Think Advisor. As we get older, it is wise to use your estate planning to prepare for cognitive decline.

An aging population brings many challenges to estate planning attorneys, who are mindful of the challenges of aging, both mental, physical and financial. Experienced estate planning attorneys are in the best position to help clients prepare for these challenges by taking concrete steps to protect themselves.

Individuals with cognitive decline become more vulnerable to potentially negative influences at the same time their network of trusted friends and family members begins to shrink. As people become older, they are often more isolated, making them increasingly susceptible to scams. The current scam-rich environment is yet another reason to use estate planning.

When a person is diagnosed with Alzheimer’s or any other form of dementia, an estate plan must be put into place as soon as possible, as long as the person is still able express their wishes. A diagnosis can lead to profound distress. However, there is no time to delay.

While typically, the person may state they wish their spouse to be entrusted with everything, this has to be properly documented and is only part of the solution. This is especially the case if the couple is close in age. A secondary and even tertiary agent needs to be made part of the plan for incapacity.

The documents needed to protect the individual and the family are a will, financial power of attorney, durable power of attorney and health care documentation. In addition, for families with more sophisticated finances and legacy goals, trusts and other estate and tax planning strategies are needed.

A common challenge occurs when parents cannot entrust their children to be named as their primary or secondary agents. For example, suppose no immediate family members can be trusted to manage their affairs. In that case, it may be necessary to appoint a family friend or the child of a family friend known to be responsible and trustworthy.

The creation of power of attorney documents by an estate planning attorney is critical. This is because if no one is named, the court will need to step in and name a professional guardian. This person won’t know the person or their family dynamics and may not put their ward’s best interests first, even though they are legally bound to do so. There have been many reports of financial and emotional abuse by court-appointed guardians, so this is something to avoid if possible. An experienced attorney will make sure you are using your estate planning to prepare for cognitive decline. If you would like to learn more about elder care planning, please visit our previous posts.

Reference: Think Advisor (April 21, 2023) “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans”

What are the Responsibilities of a Legal Guardian?

February 22, 2023

When a person is impaired by physical or mental illness or another kind of disability and they haven’t had a legal power of attorney or health care power of attorney created, they may need a court appointed guardian to act on their behalf. So what are the responsibilities of a legal guardian?

As explained in a recent article titled “Legal Guardians” from My Prime Time News, for the court to find the “protected person” in need of a guardian, it must find the protected person unable to receive or evaluate information or both, unable to make or communicate decisions to satisfy essential requirements for physical health, safety or self-care.

The guardian may receive the protected person’s income, such as Social Security, and pay bills. In some states, a conservator is appointed when someone has considerable assets requiring active management.

If a protected person needs help with the tasks of daily living and asset management, the court may appoint both a guardian and a conservator. One person may serve in both roles, unless the person is a “professional caretaker.”

In almost all cases, it is far better to have a plan for incapacity in place, with a trusted and known person named to serve as an agent to handle financial and legal matters, and the same or another person named to act as a health care proxy.

To be appointed a guardian, a petition must be filed with the court and any interested persons must be notified of the petition. This includes spouse, parents, adult children, other caretakers and the treating physician. The petition must include a letter from a doctor indicating the need for a guardianship.

The process varies in different jurisdictions. However, the court usually requires a background check and a credit report for the person petitioning for guardianship. The court appoints a visitor to investigate and report whether an appointment for the guardian is necessary and if the person petitioning for the role of guardian is suitable.

After all this has been completed, a hearing takes place, with the protected person present. The court will make its decision. If the decision is to award the guardianship, the court issues Letters of Appointment and an Order, unless the protected person protests. The order requires the guardian and/or conservator to file annual reports with the court.

The guardian’s responsibility varies with the circumstances. The guardian’s powers should generally be no greater than needed to see to the needs of the protected person. The protected person should be encouraged to maintain the greatest degree of independence under their circumstances. While the guardian is not required to take physical care of the protected person, they are responsible for ensuring the protected person has an appropriate level of care, whether in a nursing home, assisted living or other institutional care.

The guardian’s appointment ends when the protected person dies, or if the guardian dies or if the court issues an order terminating their guardianship. Your estate planning or elder law attorney can help explain what the responsibilities of a legal guardian are and how to begin the process. If you would like to learn more about guardianships, please visit our previous posts.

Reference: My Prime Time News (Jan. 1, 2023) “Legal Guardians”

How the Guardianship Process Works

January 17, 2023

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?”

A Durable Power of Attorney is Essential

December 29, 2022

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”

Photo by Mikhail Nilov

The Responsibilities of Being a Guardian

December 14, 2022

Yes, it is an honor to be asked to be the guardian of someone’s children. However, you’ll want to understand the full responsibilities of being a guardian before agreeing to this life-changing role. A recent article from Kiplinger, “3 Key Things to Consider Before Agreeing to Be A Guardian in a Trust,” explains.

For parents, this is one of the most emotional decisions they have to make. Assuming a family member will step in is not a plan for your children. Naming a guardian in your will needs to be carefully and realistically thought out.

For instance, people often first think of their own parents. However, grandparents may not be able to care for a child for one or two decades. If the grandparent’s own future plan includes downsizing to a smaller home or moving to a 55+ community, they may not have the room for children. In a 55+ community, they may also not be permitted to have minor children as permanent residents.

What about siblings? A trusted aunt or uncle might be able to be a guardian. However, do they have children of their own, and will they be able to manage caring for your children as well as their own? You’ll also have to be comfortable with their parenting styles and values.

Other candidates may be a close friend of the family, who does not have children of their own. An “honorary” aunt or uncle who is willing to embark on raising your children might be a good choice. However, it requires careful thought and discussion.

Financial Considerations. What resources will be available to raise the children to adulthood? Do the parents have life insurance to pay for their needs, and if so, how much? Are there other assets available for the children? Will you be in charge of managing assets and children, or will someone else be in charge of finances? You’ll need to be very clear about the money.

Legal Arrangements. Is there a family trust? If so, who is the successor trustee of the trust? What are the terms of the trust? Most revocable trusts include language stating they must be used for the “health, education, maintenance, and support of beneficiaries.” However, sometimes there are conditions for use of the funds, or some funds are only available for milestones, like graduating college or getting married.

Lifestyle Choices. You’ll want to have a complete understanding of how the parents want their children to be raised. Do they want the children to remain in their current house, and has an estate plan been made to allow this to happen? Will the children stay in their current schools, religious institutions or stay in the neighborhood?

In frank terms, simply loving someone else’s children is not enough to take on the responsibilities of being a guardian. Financial resources need to be discussed and lifestyle choices must be clarified. At the end of the discussion, all parties need to be completely satisfied and comfortable. This kind of preparedness provides tremendous peace of mind. If you would like to read more about guardianship, please visit our previous posts.

Reference: Kiplinger (Nov. 17, 2022) “3 Key Things to Consider Before Agreeing to Be A Guardian in a Trust”

Guardianship is a Valuable tool to Protect Loved Ones

December 5, 2022

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”

Photo by RODNAE Productions

Make Sure Beneficiaries Are Selected Properly

November 1, 2022

What are the primary benefits of having a life insurance policy? In exchange for a monthly or annual payment to a life insurance provider, your beneficiaries get a pre-determined sum of money after you die. CBS News’ recent article entitled “Choosing life insurance beneficiaries? Make these 3 smart moves says it’s important to have the right amount of coverage. However, it’s equally important to make certain that your beneficiaries are selected properly and added to your policy.

When you buy a policy for a significant sum, you may want to list a variety of people as beneficiaries. However, you should remember why you initially got a plan.

If the policy is primarily to support your children after you have died, then name them first. If you want to leave it to your spouse to make up for lost income in your absence, he or she should be listed as the primary beneficiary. If you want the policy to be used to keep a family business going, then adjust the beneficiaries accordingly.

Note that you should also list contingent beneficiaries. This is a person (or multiple people) who will receive the policy proceeds, if the primary beneficiary is not around. Primary beneficiaries may be hard to find, may refuse the funds, or could have passed away. Therefore, make sure that you have someone else to receive those funds. If you have more than one contingent beneficiary, allocate the policy proceeds as you wish (provided they combine for 100%).

If you want to leave the plan to your spouse, list him or her them as the primary beneficiary. If you have children, list them as secondary beneficiaries.

However, take care when listing minors.

You can list minors on your policy. However, if you die, and your beneficiaries aren’t of legal age, they may face a long road to see the funds. Restrictions on how much money minors can access via a life insurance policy vary from state to state, so the transfer won’t be as clean and simple as it would be with an adult. In some cases, the court may even have to appoint a guardian to administer the funds.

It’s not that you have to avoid listing minors. However, you must understand what may happen if you do.

An adult you trust to administer the funds in your absence may be a better choice to make certain that your minor beneficiaries don’t have to fight for the money. However, do not list that trusted adult as the beneficiary if it is not your spouse. Why? If you die, then they die, the life insurance proceeds will be administered according to their estate plan and not yours! This is where estate planning kicks in to avoid such unintended consequences with legal strategies, like trusts. Talk with an estate planning attorney to make sure your beneficiaries are selected properly.

When it comes to life insurance policies and protections, recommendations are specific to your individual personal financial situation, preferences and goals. Keep this in mind at all times. If you would like to learn more about naming beneficiaries, please visit our previous posts.

Reference: CBS News (Oct. 6, 2022) “Choosing life insurance beneficiaries? Make these 3 smart moves”

Photo by Maryia Plashchynskaya

Category: Guardianship

Important to Evaluate your Planning before a Second Marriage

Estate Plans Require Preparation for Success

Durable Power of Attorney can Prevent Guardianship Issues

How the Guardianship Process Works

A Durable Power of Attorney is Essential

The Responsibilities of Being a Guardian

Guardianship is a Valuable tool to Protect Loved Ones

Make Sure Beneficiaries Are Selected Properly

Categories

View Blog Archives

Watch the

Estate Of The Union

Join Our

eNewsletter and Blog Digest List

Listen to the

Estate Of The Union

Texas Trust Law

Quick Links

Connect With Us