Articles Posted in Estate Planning

Although we may think of phishing emails, robocalls, or other types of scams when we think about financial exploitation, it is far more common for this type of exploitation to be done by relatives, caregivers, neighbors, or friends someone believed they could trust. Financial exploitation is more common than most people realize, but understanding financial abuse and strategies can help people avoid being exploited.

Several studies have shown that individuals who have a cognitive impairment, are in poor physical health, are isolated, or have a learning disability may be more at risk for financial abuse.

Studies have also revealed common characteristics of individuals who financially exploit others, including those who have substance abuse issues, mental illness, or who are financially dependent on the person they are exploiting.

A lot of people are part of a blended family. It’s important for those in this type of family to make sure that stepchildren are incorporated into their estate planning process.

Many stepparents love and care for their stepchildren as their own children, and they may not be aware that this emotional bond is not one that is protected by law. Laws of inheritance do not apply to stepchildren unless they are formally adopted. Without a legal relationship to your step children, you will need to be clear in your estate plan that you wish for your estate to benefit them.

Often, remaining property is left to children equally in estate plans. However, this type of language only applies to biological and adopted children. Although people believe their family will understand the decedent’s wishes and share things evenly, this is not always the case.

As I began writing about in last week’s post, there are a number of important factors to consider when deciding who to name as trustees, powers of attorney, health care surrogates, and executors while working on your estate plan. Here are a few more tips to keep in mind:

4. Pick the best agent for today

Especially for those who do not have children, the answer of who to choose as an agent may not be obvious. If the person who would be appointed as agent is older, there’s a chance that person would be the first to pass away. If someone is considering appointing a friend, they may worry that the friendship won’t last and that that person would not be a good choice or be willing or able to serve as their agent when the time comes.

When implementing estate planning documents, one of the biggest challenges people often run into is the choice of who to name as their trustees, powers of attorney, health care surrogates, and executors. Here are some tips for deciding who to appoint:

1. Give preference to those who have the most time to devote and live nearby

You may have children who are very successful professionals, leaders, or business owners, but sometimes these are not the best choice since they often have tighter schedules and less time to devote to helping you with your affairs. Also take into account if any of your children have more children of their own to care for or other time-consuming obligations.

People with revocable living trusts often name a family member (spouse, oldest child, etc.) as their successor trustee. The successor trustee is who takes over the administrative duties for the trust in the event you become incapacitated or die.

However, naming only one successor is probably not enough. It is better to name a secondary successor trustee in case the first one is unable to serve as trustee when the time actually arrives. There are a number of reasons this may happen, including the following:

You could both be injured or die in a common accident

Although parents typically want to leave equal shares of their estate for their children, there are cases where equal isn’t fair. It’s important to carefully prepare if you want to provide more or less for one child in your estate plan.

There may be a number of reasons a parent would want to leave unequal shares for their children. For example, if one child provides all of the caregiving, a parent may want to leave more for that child. Also, if one child is substantially better off than the other child, their parent may want to provide more for the child in greater need. Other factors can also come into play, such as if one child has special needs, if one wants to run a family business, or if parents have already helped one child more during their lifetime by funding things such as graduate school or the purchase of a house.

It is important that, no matter what your reasons are, that you sit down and have a conversation with your children about these reasons for leaving unequal shares for them and explain your process for making this choice. If you believe this could be a difficult and tense conversation, it may help to hire a mediator to facilitate this discussion.

It can be enough of a challenge to do estate planning for yourself, but it might be even more complicated when you have a spouse. You and your spouse may have been able to reach agreements on major life decisions such as raising children and where to live, but that doesn’t necessarily mean that you will easily agree on estate planning decisions.

At times, one spouse goes ahead and makes estate planning decisions without the other spouse knowing or approving of these choices, and this can come with serious consequences for the entire family. Clear and honest communication about estate planning goals is for everyone’s benefit.

Depending on which state you live, you and your spouse’s property may be community property, separate property, or tenancy by the entirety. Start by finding out what the law is for the state where you live as you plan for a joint estate.

It’s a huge responsibility to act as an agent under a power of attorney, and it isn’t something everyone is able or willing to do. If someone names you as an agent in their power of attorney document, you can resign or refuse the position.

The main types of power of attorney are financial and medical, and agents act in place of the principal (the person executing the power of attorney) if and when that person becomes incapacitated.

If you are an agent under a financial power of attorney, it’s your job to take spending and investment measures that the principal would take. Although there may be specific limitations in the power of attorney document, you can typically open and withdraw funds from bank accounts, trade stock, pay bills, cash checks, and things of that nature. It’s also important that you keep good records.

As you are preparing to bring your student to college, there’s some estate planning you will want to include as part of this preparation. Your child becomes a legal adult once they turn 18, and in most circumstances, you are no longer authorized to obtain information regarding their medical care or finances. Young adults should consider signing a Power of Attorney and Advance Directive for Health Care to prepare for the unlikely event of the type of emergency where it would be beneficial to give parents the authority to act on their behalf.

A Durable Power of Attorney gives the Agent (often a parent for college-aged young adults) authority to access bank accounts and act for them when it comes to legal matters. Your child has proven that they are responsible and independent, but it is wise to plan for what may happen in case of an emergency. A Power of Attorney would allow parents to do things for their child such as write checks, pay bills, and manage those types of affairs for their child.

One of the primary purposes of the Healthcare Insurance Portability and Accountability Act (“HIPAA”) is to protect the privacy of medical records and restrict access to personal medical information. An Advance Directive for Health Care is used to appoint a Health Care Representative and grant that person access to medical records as well as authority to make medical decisions for someone should they become unable to communicate with their medical providers. Without this document, medical professionals are not authorized to discuss medical care with the parents of the student being treated. Also, if the student has a medical emergency, parents may have to petition a court to be granted authority to make decisions for their child if they have not been appointed as Health Care Representative. A lot of stress may be avoided by taking the time to execute an Advance Directive before it would be needed.

People usually find it stressful to talk to family members about decisions they are making for their estate plan, and this can lead a lot of people to avoid having these conversations. Sometimes, a parent’s adult children won’t talk to their parents about this topic because they don’t want to acknowledge that their parent may one day become incapacitated and will eventually pass away. It can be too difficult for children to accept that their parents may be anything less than healthy and safe from harm.

The dynamics of that family may also make it harder for these conversations to take place. It’s common for one sibling to live closer to their parents and see more of the reality of the parents’ health and illness as they age while a sibling who lives far away has trouble accepting that there are any issues at all.  The child who sees their parents more often may want to have conversations about planning for incapacity or death, and the child who doesn’t live locally may see this as inappropriate or not yet needed.

An estate plan is a collection of documents nearly all adults should have in order to plan for if they become unable to make their own decisions and for when they die. This typically includes documents such as: