10 Reasons Every Millennial Needs a Power of Attorney

Dear Millennial,

If you become incapacitated and can no longer handle your affairs or make your own healthcare decisions, who will make those decisions for you? Your parents? A family member? Your boyfriend/girlfriend, roommate, or spouse?

If you do not have a Financial Power of Attorney and/or a Healthcare Power of Attorney, naming an agent, the answer is none of the above. Once an individual reaches the age of eighteen (18), they become an adult under the eyes of the law, and must grant an agent the authority to make decisions in the event they cannot.

There are two (2) types of Power of Attorney; Financial and Healthcare. Both types name an agent and grant that agent specific authority in regards to your finances and healthcare. For example, in a financial power of attorney, you can designate that your agent has the ability to pay taxes, bills, and access your bank account. In your healthcare power of attorney, you can grant your agent the power to discharge or admit you to any healthcare facility, to make decisions regarding medications, and even to make end of life decisions.

The purpose of these documents is to enable someone you trust to make those everyday decisions that you no longer have capacity to do.

Life is unpredictable. No one has a magic crystal ball to tell them the exact moment when they will need a power of attorney. No one is guaranteed to reach an “old age” before a power of attorney is needed.

So, with that being said, here are ten (10) reasosn every Millennial should have a power of attorney.

  1. Granting someone the ability to access your bank account.
    • Unless your bank account is a joint account with another person, a bank will not let a parent, family member, or partner access your bank account without a financial power of attorney.
  2. Choosing who is able to make financial or health related decisions
    • If you have no power of attorney and you become incapacitated, the court will appoint you a Guardian. Court will appointment the person they believe to have your best interests at heart and be the best person to care for you during your incapacity. The persona appointed might not be the person you would have ever chosen.
  3. You have strong feelings about certain healthcare decisions
    • If you have very firm religious or personal beliefs regarding life saving treatments like tube feeding or life support, to ensure those wishes are followed, you would need a healthcare power of attorney
    • For example, you get in a car accident and are rushed the emergency room In order to save your life you are placed on life support. If your wish is to not be kept alive artificially, but you lack a healthcare power of attorney, that decisions will be made by a court appointed agent. The court appointed agent could decide to keep you on life support.
  4. You have very specific ideas about certain medical treatments
    • For example, if you are a pregnant, you can designate in a healthcare power of attorney that any medical procedures to save the baby be done, at the expense of your own life. Or you can designate that you refuse to be given any kind of potentially addictive pain killer, like oxycodone. If you do not have a designated agent to stand up for these wishes, they might not be followed.
  5. You will never be able to create one “when you need it”
    • To validly execute any document, the principal must have capacity. Power of Attorneys come into action when you lack capacity to make your own decisions. Therefore, when you need the document, you lack the capacity to execute one, and therefore must settle with the court appointed agent.
  6. You will prevent arguments and conflicts between family members, partners, and friends
    • Again, the best case dealing with this reason is Terry Schiavo.
    • If something happens to you, your partner and parents could have very different ideas about “what you want”. Those differing opinions will cause conflicts and heartache for both parties and potentially cause the guardianship process to be lengthy and expensive. Plus, once the court appoints a guardian, the party not chosen is going to be even more upset because of feeling “your wishes” are not being met.
  7. Caring for your pet
    • If you have a pet at home and you get in an accident, who will take care of the pet? Naming an agent and specifically granting them the authority to pay for vet bills, foods, pet daycare, etc., ensure your pet is taken care of when you cannot.
    • It also ensure your pet is taken care of by the person you feel is most suited to caring and tending for your pet.
  8. Ensuring your bills and monetary obligations are paid.
    • If you do not grant somebody access to your bank account, how will your bills get paid?
    • Student Loan payments, life insurance, health insurance, car insurance, rent, etc. are just a few examples of bill that will need to be paid during your incapacity. If no one has the authority to access your bank account, no one will be able to pay your bills.
  9. Granting access to your medical records and medical bills
    • As of 2003, every healthcare power of attorney should include a HIPPA Waiver. HIPPA Waivers deal with the privacy laws surrounding medical records and medical bills. If you have not granted your agent the authority to review/receive your medical records and medical billing information, no one is going to be able to assist in making healthcare decisions for you. Hospitals and Doctors are not going to talk to somebody about your condition barring the HIPPA WAIVER.
  10. Peace of mind for you and loved ones.
    • Financial Power of Attorney and Healthcare Power of Attorney’s are the “best insurance” you hopefully never have to use.
    • Having these documents in place in the event of your incapacity will make the process of assuming the decision making for you smooth, and easy. These documents are written instructions of how to best take care you and tend to your needs.

These ten (10) are just a few reasons why a Millennial should have powers of attorney. It is hard to think when you are in your 20s that you would not be able to pay your bills and dictate your healthcare. Youth brings with it a sense of indestructability.

The harsh reality is this: No One is Indestructible.

So, ask yourself this; How would your life and loved ones be effected if you have no power of attorney?

Sincerely,

The Millennial Lawyer

How Can I Avoid Probate?

This post is the follow-up to “So, What Exactly is Probate?”. As mentioned before, the two most popular questions asked about the Probate Process are “What is Probate” and “How Can I Avoid Probate.” Here we are going to answer the latter.

So, How Can I Avoid Probate?

If you have decided you do not want your heirs to have to worry about probating your estate, there are several options available.  Probate only deals with assets that remained in your individual name at the time of death.

For example, Husband and Wife have a join bank account and are both named on the deed for their residence. The bank account and residence state Husband and Wife are joint tenants with rights of survivorship. Meaning when one passes, the surviving spouse automatically takes possession of the asset, and probate is not necessary. However, when the surviving spouse passes, all of the assets now in their name only, will have to be probated.

One of the simplest ways to avoid probate is by creating a Revocable Living Trust.

A trust is a contract between the Grantor (the person who creates the trust), the Trustee (one who controls the trust) and the beneficiaries (those entitled to benefit from the trust). Amazingly, under the law, you can be Grantor, Trustee and Beneficiary at the same time! You, as Grantor, determine how the trust will be operated by the Trustee and who benefits, how and when. You can create a trust that permits you to be Trustee and give yourself the right to receive full benefits from it. 

It permits you to keep total control and access to all your assets during your lifetime, and provides for the distribution of your assets to your beneficiaries at your death. We often refer to a revocable living trust as your “Book of Instructions.” Meaning, upon your passing, your heirs will follow the instructions in the trust, and distribute assets accordingly.  No Probate Needed.

Now, a Revocable Living Trust might not be the answer for everybody. Trusts are usually cost a couple thousand dollars or more to set up and they involve some work and effort to fund. Also, some clients estates may not be conducive to a trust.

The following are two special alternate estate planning tools for dealing with estate planning and real estate.

Life Estate Deed: A “life estate” is the right to live and occupy real property for an entire lifetime. The life estate deed divides ownership of real property between two parties: “Life Tenant” and the “Remainderman”.

The Life Tenant enjoys the use of the property for the duration of his/her life and is responsible for the taxes, insurance, upkeep, and other expenses related to the property;

  • At the death of the Life Tenant, ownership of the property passes directly to the Remainderman, with no need to Probate a Will;
  • Unlike an outright gift of real estate, the life estate deed transfer retains the benefits of certain income tax basis rules;
  • A life estate does not have to be liquidated to pay for nursing home expenses. It is an excellent asset protection tool;

The Life Tenant(s) and Remainderman have to consent to the sale of the property during the Life Tenant’s lifetime, and the sale proceeds are shared between the life tenant and Remainderman.

Real Estate Trust: A real estate trust is a type of Revocable Living Trust (RLT) that can also be useful to transfer ownership of real property at death without having to probate a will.

  • A Real Estate Trust is an abbreviated RLT. It is a trust that only contains real property- no bank accounts, no stocks;
     
  • Like a RLT, you retain full control over the trust and any real property therein for your lifetime;
  • The trust avoids probate, so that upon your death, any real property in the trust will pass to the beneficiary(ies);
  • The legal fees for creating the real estate trust are more affordable than your standard RLT.

Each technique has positives and negatives, but they all have one simple principle in common: arrange assets so that there is nothing in your name that does not automatically pass to someone else upon your death.

As always, talk to qualified Estate Planning Attorney in your area about these issues. Only an attorney can assess your estate and advise you on the best course of action.

 

 

So, What Exactly is “Probate”?

The most frequently asked questions I’ve received as an estate planning attorney deal with the term, “Probate”.  The two most popular are: “What is Probate” and “How can I avoid Probate”.  Today, we are going to tackle answering the first question, “What is Probate?”

So, What exactly is Probate?

The legal definition of probate is: “The act or process of proving a will. The proof before an ordinary, surrogate, register, or other duly authorized person that a document produced before him for official recognition and registration, and alleged to be the last will and testament of a certain deceased person, is such in reality” (Thank You -Law Dictionary: What is PROBATE? definition of PROBATE (Black’s Law Dictionary) ).

Every state has a Probate Court, though they are not all called “Probate Courts”. South Carolina refers to this type of court as the Probate Court, but Maryland, for example, calls it the Orphan’s Court.  Regardless of the name, the purpose of this court is to facilitate the “proving of a will.” Now, every state handles the probate process differently. Some, like New Jersey, have a relatively simple process when your estate is going to children. South Carolina has a lengthy and potentially costly process, but it is not the worst state. California is rumored to have one of the more complex probate processes.

There are two absolutes no matter what state you reside. First, every state has a probate process. Second, if you die without a will, you fall under the “intestacy” category, and every state has a plan in place to probate your estate.  (More on “intestacy” later.)

Okay, so who has to go through Probate and how does Probate work?

The simple answer is: everyone who dies with no Last Will and Testament or those who die with only a Last Will and Testament, have to go through the Probate Process.  Those who have a Trust avoid probate (this will be discussed on a another blog post).

Now, for those who die “intestate” meaning no will, the state has a plan for how your estate will be distributed. The Probate Judge will assign someone to be your “Executor” or as we call them in South Carolina, your “Personal Representative”. This person is tasked with administering your estate. They are responsible for notifying any heirs, creating an accounting of your individual assets, opening an estate account etc. Then after the statutory time period has elapsed, the court will approve an order closing the estate and how the estate shall be distributed.

Those who die with a will, have named a Personal Representative. The named Personal Representative will present the will to the court and administer the estate, following the same process as detailed above, and ensure the distribution of assets in your will is followed.

In South Carolina, the probate process takes at minimum a year. Yep. 365 days between death and your estate being distributed to your heirs. And that time frame is only if everything goes smoothly and deadlines are met. The main reason an estate takes so long to probate is the statutory period of having to leave the estate open for 8 months, to allow creditors time to make a claim against your estate.

Other impediments that cause a lengthy probate are:

  • Will contests
    • Any disgruntled heir can go online and complete a form contesting a section of the will. When is the done, the court has to have a hearing to address the contest. This puts the probate process on hold and it will not resume again until a ruling has been made regarding the contest.
  • Naming Multiple Personal Representatives
    • I’ve seen several probate estate where the decedent named two or more children as  co-Personal Representatives. This lengthens the process because all of the named PRs must sign the documents and participate in the administration of the estate. If each PR lives in a different state, gathering documents takes even longer. Also, sometimes the named PRs do not get along causing the process to slow down.
  • Issues gathering necessary information
  • Contests about the named Personal Representatives
  • Contests about the plan of distribution
  • Trying to probate the estate without proper legal counsel
    • Some people feel they can probate the estate on their own. You have the right to probate an estate without legal counsel, but if you are unsure what to do or forget to do something, the process stalls.

And so on and so forth. Each estate that is probated is different, so there is no way to tell if a particular estate will be easy or complex.

If you have a will, review it. Check that the distributions are still relevant to your current wishes and that those named as Personal Representatives are still choices you want.

It never hurts to have a qualified attorney review your documents to see if your will is executed correctly, distributes your assesses accordingly, and clearly shows your intent in regards to your estate. You should also talk to an attorney about Probate. An attorney will be able to review your existing will and walk you through the specifics of the probate process and how the process could impact your will.

 

 

 

 

 

 

 

 

 

Pet Trusts- A Differnt Kind of Trust

Yes, you read that correctly, Pet Trusts.

A pet trust is a legal technique available to make sure your pet receives proper care after you die by providing enough money to a trusted person (the “Trustee”) who will be under legal obligation to make arrangements for the proper care of your pet according to your instructions. The trustee can also be the caregiver. The assets in Trust will pay for your pet’s expenses.

There are several types of pet trusts.

The first is called a “statutory pet trust,” and is specifically authorized by South Carolina law. A statutory pet trust is a basic plan and does not require the pet owner to make as many decisions regarding the terms of the trust. South Carolina law “fills in the gaps” and a simple provision in a will such as, “I leave $1,000 in trust for the care of my dog, Rover” may be effective.

Another type of pet trust is a “traditional pet trust” where you select a trustee to help the person providing care to your pet by paying for the pet’s expenses according to your directions and include more specific details for care of your pet.

Many pet owners prefer the traditional pet trust because the ability to control these details. Details to consider for the traditional pet trusts are: the amount to leave in trust, food and diet, daily routines, toys, cages, grooming, socialization, medical care, including preferred veterinarian, compensation for the caregiver (if any), and even liability insurance.

The selection of the caregiver for your pet is extremely important. Willingness and ability to provide the desired environment are key. You should name at least one alternate caregiver just “in case”.

Avoid designating too much money to your pet trust because a gift too large may encourage heirs and beneficiaries to contest the trust. And, if the amount is unreasonably large, the court may reduce it to a “reasonable” amount.

So, if you have a beloved furry companion and want to ensure they are cared for upon your passing, why not look into a pet trust. You take care of everyone else, why not your pet too.

 

 

Things to Consider When Naming a Guardian

In my previous post, “Why Parents of Minor Children Need a Will”, I briefly outlined why parents of minors need to have a will. The most important reason to have a will is the need to name a guardian.

When you name a guardian in a will, you are giving that person the responsibility of caring for your children. A guardian provides shelter, education, medical care, personal needs, and financial needs. They essentially assume the duties and role of parent.

Here are a few things to consider when deciding on a guardian:How old is the person you are considering?

The age of the person you are considering naming as guardian should be one factor you consider. You should chose a guardian that would be capable of taking care of your children if something happened to you tomorrow, but also would be capable if something happened to you five to seven years down the road. It is important to re-evaluate the age of the guardian every so often to ensure they still have the ability to care for your children. For example, naming your sixty (60) year old parents as your small children’s guardian might be okay right now, but would they be a viable choice at 70? If after several years you notice a decline in your named guardian, updating you will in favor of someone younger would be wise.

How financially stable is the person you are considering?

You should always consider a guardian that knows how to manage money and is not in any financial trouble. You do not to leave your children with someone who struggles to manage money and except having to care for your children to correct those issues. Especially, if you estate would leave your children assets that need to be managed.

Are you considering a married couple?

If you are naming a married couple, make sure the relationship is steady. It is always wise to have a contingency plan in the even the married couple you are naming as guardian should get divorced.

What religious affiliation is the person?

If you want your children brought up in a certain religion, it is best to choose a guardian that follows that religion, or a guardian that has no qualms about attending and raising your children in that religion.

How far away does this guardian live?

If your guardian lives several hours or several states away, it is wise to name a temporary guardian that your children could be placed with if necessary until your named permanent guardian is able to reach them. Also, naming a guardian who lives far away is not necessarily a bad choice, but you want to be sure that your children would be okay with moving to wherever that guardian resides.

Does this person already have children of their own?

If you name a guardian who already has children, you should consider the following: do they have enough room for your children, will they be financially able to support their children and yours, and do your children get along with their children.

When you do decide on who you like to name as guardian, you should always ask them if they are willing to be the guardian. Some people may not want the responsibility of raising children. It is also important to ensure you name an alternate guardian, someone who would be equally as qualified in the event your primary guardian is unavailable or unable.

Determining a guardian is not an easy decision and should not be taken lightly. However, it is always better to have peace of mind that you have a plan in place for you children.

Always talk to a qualified attorney before creating any estate planning documents. Attorneys will be able to guide you in the right direction and draft a more complete document than one you can get for cheap offline. Never leave the future of your children in the hands of DIY legal documents.

Why Parents of Minor Children Need Will.

“I’m Not a Regular Mom, I’m a Cool Mom.” -Mean Girls

Remember the movie Mean Girls? We all love that movie to this day. It is one of the classic girl movies from our generation.

Remember Regina George’s mother? We knew she was a terrible mother from the start. Even though we might have had a fleeting thought of “I wish my mom was like that”, it never lasted long. Why? Because we knew our mothers, no matter how much they drove us crazy, were doing their job as a parent.

So, I pose this question to all of you new mothers, soon to be mothers, and those who will someday be mothers, are you/will you be a Mrs. George?

The answer is more than likely a resounding NO! You will do your best to parent your children so they grow up happy, healthy, loved, and successful.

As you embark on your adventure into parenthood, have you stopped to consider protecting your children in the event you are not around to raise them? No one wants to think about not being around to see their children grow up, but life happens. Part of being a parent is being prepared for whatever life throws at you and your children.

Any person with minor children, meaning under the age 18, should at minimum, have a Last Will and Testament.

Most people do not have a will because the subject is a hard one and younger parents do not believe a will is for them. Wills are for people who are “old.”

Well, if you have minor children and die without a will:

  • Your children could be taken into care while the court appoints guardians.

Did you catch that? A COURT will decide who is the best guardian for your children. Is that a decision you want a judge, who has never met your children or your family to decide?

Now, if one parents dies, the surviving parent will continue to be the guardian of the children. But what happens when both parents are gone? What happens when the surviving parents has lost parent rights or is unfit? What happens to blended families and the surviving spouse is a step-parent? I say it again, a COURT will appoint a guardian for your children.

Other consequences for not having a will:

  • Your spouse/partner will not inherit ALL of your estate under the laws of intestacy. (Intestacy are the rules for dealing with an estate when there is no will.)
  • Disputes over distribution could prolong your beneficiaries from receiving your estate.
  • The Court will determine who shall manage any property and assets your minor children receive until they are of legal age.

The list can go on and on. The bottom line is, every parent should have a will.

Think about everything you do for your children on a daily basis. Think about everything you would do for your children if they need something. How difficult is it then to think about having a will and ensuring your children are going to be taken care of even if you are not the one giving the care?

Now, if this post has prompted any of you to get a will, then I have been successful. However, do not think that an online will is the way to go. You should go see a qualified attorney and have them draft a will. Guardian provisions and provisions dispensing your estate for your children need to be written in a precise manner that conveys clearly your desires. Online document sites cannot give you that.

So, do not be a “Cool Mom” (or dad). Be a Smart Mom. Have a plan in place that protects your children from whatever life may throw at them.

 

Please look out for my next article dealing with things to consider when selecting a guardian for your children.

10 Most Common Estate Planning Mistakes

Are you making one or more of these Mistakes?

  1. Not having a Will: Personal wishes, whether written or oral, will most likely not be followed in the absence of a will. Without a written plan that is set forth in a Will that YOU create, your assets will pass to your heirs according to your state’s laws of intestacy, not the way YOU would want.
  2. Doing it yourself: Even if a self-prepared will or trust is legally enforceable, estate planning is a complex legal process requiring knowledge in several areas of the law, including estate law, tax law and property law as starters.
  3. Not funding your revocable living trust: A property drafted trust will prevent putting your loved ones through the expensive, lengthy and emotionally draining court probate process. Creating a trust is one thing- funding it is another. An unfunded Revocable Trust is useless. Make sure your attorney guides you on funding the trust once created.
  4. Failing to understand the impact of life insurance proceeds: Many people do not realize that life insurance proceeds are normally included in the taxable estate of the deceased, which can result in approximately 50% of the proceeds going to the IRS instead of your intended beneficiaries.
  5. Failing to adequately plan for children with special needs: A child with special needs risks being disqualified from receiving SSI benefits and may have to use their inheritance to pay for their care. Depending upon the situation, a Special Needs Trust may be appropriate.
  6. Not properly planning for incapacity: People are living longer, and therefore the risk of lacking capacity during your lifetime is increasing. Only with proper estate planning can you be sure that your health and financial affairs will be taken care of in the event of your inability to take care of them yourself
  7. Business planning: Who will own and control your business upon your death? Proper estate planning increases the likelihood of your business continuing as a viable operation.
  8. Not preparing for minor children: If you have minor children, you should have a will nominating personal guardians for the children, in the event that both you and your spouse should die prior the children reaching the age of 18. Without a plan, the court will decide without your input where the kids will live and who will make important decisions about their money, education and life.
  9. Improper beneficiary designations: Your Will and your beneficiary designations on life insurance, IRAs, 401k’s and annuities should be consistent. A Will does not necessarily control the disposition of these assets.
  10. Not periodically updating an estate plan: Generally, people do not like to discuss dying, and therefore people often want to simply execute their estate plan documents and be done with it. However, economic, family, and health changes require revisions to your estate plan.

Estate planning is an uncomfortable topic because no one wants to think about their death, much less plan for it.

A friend of mine made the comment “If I have an estate plan, I feel like I’m tempting fate.” If you subscribe to the same philosophy, its time to unsubscribe. Having a good solid estate plan is no different than having health insurance, car insurance, or home owners insurance. When you acquire these insurances, you are not “tempting fate” to make you get sick, or get in a wreck, or have damage to your home. You are simply ensuring that “IF” something were to occur, you and your family would be able to take of it.

The same holds true for you estate plan. You are ensuring that upon your death, which is inevitable, your family will have the means to deal with it and handle your estate.

It’s never too early to plan. Talk to a local Estate Planning Attorney today!