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Category: Medical Directives

estate planning for a second marriage

Your Estate Plan May Need an Audit

You should have an estate plan because every state has statutes that describe how your assets are managed, and who benefits if you don’t have a will. Most people want to have more say about who and how their assets are managed, so they draft estate planning documents that match their objectives. If you created an estate plan years – or even decades ago – your estate plan may need an audit.

Forbes’ recent article entitled “Auditing Your Estate Plan” says the first question is what are your estate planning objectives? Almost everyone wants to have financial security and the satisfaction of knowing how their assets will be properly managed. Therefore, these are often the most common objectives. However, some people also want to also promote the financial and personal growth of their families, provide for social and cultural objectives by giving to charity and other goals. To help you with deciding on your objectives and priorities, here are some of the most common objectives:

  • Making sure a surviving spouse or family is financially OK
  • Providing for others
  • Providing now for your children and later
  • Saving now on income taxes
  • Saving on estate and gift taxes in the future
  • Donating to charity
  • Having a trusted agency manage my assets, if I am incapacitated
  • Having money for my children’s education
  • Having retirement income; and
  • Shielding my assets from creditors.

Speak with an experienced estate planning attorney about the way in which you should handle your assets. If your plan doesn’t meet your objectives, your estate plan should be revised. This estate planning audit will include a review of your will, trusts, powers of attorney, healthcare proxies, beneficiary designation forms and real property titles.

Note that joint accounts, pay on death (POD) accounts, retirement accounts, life insurance policies, annuities and other assets will transfer to your heirs by the way you designate your beneficiaries on those accounts. Any assets in a trust won’t go through probate. “Irrevocable” trusts may protect assets from the claims of creditors and possibly long-term care costs, if properly drafted and funded.

Another question is what happens in the event you become mentally or physically incapacitated and who will see to your financial and medical affairs. Use a power of attorney to name a person to act as your agent in these situations.

If you have decided that your estate plan needs an audit and you find that your plans need to be revised, follow these steps:

  1. Work with an experienced estate planning attorney to create a plan based on your objectives
  2. Draft and execute a will and other estate planning documents customized to your plan
  3. Correctly title your assets and complete your beneficiary designations
  4. Create and fund trusts
  5. Draft and sign powers of attorney, in the event of your incapacity
  6. Draft and sign documents for ownership interest in businesses, intellectual property, artwork and real estate
  7. Discuss the consequences of implementing your plan with an experienced estate planning attorney; and
  8. Review your plan regularly.

To learn more about estate planning documents such as a trust or will, please visit our previous posts.

Reference: Forbes (Sep. 23, 2020) “Auditing Your Estate Plan”

 

estate planning for a second marriage

When Do We Need an Elder Law Attorney?

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

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

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

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

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

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

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

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

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

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

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

 

estate planning for a second marriage

Life Changes Mean Changes For Your Estate

Federal News Network’s recent article entitled “Divorced, kids grown, moving? Time for a pre-checkout checkup!” says life changes mean changes for your estate, like when your children grow up and leave the home.

Let’s review some of the key components of a complete estate plan.

A basic estate plan includes powers or attorney and some mechanism for distributing your assets, in the event of death.

If you become seriously ill or injured, perhaps even in a vegetative state, you should let your family and the hospital know if you want heroic measures to be taken to keep you alive.

An advance medical directive, also known as a health care power of attorney, is essential. This document addresses two important issues. It designates an individual that you select to make health care decisions for you, if you’re unable to make these decisions for yourself.

It also includes end of life instructions (called a living will) that details what actions you wish to have taken on your behalf if you are terminally ill, in a vegetative state and if you are unlikely to recover. For example, many living wills discuss whether to be kept alive by artificial means, such as with the use of a ventilator.

Another important tool in any estate plan is a general durable financial power of attorney. This lets your agent manage your financial affairs, if you’re incapable of managing them on your own.

When most people think of estate planning, they think about a will.

While a will is very important, most people have many assets that will not be impacted by their wills. This includes assets such as jointly owned property, and assets for which a beneficiary is designated, like life insurance, TSP and annuities.

The important point to know is that everyone needs to state exactly how they want to have their assets distributed following their death. This can be via a will, a trust, or by beneficiary designations. Many different events will shape your life and these changes mean you need to keep changing and updating your estate plan to keep up.

If you would like to learn more about estate planning and the different options available to you, please read our previous posts. 

Reference: Federal News Network (August 31, 2020) “Divorced, kids grown, moving? Time for a pre-checkout checkup!”

 

estate planning for a second marriage

Planning For Incapacity Is Important

Planning for incapacity is important, just as important as planning for death. One is certain, the other is extremely likely. Therefore, it makes sense to prepare in advance, advises the article “Planning ahead for incapacity helps you and family” from The Press-Enterprise.

Let’s start by defining capacity. Each state has its own language but for the most part, incapacity means that a person is incapable of making decisions or performing certain acts. A concerned adult child is usually the one trying to have a senior parent declared incapacitated.

A person who has a mental or physical disorder may still be capable of entering into a contract, getting married, making medical decisions, executing wills or trusts, or performing other actions. However, before a person is declared incapacitated by medical professionals or a court, having a plan in place makes a world of difference for the family or trusted person who will be caring for them. Certain legal documents are needed.

Power of Attorney. This is the primary document needed when planning for incapacity. There are several kinds, and an estate planning attorney will know which one will be best for your situation. A “springing” power of attorney becomes effective, only when a person is deemed incapacitated and continues throughout their incapacity. A POA can be general, broadly authorizing a named person to act on different matters, like finances, determining where you will live, entering into contracts, caring for pets, etc. A POA can also be drafted with limited and specific powers, like to sell a car within a certain timeframe.

The POA can be activated before you become incapacitated. Let’s say that you are diagnosed with early-stage dementia. You may still have legal capacity but might wish a trusted family member to help handle matters. For elderly people who feel more comfortable having someone else handle their finances or the sale of their home, a POA can be created to allow a trusted individual to act on their behalf for these specific tasks.

A POA is a powerful document. A POA gives another person control of your life. Yes, your named agent has a fiduciary duty to put your interests first and could be sued for mismanagement or abuse. However, the goal of a POA is to protect your interests, not put them at risk. Choosing a person to be your POA must be done with care. You should also be sure to name an alternate POA. A POA expires on your death, so the person will not be involved in any decisions regarding your estate, burial or funeral arrangements. That is the role of the executor, named in your will.

Advance health care directive, or living will, provides your instructions about medical care. This document is one that most people would rather not think about. However, it is very important if your wishes are to be followed. It explains what kind of medical care you do or do not want, in the event of dementia, a stroke, coma or brain injury. It gets into the details: do you want resuscitation, mechanical ventilation or feeding tubes to keep you alive? It can also be used for post-death wishes concerning autopsies, organ donation, cremation or burial.

The dramatic events of 2020 have taught us all that we don’t know what is coming in the near future. Planning for incapacity in advance is a kindness to yourself and your family. More posts about incapacity and end of life decisions can be reached here.

Reference: The Press-Enterprise (July 19, 2020) “Planning ahead for incapacity helps you and family”

 

estate planning for a second marriage

Planning An Estate After A Divorce

Planning an estate after a divorce involves adopting a different type of arithmetic. Without a spouse to anchor an estate plan, the executors, trustees, guardians or agents under a power of attorney and health care proxies will have to be chosen from a more diverse pool of those that are connected to you.

Wealth Advisor’s recent article entitled “How to Revise Your Estate Plan After Divorce” explains that beneficiary forms tied to an IRA, 401(k), 403(b) and life insurance will need to be updated to show the dissolution of the marriage.

There are usually estate planning terms that are included in agreements created during the separation and divorce. These may call for the removal of both spouses from each other’s estate planning documents and retirement accounts. For example, in New York, bequests to an ex-spouse in a will prepared during the marriage are voided after the divorce. Even though the old will is still valid, a new will has the benefit of realigning the estate assets with the intended recipients.

However, any trust created while married is treated differently. Revocable trusts can be revoked, and the assets held by those trusts can be part of the divorce. Irrevocable trusts involving marital property are less likely to be dissolved, and after the death of the grantor, distributions may be made to an ex-spouse as directed by the trust.

A big task in the post-divorce estate planning process is changing beneficiaries. Ask for a change of beneficiary forms for all retirement accounts. Without a stipulation in the divorce decree ending their interest, an ex-spouse still listed as beneficiary of an IRA or life insurance policy may still receive the proceeds at your death.

Divorce makes children assume responsibility at an earlier age. Adult children in their 20s or early 30s typically assume the place of the ex-spouse as fiduciaries and health care proxies, as well as agents under powers of attorney, executors and trustees.

If the divorcing parents have minor children, they must choose a guardian in their wills to care for the children, in the event that both parents pass away.

Ask an experienced estate planning attorney to help you with the issues that are involved in planning an estate after a divorce. There are other important times in your life when you should review your planning.  To learn more, please read our previous posts.

Reference: Wealth Advisor (July 7, 2020) “How to Revise Your Estate Plan After Divorce”

 

estate planning for a second marriage

Do You Need a DNR in Your Estate Plan?

The rise of COVID 19 has caused many people to consider estate planning, and that is a good thing. When the discussion arrives at end of life decisions, the subject of a DNR comes up. Do you need a DNR in your estate plan? Forbes’s article entitled “Should “Do Not Resuscitate” Be Part Of Your Estate Plan?” explains the difference between a health care proxy and a DNR.

A health care proxy is a legal document that lets you name an agent to make health care decisions for you. It is used if you’re unable to make those decisions for yourself. When you were again able to communicate, you’d go back to making your decisions for yourself. The ability to create a health care proxy is governed by your state’s laws. Every state’s laws are different.

Ask an experienced estate planning attorney about a DNR and how to comply with your state’s law in creating these directives. He or she will know about health care institutions and whether they will give authority to the documents you created. If they won’t, your named agent would have to go to court to enforce them.

You can also supplement your state’s directives with additional guidance.

Some states’ directives require a set series of instructions for your agent in your estate plan regarding your DNR. For instance, it may include questions as to whether you want life sustaining treatment and medically administered nutrition and hydration. Other states contain language that is broader. They allow the agent more latitude to decide end-of-life decisions. This language usually includes the intention that you want to be taken off life support, if you have a terminal illness or injury and your death is imminent.

A DNR is a medical order informing health care workers that they are not to revive you. It is a document that you put in place with your physician. Some states have also adopted MOLST forms (Medical Orders for Life Sustaining Treatment) to address other situations, like intubation, ventilation and dialysis. These documents require a thorough discussion between the patient and the health care provider. They are typically part of end of life care, when a person has an advanced stage terminal illness.

If you’re relatively healthy, you want to be treated – and resuscitated – if you have a heart attack. There may be a time when you need a DNR, but most likely it’s not now. If and when that time comes, you’ll need to have a talk with your doctor and estate planning attorney about a DNR, and whether you should include it in your estate plan.

However, you should speak with your estate planning attorney about your health care proxy, especially if you don’t have one. Whether it’s during the coronavirus pandemic or not, a health care proxy is a critical part of a complete estate plan. To learn more about other important documents to include in your planning, such as a Power of Attorney or Guardianship, please read our previous posts.

Reference: Forbes (May 28, 2020) “Should “Do Not Resuscitate” Be Part Of Your Estate Plan?”

 

estate planning for a second marriage

Your Estate Plan Needs to Be Customized

The only thing worse than having no estate plan, is an estate plan created from a ‘fill-in-the-blank’ form, according to the recent article “Don’t settle for a generic estate plan” from The News-Enterprise. Your estate plan needs to be customized. Compare having an estate plan created to buying a home. Before you start packing, you think about the kind of house you want and how much you can spend. You also talk with real estate agents and mortgage brokers to get ready.

Even when you find a house you love, you don’t write a check right away. You hire an engineer to inspect the property. You might even bring in contractors for repair estimates. At some point, you contact an insurance agent to learn how much it will cost to protect the house. You rely on professionals, because buying a home is an expensive proposition and you want to be sure it will suit your needs and be a sound investment.

The same process goes for your estate plan. You need the advice of a skilled professional–the estate planning lawyer. Sometimes you want input from trusted family members or friends. There other times when you need the estate planning lawyer to help you get past the emotions that can tangle up an estate plan and anticipate any family dynamics that could become a problem in the future.

An estate planning attorney will also help you to avoid problems you may not anticipate. If the family includes a special needs individual, leaving money to that person could result in their losing government benefits. Giving property to an adult child to try to avoid nursing home costs could backfire, making you ineligible for Medicaid coverage and cause your offspring to have an unexpected tax bill.

Your estate planning lawyer should work with your team of professional advisors, including your financial advisor, accountant and, if you own a business, your business advisor. Think of it this way—you wouldn’t ask your real estate agent to do a termite inspection or repair a faulty chimney. Your estate plan needs to be created and updated by a skilled professional: the estate planning lawyer.

Once your estate plan is completed, it’s not done yet. Make sure that the people who need to have original documents—like a power of attorney—have original documents or tell them where they can be found when needed. Keep in mind that many financial institutions will only accept their own power of attorney forms, so you may need to include those in your estate plan.

Medical documents, like advance directives and healthcare powers of attorney, should be given to the people you selected to make decisions on your behalf. Make a list of the documents in your estate plan and where they can be found.

Preparing an estate plan is not just signing a series of fill-in-the-blank forms. Your estate plan needs to be customized. It is a means of protecting and passing down the estate that you have devoted a lifetime to creating, no matter its size.

Reference: The News-Enterprise (June 23, 2020) “Don’t settle for a generic estate plan”

 

estate planning for a second marriage

Why You Need an Advance Directive Right Now

The number of Americans who have died in the last few months because of COVID-19 is staggering, reports Inside Indiana Business in an article that advises readers to “Get Your Advance Directives in Place Now.”  This is why you need an advance directive right now. Just talking with family members about your wishes is not enough. You’ll need to put the proper legal documents in place. It’s not that hard, and it is necessary.

Only one in three Americans has completed any kind of advance directive. Many younger adults don’t feel the need to complete these documents, but there have been many examples that prove this is the wrong approach. Both Terri Schiavo and Karen Ann Quinlan were only in their twenties when they were not able to make their wishes known. Family members fought in and out of court for years.

The clinical realities of COVID-19 make it hard for healthcare workers to determine their patient’s wishes. Visitors are not permitted, and staff members are overwhelmed with patients. COVID-19 respiratory symptoms come on rapidly in many cases, making it impossible to convey end-of-life wishes.

Advance directives are the written instructions regarding health care decisions, if you are not able to communicate your wishes. They must be in compliance with your state’s laws. The most common types of advance care directives are the durable power of attorney for health care and the living will.

A durable power of attorney for health care names a person, usually a spouse or family member, to be a health care agent. You may also name alternative agents. This person will be able to make decisions about your health care on your behalf, so be sure they know what your wishes are.

A living will is the document that states your wishes about the type of care you do or don’t want to receive. Living wills typically concern treatments like CPR (cardiopulmonary resuscitation), breathing machines (ventilators), dialysis, feeding tubes and certain treatments, like the use of an IV (intravenous, meaning medicine delivered directly into the bloodstream).

Studies show that people who have properly executed advance directives are more likely to get care that reflects their stated preferences.

Traditional documents will cover most health situations. However, the specific symptoms of COVID-19 may require you to reconsider opinions on certain treatments. Many COVID-19 patients need ventilators to breathe and do subsequently recover. If in the past you wanted to refuse being put on a ventilator, this may cause you to reconsider.

Almost all states require notarization and/or witnesses for advance directives and other estate planning documents to be valid. Many states, including Indiana and New York, now allow for remote notarization.

Talk with your estate planning attorney about putting all of your estate planning documents in order.

Reference: Inside Indiana Business (June 8, 2020) “Get Your Advance Directives in Place Now”

 

estate planning for a second marriage

What Should I Keep in a Safe Deposit Box?

What should I keep in a safe deposit box? A safety deposit box isn’t a smart choice for everything. Kiplinger’s recent article entitled “9 Things You’ll Regret Keeping in a Safe Deposit Box” advises that there are some items you might not want to lock up in your bank, which isn’t open nights, holidays, or weekends. During this pandemic, hours of operation for many businesses are reduced. In fact, some financial institutions, like Bank of America, have temporarily closed some locations. There are other banks that require an appointment for in-branch services, like accessing your safe deposit box. This would create a headache for you in your attempt to retrieve important documents or items when you need them.

While keeping things in a safe deposit box is wise, there are some important items you should consider storing elsewhere, because you’ll need to access more often or on short notice. Maybe they should be in a fireproof safe that’s secured to the floor in your home.

Cash. Keeping a wad of cash in a safe deposit box, isn’t a good idea because if you need it in a pinch and the bank is closed, you’re out of luck. In addition, that cash will lose its buying power over time because of inflation and some banks don’t allow cash in a safe deposit box. Finally, cash in a safe deposit box isn’t protected by the FDIC. To have FDIC insurance (covering up to $250,000 per depositor per insured bank), your cash needs to be deposited in a qualifying deposit account, such as a checking account, savings account, or CD.

Your Passport. OK, most of us don’t need your passport in hand at a moment’s notice. However, you may need to take an emergency trip, which will happen during non-banking hours. Without your passport handy, there’s not much you can do about those calls in the middle of the night requiring you to dash.

The Original Copy of Your Will. You may want to keep a copy of your own will, your spouse’s and any in which you’re named the executor in a safe deposit box. However, don’t store the original copy of your will there, particularly if you’re the only owner. That’s because after your death, the bank will seal the safe deposit box, until your executor can prove she has the legal right to access it. This could mean a long and potentially expensive delay before your will is executed and your assets can be disbursed to the intended heirs. Keep the original copy of your will with your estate planning attorney or in a location where your executor can get to it without any legal hassles.

Letters of Instruction. Many people write a letter of instruction to accompany their will. This letter can describe whether you want to be buried or cremated and the type of service you want. This letter can include details on specific bequests of sentimental items, but it’s no help if its’ locked in your safe deposit box.

Durable Power of Attorney (POA). This document gives a trusted friend, family member, or professional adviser the authority to financial make decisions on your behalf. However, if your POA is in a safe deposit box that no one can access, the person you’re depending on to protect you at your time of need could find her hands tied. Keep the original POA with the original copy of your will and give copies to those who may need it one day.

Advance Directives. A living will and a health care proxy are sometimes collectively known as advance directives, but each has a unique purpose. A living will states your wishes for end-of-life care, and a health care proxy (also known as a health care power of attorney) names a person to make medical decisions for you, if you can’t make them yourself. Neither is any good locked away in an inaccessible safe deposit box.

Uninsured Jewelry and Collectibles. Heirloom jewelry and your valuable stamp collection and rare coins are good candidates for a safe deposit box, but they must be properly insured. The FDIC doesn’t insure contents, and neither does the bank, unless it’s stated in your agreement.

Any Illegal or Dangerous Items. Your bank should provide you with a list of items that are not permissible to keep in a safe deposit box. This will include things like firearms, illegal drugs and hazardous materials.

Reference: Kiplinger (June 1, 2020) “9 Things You’ll Regret Keeping in a Safe Deposit Box”

 

estate planning for a second marriage

Your Children Wish You Had an Estate Plan

It is the adult children who are in charge of aging parents when they need long-term care. They are also the ones who settle estates when parents die. Even if they can’t always come out and tell you, your children wish you had an estate plan. The recent article, “Why your children wish you had an Elder Law Estate Plan” from the Times Herald-Record spells out exactly why an elder law estate plan is so important for your loved ones.

Avoid court proceedings while living. In a perfect world, everyone over age 18 will have an advance directive, including a power of attorney, a health care proxy, and a living will. These documents appoint others to make financial, legal, and medical decisions, in case of incapacity. Without them, the children will have to get involved with time-consuming, expensive guardianship proceedings, where a judge appoints a legal guardian to make these decisions. Your life is turned over to a court-appointed guardian, instead of your children or another person of your choosing.

Avoid court proceedings after you die. If you die and assets are in your name alone, then your estate will go through probate, a court proceeding that can be time consuming and costly. Not having any assets in trusts leaves your kids open to the possibility of wills being challenged, disputes among family members and litigation that can drag on for years.

Wills in probate court are public documents. Trusts are private documents. Do you really want a stranger to access your will and learn about your assets?

An elder law estate plan also plans for the possibility of long-term care and costs. Nursing home care costs can run between $12,000—$18,000 per month. If you don’t have long-term care insurance, you can create a Medicaid Asset Protection Trust (MAPT) that protects assets in the trust from nursing home costs, once the assets are in the trust for five years. The MAPT also protects assets from homecare provided by Medicaid, called “community” Medicaid, once the assets are in the trust for 30 months under a new rule that starts on October 1, 2020.

The “elder law power of attorney” has unlimited gifting powers that could save about half of a single person’s assets from the cost of nursing homes. This can be done on the eve of needing nursing home care, but it is always better to do this planning in advance.

Having a plan in place decreases stress and anxiety for adult children. They are likely busy with their own lives, working, caring for their children and coping in a challenging world. When a plan is in place, they don’t have to start learning about Medicaid law, navigating their way through the court system, or wondering why their parents did not take advantage of the time they had to plan properly.

You probably don’t want your children remembering you as the parents who left a financial and legal mess behind for the them to clean up. Speak with an elder law estate planning attorney to create a plan for your future. Your children will appreciate it.

Reference: Times Herald-Record (May 23, 2020) “Why your children wish you had an Elder Law Estate Plan”