FAQ - Estate Planning

I am WECTU's Eldercare Answerman. My FAQs discuss many of the primary issues that we have to address when assisting our loved ones as they age. For more indepth topical information, please check out my Blog, my Podcasts and my Elder Care Search Wizard.

 

If you have a specific request regarding a topic that I have not addressed, please use the form at the bottom of this page to contact us with your request.

 

1 – My parents live in Florida where they retired.  I’m moving them to Georgia to be closer to me do they need to change their will or power of attorney?

I always recommend that when a person moves from one state to another that they convene with a top-flight estate and elder law attorney  to review their legal documents. In most cases, the documents may be functional in their new state of residence. It is also a good time to review their overall tax planning strategy and beneficiary designations for their life insurance and retirement accounts. Many of the documents are portable and will work in the new state of residence. In some cases, there may be different requirements involving mundane issues such as does the document need to be notarized or how was it witnessed. Normally I suggest that you revise their advance health care directive and power of attorney so that you are certain that it is in compliance with the local and state law.

Related blogs: Power Of Attorney , The Advanced Healthcare Directive , Selecting a Fiduciary

Related podcasts: Selecting a Fiduciary , Blended Families , Power of Attorney

 

2 – I’m now 82 years of age and have begun to slow down. I don’t have any children and my brothers and sisters are older than me. Who should I trust to help me with my financial and personal affairs in the future? My nephew is an attorney but I’m not close with him and I have a trusted accountant is in his 40s?

The first thing that I would recommend is that you meet with an independent attorney to discuss your financial and eldercare matters. This attorney should be proficient in estates and trusts so that he can give you a roadmap to help you develop a strategy regarding your assets and their management. You are the perfect person to implement what is known as a revocable living trust. This is a document that allows you to construct a tool controlled by you while you’re healthy to hold all your assets. This should be coupled with a well written power of attorney that will allow your fiduciaries to have authority to control your retirement accounts, annuities, and life insurance. With regard to the trust, I would suggest that you name two trustees who could act jointly or individually to oversee your assets at a point in time in the future where you are unable to do so. You may want to use a financial institution or a bank to serve as one of the trustees. In your case, you could also use your nephew who is an attorney and/or your accountant to serve with the financial institution or bank as trustee. In this way, you would have someone who has a personal relationship with you who could work with the corporate fiduciary with regard to your day-to-day personal and financial affairs. Normally financial institutions and banks cannot and will not act as a power of attorney. In your situation, you may choose your nephew and your accountant to serve as your power holder. It is always wise to integrate the management team into your current circumstances prior to a major deterioration of your health.

Related blogs: Power Of Attorney , Revocable Living Trust , Testamentary Trusts

Related podcasts: Beneficiary Designation , Selecting a Fiduciary , Power of Attorney

 

3 – I’m getting older and I’ve heard a lot about something called a revocable living trust. As a vibrant 76-year-old woman is this a good tool for me to utilize at this age?

A revocable living trust is an excellent management tool for any person who has a substantial amount of assets in their estate. Assets such as retirement plans, IRA accounts, annuities and life insurance policies pass by beneficiary designation to your family if so designated. If you own real estate and particularly if any real estate is owned in another state, then the revocable living trust will act as an excellent management tool while also allowing those assets held in another state to avoid the probate process in another jurisdiction. The major benefit of a revocable living trust is that you are able to designate a successor trustee or trustees to step into your shoes in the event you are unable to manage her affairs as you continue to age. A collateral benefit of a revocable trust is that it allows those assets titled in the name of the trust to avoid the costly and time-consuming probate process. As long as you are preparing a sophisticated estate planning document, it will permit you to create trust for family members or those individuals who have not attained an appropriate age to handle their financial affairs. All of this can be done within the framework of a single revocable living trust instrument. A $500,000 estate is a normal minimum threshold to cause one to consider the implementation of a revocable living trust.

Related blogs: Revocable Living Trust , Convincing Mom To Get Help , Power Of Attorney

Related podcasts: Selecting a Fiduciary

 

4 – My two children have never gotten along. They rarely speak or communicate. I’ve been encouraged by my attorney to name both of them as my power of attorney and health care agent. Is this a good idea?

I must say that I disagree with the advice that you are getting. If your health begins to deteriorate it is likely that the fractious relationship that exists with both of your children will only get worse. In many cases, problems that exist in the sibling relationship only worsen when a parent falls into a state of disrepair. You may want to consider a neutral third-party as your power holder. In the alternative, you may want to utilize the neutral third-party and one of your children to act as your power of attorney. It may also be wise to name your other child as a secondary power of attorney who would step in to the shoes of the first child that you have selected. When it comes to healthcare decision-making, it may be wise to name both children as your healthcare agents. In that type of situation, I believe that it is important to have both children’s concurrence in order to make end-of-life decisions.

Related blogs: Power Of Attorney , Selecting a Fiduciary , Estranged Family Members

Related podcasts: Selecting a Fiduciary , Family Disputes , Power of Attorney

 

5 – My mom has no will. What will happen to her assets when she dies since she is suffering from a case of advanced Alzheimer’s disease?

If your mom passes away without a will she will die intestate meaning that the state intestacy statutes will write her will. By way of example, if a person dies without a will but with a surviving spouse in the state of Maryland, the children can inherit up to one- half of the estate which is subject to probate. Keep in mind that this process only applies to assets subject to the probate process. Investments such as retirement accounts, annuities, life insurance policies, payable on death, or transfer on death accounts will pass to the beneficiary directly and not be subject to the dictates of the will or the intestacy laws. This also applies to jointly held accounts and life estate deeds. It would be wise for you to check all of the beneficiary designations and the titles on the assets in order to try to avoid an intestacy situation. If your mother still has lucid moments, you may be able to implement a comprehensive power of attorney so that the appropriate steps can be taken in to avoid the intestacy statutes in the state in which you are mother lives.

Related blogs: Dying Without a Will , Handwritten Will

Related podcasts:

 

6 – My uncle named a niece and two nephews as the beneficiaries of his will. One of the nephews died six months ago. What would happen to his share of my uncle’s estate? The nephew who died had two children.

My answer depends on how the will was constructed. If the will states that the assets only go to the three of you or those of you that survive then the nephew’s children would have no claim to assets in the estate. Many documents are written in such a way that it says that the assets would go to your nephew if surviving if not to his descendants per stirpes. This strange designation means that your uncles estate would be divided one- third to the niece one- third to the nephew and 1/6 to each of the deceased nephew’s children.

Related blogs: Passing Assets to Heirs

Related podcasts:

 

7 – “My aunt’s will contains a weird term” per stirpes”. What is the meaning of these words?

The word per stirpes means that if her will leaves the assets to two of her nieces and one of the nieces has predeceased her aunt, then the deceased nieces one half share will be divided equally among the niece’s children. The term that you may also see in a will is per capita. If we assume that the niece has three children then the three children would step up to the nieces level and the entire estate would be divided for ways among you and the nieces children.

Related blogs: Passing Assets to Heirs

Related podcasts:

 

8 – My uncle Jake has shown me a hand written will signed by him in 2010. He claims that his estate is in good order and that is handwritten will is all the estate planning that he needs. I believe his estate is over $500,000. Is he correct?

A handwritten will is known as a Holographic will. Whether it is valid and binding will depend on the state in which he lives. In many states, in order for such a will to be effective, it will either need to be witnessed at the time of its signing or notarized. If your uncle has not complied with the specific state requirements, then the document will be invalidated. Also, he must be very careful that he does not cross things out or has not inserted items into the Holographic subsequent to his initial draft of the document since it could invalidate the handwritten document. With an estate as large as your uncles, I would heartily recommend that he see a competent estate lawyer to make certain that he has a well drafted and properly executed document.

Related blogs: Handwritten Will , Dying Without a Will

Related podcasts:

 

9 – I have a disabled sister. My parents are leaving her a portion of their estate in a special kind of trust. I’ve been named trustee. Is this a good idea? I have heard that a disabled person should never inherit anything in my right?

It sounds to me like your parents of implemented what is known as a special needs trust. This is a discretionary trust they can be established at the time of their death or while they’re alive for the benefit of a disabled family member. In this way the disabled party can have the use of the funds that have been left to them at the discretion as trustee. The assets will not disqualify her from receiving federal and state governmental benefits provided your parents have implemented a properly drafted special needs trust. I think it is always best to select a family member to serve as a trustee while at the same time naming a financial institution to serve as a co-fiduciary or alternate fiduciary. You should always remember that you may predecease your disabled sister in which case an institution which has perpetual existence will make certain that there is a qualified trustee who can continue to oversee the funds for the benefit of your sister.

Related blogs: Special Needs Trust

Related podcasts: Special Needs Trust

 

10– My kids are asking me to deed our family farm to them now that I am 74 years of age. They claim that I can get it back any time that I want. The farm is over 100 years old and is been in our family for a number of generations. I have some real concerns about handing over the farm to my three children since only two of them have ever been involved in the farming activity. Is it a good idea to give my kids total control of my farm?

I believe your inclinations are correct. You take a tremendous risk if in fact you transfer your family farm to your children. In the alternative, if you enter a long-term care facility or don’t do proper estate planning a child who participates in the farming activity may lose the family farm. A good strategy to consider would be to utilize a tool called a life estate deed with no powers. In this way, you can control the farm while you’re alive but at your death it will pass directly to the stated heirs. This type of deed when implemented will normally start the Medicaid transfer penalty ticking. If you are healthy for period of five years subsequent to the transfer of the remainder interest, then the farm can be fully protected from a long-term care stay. You may also wish to consider the purchase of long-term care insurance to protect your family in the event you become institutionalized in a long-term care facility during the intervening five years. There are also very significant estate tax ramifications when dealing with farm estates. I highly recommend that you see in an estate and elder law attorney that is knowledgeable and family farm planning.

Related blogs: Life Estate Deeds

Related podcasts: Gift Issues , Life Estate Deeds

 

11 – My children are successful and have been active in handling my financial affairs. My attorney has told me that it is best for him to handle my estate. I have mixed emotions and favor naming my sons as executor of my estate. Is this the best idea?

Success is not the only factor to consider when determining whether your children can best handle your estate. You want to make certain that they get along with one another and also whether they have the time to handle your estate. In many states, the executor is entitled to a commission for handling your estate. If your sons get along and are capable and willing to do so, then I normally recommend that they handle your estate and hire an attorney to finalize and probate your estate. Your children can come to an understanding with the attorney with regard to the fees that will be charged.

Related blogs: Selecting a Fiduciary

Related podcasts: Selecting a Fiduciary

 

12 - is there any problem with putting my children’s names on each of my bank and my fidelity accounts?

There are several problems that you may want to think about. If you have a child that has financial problems, then their creditors may attack the accounts containing their name. Children with addictive personalities or who develop physical or mental disorders in the future could negatively impact your assets. Your assets could be considered their resources subject to spend down rules impacting governmental benefits. If your child was in a serious car accident that they caused, then and in that event your assets could be subject to the claims of the injured party. You should never add a person’s name to your account without a thorough discussion with a competent estate or financial planner. The exception may involve your personal checking account. If you were to become ill, you would certainly want to allow someone to step into your shoes and pay your day today bills and expenses. You may also want to give a family member a power of attorney so that they could access various investment accounts in to pay your bills.

Related blogs:

Related podcasts:

 

13 - My mother has a life insurance policy and has paid the premium religiously over the past 35 years. Things are getting a little tight and I was wondering whether she should continue paying this premium.

It sounds to me like she is build up quite a bit of cash value within the framework of the policy provided it’s what is known as a whole life insurance policy. If so you have several different options. First you could ask the company whether the policy can pay the premium by using the cash value that is accumulated and the interest that is earned annually on the policy. You could also inquire whether your mother could take a totally paid up policy. If you obey considerable cash value that is accumulated then you may also be able to borrow funds from the policy at a low interest rate while also keeping that policy in effect. You should discuss these options thoroughly with your life insurance agent and/or financial planner before making a final decision. One other thought would be to consider swapping the life insurance policy for an investment annuity on a tax-free basis.

Related blogs:

Related podcasts: Primer on All Insurance

 

14 - I want to put my granddaughters’ name on the deed to my vacation home in Dewey Beach Delaware. She’s 13 years old and just loves the beach. It is very special to her and I want to make certain that she inherits the property. My children don’t think it’s a good idea. What should I do?

I never believed that it makes sense to put a minor’s name on a deed to your real estate. First, she has no authority to sign the deed until she attains the age of majority which may be either the age of 18 or 21 depending on the relevant state law. If the property had to be sold or if it was necessary to make a repair in the future but before she attains the age of majority then it may be necessary for the family to go to court and get a guardianship for your granddaughter in order to take any action on her behalf. Remember that she may be driving in the not-too-distant future. What if she has an automobile accident? She may not have the greatest decision-making capability during her youthful years. She could also develop an addictive personality or be impacted by mental illness or some other malady. When dealing with a minor, it is always better to use an estate planning vehicle such as a trust which allows you to change your mind in the future with regard to the ownership of the property. It will also allow you to hold the asset for your granddaughters benefit in such a way that it can be overseen by a more mature adult until she attains an appropriate age such as 30 or 35.

Related blogs:

Related podcasts: Vacation Home Issues , Gift Issues

 

15 - I’ve got four children. One daughter and three sons. I am a female with a good deal of jewelry. I would like the vast majority of this jewelry to go to my daughter and my two granddaughters. I have two daughter-in-law’s that I would like to pass a small item or two to them. One of my daughter-in-law’s and I do not get along with and I want nothing to go to her. What is the best way to implement a strategy that will accomplish my goal?

You should make absolutely certain that your wishes are delineated in your estate planning document. If you are not utilizing or wearing some of this jewelry, it is best to derive the pleasure of distributing as much as possible during your lifetime. You must make specific bequests of your important jewelry to each family member. You need not mention the daughter-in-law with whom the problems exist. Many people use a directive letter as well where they explain their rationale for the distribution of your jewelry. You should also discuss your wishes and desires with your sons. You do not want any misunderstandings about your overall wishes subsequent to your death. Otherwise you may create a family feud that will continue for many years after you have passed away.

Related blogs: Estranged Family Members

Related podcasts: Gift Issues

 

16 - I own a parrot. It’s life expectancy is 50 to 75 years. I am very worried about its well-being since she is only 4 years old and I am 72 years of age. What is the best way to provide for her?

Given her long life expectancy, you need to consider a caretaker who you can count on to provide a proper home for her for a protracted period of time. You will also need to allocate a sizable sum to provide for her financial well-being. You should speak with your veterinarian to determine what the cost of providing for the bird would be over a 50 to 70- year period. Many states now recognize a tool known as a pet trust where you can delineate both a caregiver and a financial manager to oversee the well-being of your pet for the remainder of her lifetime.

Related blogs: Pet Trusts , Testamentary Trusts

Related podcasts:

 

17 - My wife passed away 15 years ago. I met a very nice woman and we got married six years ago. I am concerned about her future as well as leaving an inheritance to my children. My kids are doing quite well and really don’t need my assistance. What should I do with my estate which exceeds $1 million?

Sounds to me like your first priority is your new spouse. So you should determine how much you want to leave her at the time of your death. You can use the tool known as a marital trust to leave her a portion of your largest estate. Those assets will be retained in the trust for her lifetime. At the time of her death they will revert to your children or those beneficiaries that you wish to designate. In this way, you will be protecting her future while also ensuring that your funds ultimately pass to your children. I would also suggest that you consider making a specific bequest to your children and grandchildren. The best way to do this would be to designate a percentage of your estate which would flow to them either directly or in trust. This will help to mitigate any discord within the confines of your blended family.

Related blogs: Testamentary Trusts , Life Estate Deeds , Revocable Living Trust

Related podcasts: Blended Families , Gift Issues , Life Estate Deeds

 

18 – My mom is suffering from memory loss. She is in the initial stages of dementia and can be quite coherent at times. Can she implement both a power of attorney and health care directive since hers are  out of date?

Each state will treat this fact pattern in a different way. By way of example, in the state of Maryland there is a concept known as the Lucid moments rule. If the person can understand the document that they’re signing in this case a power of attorney or an advanced health care directive at the time that they are signing it, then it will be deemed to be a valid document. The burden of proof as to the validity of the signed document will shift to the person trying to invalidate the document. If you are dealing with a fractious family that doesn’t get along, it is my opinion that you should think long and hard prior to implementing a document using the Lucid moments rule.

Related blogs: Power Of Attorney , The Advanced Healthcare Directive , Estranged Family Members

Related podcasts: Power of Attorney

 

19 – My brother is addicted to drugs. He keeps pestering my elderly parents and harassing them into giving him money. What can I do to stop him from hassling my parents?

You’re dealing with a most difficult situation. Your brother has an addictive personality and will continue harassing your parents. You may suggest to your parents that they turn their financial affairs and the management thereof to either you or a neutral third party. This could limit your brothers influence over their financial situation and require him to badger someone else in order to secure funds. Another alternative would be to establish an irrevocable trust for their benefit with you or a third party managing these assets otherwise I’m afraid that your addicted brother will seek the easiest source of funds available  to subsidize his drug habit, that being your parents. You should also make certain that your parents do their estate planning and create a trust for the benefit of your brother so that he does not dissipate the funds that may be allocated to him at the time of your parents passing. You should make certain that you secure a durable power of attorney from your parents say that you do not end up in a controversial situation should their health deteriorate.

Related blogs: Power Of Attorney , Revocable Living Trust , Life Estate Deeds

Related podcasts: Life Estate Deeds , Gift Issues , Selecting a Fiduciary

 

20 – The bank is refusing to honor my dad’s power of attorney. They say it’s 10 years old and they are uncomfortable with the document. What can I do?

A power of attorney does have a shelf life. The older the power of attorney the more likely that a financial institution may object to its use and acceptance. They are concerned that another power of attorney has been signed subsequent to this document which is over 10 years old. Some states such as Maryland have begun to implement laws that protect both the power holder and the financial institution in these situations. The legislation compels the institution to accept the document. If they fail to accept the document, they can be held liable for their inaction. At the same time, the legislation protects a financial institution that relies on an older document. It is always best to update powers of attorney on a periodic basis [every 3 to 5 years] for the protection of both you and your loved one. Unless there has been a major law change impacting advanced health care directives, there is no need to revise this document more frequently.

Related blogs: Power Of Attorney , The Advanced Healthcare Directive

Related podcasts: Power of Attorney

 

21 – My mother has been diagnosed with memory loss and cannot sign her name. Is there any way that I can get access to her assets so that I can sell some of them as well as her house in order to pay her bills?

First you should determine whether your mother has implemented a durable power of attorney. If not the only solution to your problem would be to implement a legal proceeding known as a conservatorship or guardianship. These are protracted legal proceedings that can take months to conclude and which can be very costly. You must hire an attorney and the court will appoint an attorney to represent your mother. Thereafter you will be compelled to file an accounting with the court on an annual basis with regard to the use of your mother’s assets. Asset transfers are normally prohibited limiting your ability to preserve and protect your mom’s resources for the family. Also major transactions such as a property sale may need court approval. Wherever possible it is important to implement a durable power of attorney prior to the deterioration of a loved one’s health to avoid this costly and time-consuming process.

Related blogs:

Related podcasts:

 

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I am WECTU's Eldercare Answerman. My search tool will automatically guide you to information and answers that will assist you with resolving your specific eldercare issues.