Category: Durable Power of Attorney

Differences between Lifetime and Deathtime Planning… Why a Comprehensive Estate Plan Must Include Both

According to a March 2017 survey by Caring.com, six out of ten Americans have no will or any other kind of estate planning. Many said they’d get around to it, eventually. When they’re old. (The survey did find that the elderly are much more likely to have some plan in place.) It’s all too clear that most of us think “estate planning” is a euphemism for “deathtime” planning. Indeed, in the Caring.com survey, one-third said that they didn’t need an estate plan because they didn’t have any assets to give someone when they’d died.

However, comprehensive estate planning isn’t just deathtime planning. It’s lifetime planning, too. It’s about ensuring that your medical and financial decisions can be made by someone that you trust when you are unable to make those decision for yourself. Lifetime planning can help you address potential tax liabilities, find you benefit programs you may eligible for, and protect your family from costly guardianship or conservatorship court. It can make sure that a trusted party looks after and protects your affairs, if and when you’re not able to.

Lifetime Planning Tools

As estate planners, we have an arsenal of lifetime planning tools to benefit our clients, and we custom-tailor such plans to meet each individual’s needs. Here are a couple of the most common (and necessary) lifetime planning tools you should discuss with us.

Revocable living trusts

When people hear the word “trust,” they may think of “trust fund babies” or think that trusts are something only for the super-rich.

However, a trust is simply a legal tool that can help almost anyone with property – not just the wealthy. In a trust, assets you own are re-titled and transferred into the trust. When this happens, technically, you no longer own your real estate, stocks, bonds and similar properties. Instead, the trust owns them all. But you still control everything in the trust: You can buy and sell these assets as if they were still in your name. In fact, revocable living trusts don’t even change your income taxes while you’re alive. You continue to file your tax returns as you always have, making them very easy to administer while you’re alive. As the creator (grantor or settlor) of the trust, you can continue to make changes to the trust as long as you’re competent to do so.

When you die, the trust becomes irrevocable, meaning its terms can’t generally be changed. At this point, your chosen successor trustee distributes assets to beneficiaries (the people, such as your spouse, children, a church, or other charity, you named to inherit from you). In many respects, the role of the trustee is similar to that of the executor of a will. But, a trustee of a fully funded trust doesn’t have to go through the both public and expensive probate process. Trusts are private, unlike wills, which can also provide valuable privacy to your family and ultimately help preserve your assets for the people you want to benefit from your estate.

Durable power of attorney

Durable powers of attorney come in two forms. With a standard durable power of attorney, a person is legally designated to act on your behalf, in the ways specified in the document. You can make the durable power of attorney broad in scope or quite limited, and it becomes active as soon as you sign it. Under this document, the person may sign checks for you, enter contracts on your behalf, even buy or sell your assets. What they can do depends on what you authorized in the document.

For those who ultimately may need long term care, having a durable power of attorney in place before the need for the long term care arises, can allow for eligibility for Medicaid benefits that otherwise may be beyond reach of the incapacitated person. If the power of attorney is not already in place when dementia or Alzheimer’s Disease, or other debilitating diseases arise, the lack of a durable power of attorney could cost your family thousands of dollars a month.  A properly drafted and signed power of attorney can bring those funds back to the family – legally and ethically.

In the case of a “springing” power of attorney (POA), also known as a conditional power of attorney, the person only has this authority if you become incapacitated. At that point, the POA “springs” into action.  Florida law does not allow the use of springing powers of attorney any longer, but those signed prior to October 1, 2011 are deemed to be legally effective.  However, there is no statutory basis for forcing a third party to honor a power of attorney signed before October 1, 2011, so if you have such a power of attorney you may want to seriously consider having it updated to comply with the statute that became effective on that date.

There is no “best” power of attorney. We’ll work with you to determine which is the best fit for your needs and goals.

Health Care Power of Attorney

In an instant, an accident can change a healthy, vigorous person into someone who can’t make her healthcare decisions. Others face a long decline in mental capacity because of a disease like Alzheimer’s. In either case, you want to empower those you trust to make medical decisions for you. Though health care legal documents vary somewhat by state, the general principle is that, through this document, you authorize someone to make medical decisions for you, if and when you no longer have the capacity to do so. You can also communicate your desired treatment and end-of-life care. However, those instructions may not be valid in every state.

A Holistic Approach

Lifetime planning is a comprehensive approach to estate planning. And while it addresses needs of the living, comprehensive planning may also improve the after-death part of your plan as well, because it can reduce family conflict and preserve assets against court control or interference in the event of incapacity.

Contact an Experienced Estate Planning Attorney

For insight into how to establish a trust, whether it be a revocable trust or an irrevocable trust, and implement other lifetime planning options, call us today to schedule a consultation.

Not Just Death and Taxes: 5 Essential Legal Documents You Need for Incapacity Planning

Comprehensive estate planning is more than your legacy after death, avoiding probate, and saving on taxes. Good estate planning includes a plan in place to manage your affairs if you become incapacitated during your life and can no longer make decisions for yourself.

What happens without an incapacity plan?

Without a comprehensive incapacity plan in place, your family will have to go to court to get a judge to appoint a guardian or conservator to take control of your assets and health care decisions. This guardian or conservator will make all personal and medical decisions on your behalf as part of a court-supervised guardianship or conservatorship. Until you regain capacity or die, you and your loved ones will be faced with an expensive and time-consuming guardianship or conservatorship proceeding. There are two dimensions to decision making that need to be considered when considering incapacity planning: financial decisions and healthcare decisions.  If you are a young couple with small children, an even more important reason for incapacity planning is for you to designate the person or persons you want to provide care and make decisions for your children’s benefit if both you and your spouse are unable to provide care for your children.

  • Finances during incapacity

If you are incapacitated, you are legally unable to make financial, investment, or tax decisions for yourself. Of course, bills still need to be paid, tax returns still need to be filed, and investments still need to be managed.  If you own and operate a small business, you should designate someone to preside over the company’s operations if you have become incapacitated.

  • Healthcare during incapacity

If you become legally incapacitated, you won’t be able to make healthcare decisions for yourself. Because of patient privacy laws, your loved ones may even be denied access to medical information during a crisis and end up in court fighting over what medical treatment you should, or should not, receive (like Terri Schiavo’s husband and parents did, for 15 years).

You must have these five essential legal documents in place before becoming incapacitated so that your family is empowered to make decisions for you:

  1. Financial power of attorney: This legal document gives your agent the authority to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, and address other financial matters that are described in the document.

Financial Powers of Attorney come in two forms: “durable” and “springing.” A durable power of attorney goes into effect as soon as it is signed, while a springing power of attorney only goes into effect after you have been declared mentally incapacitated. There are advantages and disadvantages to each type, and we can help you decide which is best for your situation.

  1. Revocable living trust: This legal document has three parties to it: the person who creates the trust (you might see this written as “trustmaker,” “grantor,” or “settlor” — they all mean the same thing); the person who legally owns and manages the assets transferred into the trust (the “trustee”); and the person who benefits from the assets transferred into the trust (the “beneficiary”). In the typical situation, you will be the trustmaker, the trustee, and the beneficiary of your own revocable living trust. But if you ever become incapacitated, your designated successor trustee will step in to manage the trust assets for your benefit. Since the trust controls how your property is used, you can specify how your assets are to be used if you become incapacitated (for example, you can authorize the trustee to continue to make gifts or pay tuition for your grandchildren).
  1. Medical power of attorney: This legal document, also called a medical or health care proxy, gives your agent the authority to make healthcare decisions if you become incapacitated and are unable to communicate with your healthcare providers.
  1. Living will: This legal document shares your wishes regarding end of life care if you become incapacitated. Although a living will isn’t necessarily enforceable in all states, it can provide meaningful information about your desires even if it isn’t strictly enforceable.
  1. HIPAA authorization: This legal document gives your doctor authority to disclose medical information to an agent selected by you. This is important because health privacy laws may make it very difficult for your agents or family to learn about your condition without this release, even for your spouse.

Is your incapacity plan up to date?

Once you get all of these legal documents for your incapacity plan in place, you cannot simply stick them in a drawer and forget about them. Instead, your incapacity plan must be reviewed and updated periodically and when certain life events occur such as moving to a new state or going through a divorce. If you keep your incapacity plan up to date and make the documents available to your loved ones and trusted helpers, it should work the way you expect it to if needed.

 

Avoid Living Probate: How to Keep Guardians and Conservators Out of Your Estate

While most long term care and estate planning to avoid guardianship - elder law attorney or estate planning attorneyproactive individuals know the importance of having a well-rounded estate plan, it is typically considered as something that will take effect
after they have passed away. But there are in fact many ways in which comprehensive estate planning can have a positive impact on your life while you are still around to reap the benefits.

Planning for Incapacity

Most people who reach old age come to a point at which they are no longer in a position to handle all of their affairs on their own. In many cases this incapacity is due to dementia or other cognitive impairments associated with the elderly. At that point, the decisions they’ve made with their estate planning attorney can have major repercussions on their lifestyle and the handling of their wealth.

Take Alex for example. Long before Alex retired from his long and successful career as an IT manager at a large corporation, he put a cursory estate plan in place with a will detailing who would get which of his assets upon his death. But, Alex didn’t update his plan as he aged. In his late seventies, he developed Alzheimer’s and it became unclear to his family how to proceed with his medical care and wealth management. Since Alex did not formally choose an individual to be in control of his affairs in the event of incapacity, it falls upon the court to appoint a guardian or conservator. Unfortunately, that’s where things get complicated.

What is guardianship?

Guardianship goes by a few other names, so it’s important to get familiar with various terms used to indicate similar and somewhat overlapping concepts. The other terms you may hear include “conservatorship,” “plenary guardianship,” and “living probate.”

It’s important to note that these terms are used in slightly different manners from state-to-state, with some states using “guardian” and “conservator” interchangeably. Others maintain the distinction of a guardian being a person who makes decisions about medical care and living arrangements, whereas a conservator makes decisions about property and assets. In either case, the guardian or conservator is essentially a substitute decision maker that’s authorized by the court to make decisions on behalf of the incapacitated person.

3 Reasons You Should Avoid It

In the process of living probate, the court tries to settle on solutions that will fit the incapacitated individual’s best interests. That being said, there is a much better way. Here are just a few of the reasons guardianship and conservatorship are not ideal fallbacks:

  1. Cost: To put it simply, living probate is expensive. The legal fees associated with court-appointed attorneys representing incapacitated individuals can chip away at their estates very quickly. Living probate also brings your affairs into the public sector.
  1. Privacy: Alex may not have wanted his family to have to experience the financial and emotional costs of his living probate court proceedings, but he may also have felt less than enthusiastic about his personal affairs being discussed in a public forum.
  1. Clarity: In addition to it being costly and a compromise of privacy, living probate is also full of guesswork. If Alex had assigned powers of attorney and established long-term care provisions in his estate plan, his affairs would be handled exactly as he wished in the event of his incapacity. When the court is involved, they usually apply default rules of state law, which means the legislature is essentially making some choices for you and your family.

How to Structure Your Estate Plan

So what does an individual like Alex need to do in order to avoid the chance of his family having to go through living probate? There are a few specific steps we can take to make in planning your estate to ensure your affairs never end up in a court-appointed guardian’s hands:

  • Powers of attorney: A complete estate plan includes named powers of attorney who will fulfill the roles of guardians and conservators in the event of your incapacity. The difference is that these individuals will be chosen by you rather than by the court. There are a number of different types of powers of attorney for specific purposes, such as a healthcare power of attorney or a general durable power of attorney, the latter of which controls the management of your finances.
  • Long-term care planning: Although you may never need long-term care, building a strategy for it into your estate plan will allow you to relax knowing that you’ll receive long-term care according to your wishes if that becomes necessary. This type of planning also helps protect the assets in your estate plan from being used up on medical expenses before going to your beneficiaries.

Avoiding guardianship and conservatorship through living probate is a relatively pain-free process if handled well ahead of time. Get in touch with us today to go over the parts of your estate plan that may need amending to give you and your family the best possible outcomes. We are here to help and can quickly get your estate plan in optimal shape.

florida durable power of attorney, elder law attorney and lawyer

Sign a Power of Attorney Before It’s Too Late

durable power of attorney by elder law attorney and lawyerIn my last post to this blog, I explained why it is so important to put in place a durable power of attorney.  In this post, I want to emphasize why it is important to get that power of attorney in place before you need it.  If you wait until you need it, you’ll be too late.

Why Do I Need A Durable Power of Attorney?

As we discussed in that prior post, a durable power of attorney is an extremely important estate planning tool, even more important than a will in many cases.  This crucial document allows a person you appoint — your “attorney-in-fact” or “agent” — to act in place of you — the “principal” — for financial, business and legal, purposes when and if you ever become incapacitated due to dementia or some other reason, such as a stroke, heart attack, automobile accident, or other reasons that might arise.  The agent under the durable power of attorney can quickly step in and take care of your affairs.

To properly execute a power of attorney and name an agent to stand in your shoes, you need to have legal capacity.  Regrettably, many people delay completing this vital estate planning step until it’s too late and they no longer legally have the capacity for signing the document and giving it full legal effect.  Won’t wait until its too late!

What Happens If You Do Not Have A Durable Power of Attorney?

What happens then? Without a properly executed durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes lots of time, costs lots of money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, the representative may have to seek court permission to take planning steps, make long term care decisions, engage in basic financial transactions, that your agent could implement immediately with a properly executed simple durable power of attorney.  In effect, the judge, or the person appointed by the judge as your guardian, will be “in charge” of determining what issues are brought to the probate judge’s attention.  Either the judge or the guardian will be making decisions that may have a profound effect on you and your family.  No one really wants to be the subject of a guardianship.

This is why it’s so important that you have a durable power of attorney in place before the capacity to sign the document becomes an issue.  The standard for legal capacity with respect to durable powers of attorney varies from state to state. Some courts and lawyers argue that this threshold can be quite low: that you need only know that you trust the agent to manage your financial affairs. Others argue that since the agent generally has the right to enter into contracts on behalf of the principal, the principal should have the capacity to enter into contracts as well, and the threshold for entering into contracts is fairly high.  In Florida, you must show that the person signing the durable power of attorney has the capacity, and does in fact understand, who are the natural objects of his or her estate (the identity of children, grandchildren, etc.), and the nature, approximate value, and the extent of the estate assets.

How Do I Choose An Agent to Act on My Behalf?

If you do not have someone you trust to appoint as your agent, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may want to sign a limited durable power of attorney that simply nominates the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination “except for good cause or disqualification.”

Because you need a third party to assess capacity and because you need to be certain that the formal legal requirements are followed, it can be risky to prepare and execute legal documents on your own without representation by an attorney. To sign a durable power of attorney before it’s too late, contact a local experienced elder law attorney.

Can I Prepare My Own Power of Attorney?

If you insist on preparing your own Florida durable power of attorney, without the assistance of a Florida attorney because you don’t want to meet with one or pay for one, we actually offer a power of attorney for you to prepare online that complies with all of the changes in the Florida power of attorney statute that was completely rewritten in 2011.  We review your input for that power of attorney so that you can know that it will be enforceable in Florida.

Durable power of attorney in Florida by experienced elder law lawyer

Top Reasons Everyone Needs a Comprehensive Power of Attorney

Florida durable power of attorney formThe benefits of a highly detailed, comprehensive durable power of attorney are numerous. Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for seniors. This post highlights the benefits of a comprehensive, detailed durable power of attorney, including some of the provisions that should be included. A proper starting point is to emphasize that the proper use of a durable power of attorney as an estate planning and elder law document depends on the reliability and honesty of the appointed agent.

The agent under a power of attorney has traditionally been called an “attorney-in-fact” or sometimes just “attorney.” However, confusion over these terms has encouraged the terminology to change so more recent state statutes tend to use the label “agent” for the person receiving power by the document.

The “law of agency” governs the agent under a durable power of attorney. The law of agency is the body of statutes and common law court decisions built up over centuries that dictate how and to what degree an agent is authorized to act on behalf of the “principal”—in other words, the individual who has appointed the agent to represent him or her.

Powers of attorney are a species of agency-creating document. In most states, powers of attorney can be and most often are unilateral contracts – that is, signed only by the principal, but accepted by the agent by the act of performance.

Much has been written about financial exploitation of individuals, particularly seniors and other vulnerable people, by people who take advantage of them through undue influence, hidden transactions, identity theft and the like.

Many articles in the legal arena have addressed guardianships and conservatorships in Florida and discussed the benefits of court supervision of care of vulnerable people in such contexts. Even though exploitation risks exist, there are great benefits to one individual (the principal) privately empowering another person (the agent) to act on the principal’s behalf to perform certain financial functions.

A comprehensive durable power of attorney may include a grant of power for the agent to represent and advocate for the principal in regard to health care decisions. Such health care powers are more commonly addressed in a separate “health care power of attorney,” which may be a distinct document or combined with other health topics in an “advance health care directive.”

Another important preliminary consideration about powers of attorney is “durability.”  “Durability” or a “durable” power of attorney is one that does not lose its legal effectiveness in the event the principal becomes incapacitated.

Powers of attorney are voluntary delegations of authority by the principal to the agent. The principal has not given up his or her own power to do these same functions but has granted legal authority to the agent to perform various tasks on the principal’s behalf. All states have adopted a “durability” statute that allows principals to include in their powers of attorney a simple declaration that no power granted by the principal in this document will become invalid upon the subsequent mental incapacity of the principal. The result is a “durable power of attorney” – a document that continues to be valid until a stated termination date or event occurs, or the principal dies. Absent durability provisions, the power of attorney terminates upon the principal’s death or incapacity.

Having covered the explanation of what a durable power of attorney is, let us look at the top benefits of having a comprehensive durable power of attorney.

1. Provides the ability to choose who will make decisions for you (rather than a court).

If someone has signed a durable power of attorney and later becomes incapacitated and unable to make decisions, the agent named can step into the shoes of the incapacitated person and make important financial decisions. Without a durable power of attorney, a guardianship or conservatorship may need to be established, and can be very expensive and intrusive.  It also removes from the family the final authority over the incapacitated party’s family members and shifts it to the guardianship judge.

2. Avoids the necessity of a guardianship or conservatorship.

Someone who does not have a comprehensive durable power of attorney at the time they become incapacitated would have no alternative than to have someone else petition the court to appoint a guardian or conservator. The court will choose who is appointed to manage the financial and/or health affairs of the incapacitated person, and the court will continue to monitor the situation as long as the incapacitated person is alive. While not only a costly process, another detriment is the fact that the incapacitated person has no input on who will be appointed to serve.



3. Provides family members a good opportunity to discuss wishes and desires.

durable power of attorney for childThere is much thought and consideration that goes into the creation of a comprehensive durable power of attorney. One of the most important decisions is who will serve as the agent. When a parent or loved one makes the decision to sign a power of attorney, it is a good opportunity for the parent to discuss wishes and expectations with the family and, in particular, the person named as agent in the power of attorney.



4. The more comprehensive the durable power of attorney, the better.

As people age, their needs change and their power of attorney should reflect that. Seniors have concerns about long-term care, applying for government benefits to pay for care, as well as choosing the proper care providers. Without allowing, the agent to perform these tasks and more, precious time and money may be wasted.

5. Prevents questions about principal’s intent.

Many of us have read about court battles over a person’s intent once that person has become incapacitated. A well-drafted durable power of attorney, along with other health care directives, can eliminate the need for family members to argue or disagree over a loved one’s wishes. Once written down, this document is excellent evidence of their intent and is difficult to dispute.


6. Prevents delays in asset protection planning.

A comprehensive durable power of attorney should include all of the powers required to do effective asset protection planning in the event of incapacity. If the power of attorney does not include a specific power, it can greatly dampen the agent’s ability to complete the planning and could result in thousands of dollars lost. While some powers of attorney seem long, it is necessary to include all of the powers necessary to carry out proper planning.  Importantly, if the durable power of attorney does not have certain specific provisions involving “special” powers, as defined by the Florida durable power of attorney statute, it may result in the denial of Medicaid benefits to pay for long term care.  Thus it is critical that the durable power of attorney, especially in Florida, be prepared in accordance with the Florida power of attorney statute.

7. Protects the agent from claims of financial abuse.

Comprehensive durable powers of attorney often allow the agent to make substantial gifts to self or others in order to carry out asset protection planning objectives. Without the power of attorney authorizing this, the agent (often a family member) could be at risk for financial abuse allegations.  In Florida, without specifically providing in the durable power of attorney for the special power of gifting to the agent, or other family members, the agent will not have the authority to engage in gifting – with potential tax and long term care consequences.

8. Allows agents to talk to other agencies.

An agent under a power of attorney is often in the position of trying to reconcile bank charges, make arrangements for health care, engage professionals for services to be provided to the principal, and much more. Without a comprehensive durable power of attorney giving authority to the agent, many companies will refuse to disclose any information or provide services to the incapacitated person. This can result in a great deal of frustration on the part of the family, as well as lost time and money – and the specter of establishing a court supervised guardianship.

9. Allows an agent to perform planning and transactions to make the principal eligible for public benefits.

One could argue that transferring assets from the principal to others in order to make the principal eligible for public benefits–Medicaid and/or non-service-connected Veterans Administration benefits–is not in the best interests of the principal, but rather in the best interests of the transferees. In fact, one reason that a comprehensive durable power of attorney is essential in elder law is that a Judge may not be willing to authorize a guardian to protect assets for others while enhancing the ward/protected person’s eligibility for public benefits. However, that may have been the wish of the incapacitated person and one that would remain unfulfilled if a durable power of attorney were not in place.



10. Provides immediate access to critical assets.

A well-crafted durable power of attorney includes provisions that allow the agent to access critical assets, such as the principal’s digital assets or safety deposit box, to continue to pay bills, access funds, etc. in a timely manner. Absent these provisions, court approval will be required before anyone can access these assets. Digital assets are also important because older powers of attorney did not address digital assets, yet more and more individuals have digital accounts.  The statutes and case law surrounding durable powers of attorney is ever changing.  Consequently, durable powers of attorney should be reviewed regularly to determine whether changes in the law might adversely affect the usability of the power of attorney.

11. Provides peace of mind for everyone involved.

Taking the time to sign a power of attorney lessens the burden on family members who would otherwise have to go to court to get authority for performing basic tasks, like writing a check or arranging for home health services. Knowing this has been taken care of in advance is of great comfort to families and loved ones.

Conclusion

Florida Durable Power of Attorney Helps the ElderlyThis discussion of the Reasons Why Everyone Needs a Comprehensive Power of Attorney could be expanded by many more. Which benefits are most important depends on the situation of the principal and their loved ones. This is why a comprehensive durable power of attorney is so essential: Nobody can predict exactly which powers will be needed in the future. The planning goal is to have a power of attorney in place that empowers a succession of trustworthy agents to do whatever needs to be done in the future. Please call us if we can be of assistance in any way or if you have any questions about durable powers of attorney.  You can obtain a durable power of attorney that contains the basic requirements for compliance online through this website by going to this page.  If you would like to develop a durable power of attorney that is specifically tailored for your needs, and the needs of your family, call and schedule a consultation, either office, telephonically or through email, and we’ll help you get one that fits your specific needs.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.