Putting Assets in Joint Names to Avoid Probate – Will It Work?

May 21, 2009

Filed under: Estate Planning — Tags: , , , — Alexis @ 1:32 PM

Lots of people want to avoid probate. That’s the court process that a family must go through to distribute anything that was in the decedent’s name alone upon her passing. Despite its bad reputation, probate isn’t the end of the world. Yes, it’s a hassle, and yes, there are hoops to go through, but you can hire an attorney to do most of the work for you.   

If you still want your family to avoid probate, many people opt to make all of their property into “nonprobate” assets. This is anything that has someone else’s name on it in addition to yours at your passing. For example, many people purchase homes together with the spouse. We name beneciaries on life insurance policies and IRA’s.  So why not just put someone else’s name on all of your assets and be done with it?

Because that quite likely will not result in the distribution that you would like. Let’s say Ophelia has an IRA valued at $100,000 and a life insurance policy with a death benefit of $100,000. She puts her son’s name on the IRA and her daughter on the life insurance. Easy, right? Not really. Her health care needs increase over the years and she taps into the IRA. By the time she passes away, her son inherits an IRA worth $50,000 and her daughter cashes in the life insurance policy for the full $100,000.

The best way to make sure people will inherit as you would like, while also helping them to avoid probate, is to work with an elder law attorney who can draw up the appropriate trust (if that is the right solution for you), help you properly list beneficiaries on your assets, and match you up with a qualified financial advisor who can make sure there will be enough in your estate to treat all the beneficiaries in the way you would like.

See tomorrow’s post on why it is dangerous to list a child as a joint owner of a bank account.

Do You Really Need a Will?

May 20, 2009

Filed under: Estate Planning — Tags: , , , — Alexis @ 1:30 PM

If you want to have a say in who gets your possessions after you die, then yes.  If not, then the “laws of intestacy” govern what happens to an estate when a person dies without a Will. 

A typical scenario is one parent dies leaving his spouse and children.  Without a Will, anything that was in his name alone at his passing is divided equally – one half to his wife, one half split evenly among his children.  Most people would prefer to leave all of their assets to their spouse, and then after the spouse dies, to the children.  If that is what you prefer, then you need a Will.  

What happens if you don’t have a spouse, but you do have children?  Without a Will, anything in your name alone at your passing goes to your children, divided equally among them. Generally speaking, this is what most people want. But if you have a disabled child or grandchild, this scheme will cause problems.  

If you have a spouse and no children?  The spouse gets it all. Again, probably what most people would want under this scenario. But if, for example, there are certain possessions you would like to leave to a friend or niece or nephew, or if you want to make a gift to charity, then you need a Will. 

And if you are a single person – no spouse and no children?  It goes to your parents, and if they are no longer living, to your siblings.  If your parents are using public benefits to provide healthcare (ex. nursing home), then a direct inheritance from you could upset the apple cart.  

Remember that all of the above applies only to “probate property”  – that is, anything that has only your name on it. “Nonprobate property” has your name plus another, for example, naming someone as a beneficiary on your IRA or life insurance, or purchasing a home jointly (usually with your spouse). Nonprobate property passes right to the person you have named.  

So if you think that the laws of intestacy will achieve your goals, then you probably don’t need a Will.  But if you have any particular gifts you want to make, and especially if you have any disabled family members, then you need a Will.

Why Should My Elder Law Attorney Draft My Health Care Proxy? I Have the Form from the Hospital.

May 10, 2009

Filed under: Estate Planning — Tags: , , , , — Alexis @ 4:58 PM

Massachusetts hospitals hand patients a two-page Health Care Proxy form that was developed in 1999 and does not accommodate for changes in the law since then or for issues pertinent to elders. 

You probably have signed a “HIPAA” form by now at your doctor’s office.  This form allows the doctor’s office to share your confidential information with anyone in particular you name, such as your spouse or children – while you are competent.  (The Health Care Proxy kicks in when you cannot make or communicate your own decisions.)  Without this form in place, your medical team is well within its rights to refuse to discuss your case with your family.  Many elders like to know that the doctor will speak with their child later in the day to review the results of the appointment.  A well drafted Health Care Proxy with your Elder Law Attorney will enable this.  The state form does not.

The hospital form can also lead to expensive guardianship proceedings, because it lacks several important items.  It does not allow the person you have named to authorize anti-psychotic medications, which can be critical to an elder with dementia, depression, or anxiety, or a combination of all three.   It does not allow the agent to sign for a nursing home admission, nor to permit extraordinary measures (ex. feeding tube).  If you have only the state form and you need any of these actions later, your family will have to commence a lengthy and time-consuming guardianship process.

Contact your elder law attorney today and ask to draft a new Health Care Proxy form and save your family considerable expense and headache later.

It Just Got More Expensive to Ignore Your Estate Planning in Massachusetts

May 3, 2009

As part of your estate planning work, your attorney will prepare a Durable Power of Attorney and Health Care Proxy.  These documents are critical to allow another person whom you appoint to legally care for you when you are unable to manage your own affairs, for example, if you are in a car accident, develop dementia, or are having a rough patch after a surgery.

What happens if you don’t sign these documents when you are able to and later need someone to act for you?  Your family will need to go to court and pursue a guardianship, which is an involved court proceeding.  When everything goes smoothly, this can take several weeks, usually requires hiring a lawyer, and then there are annual reports that your agent must make to the court.  All this is paid for out of your bank account, and it can easily add up to thousands of dollars.

Starting on July 1, 2009, the Massachusetts guardianship process will be even more involved and more expensive.  The legislature added several components which will do a much better job at upholding the due process rights of the public than our existing laws.  Doctors will have to complete lengthy, detailed reports attesting to the fact that the patient cannot manage her own affairs – these reports are not covered by health insurance.  Lawyers will need to draft documents that are much more detailed pleadings concerning the incapacitated person’s need for assistance.  And the lawyer and the family together will need to draw up a detailed plan for the person’s care complete with milestones and goals.  Annually, the family will need to write and file with the court a report specifically detailing the incapacitated person’s living situation, health status, and finances, and consider whether the person has improved so that perhaps the guardianship is no longer needed. 

All of this will cost a lot of money and take up a good deal of time.  Instead, you can today plan to meet with your elder law attorney and for only a few hundred dollars, write and sign a Durable Power of Attorney and Health Care Proxy.  It’s that simple.

April 16 is National Healthcare Decisions Day – Time to Sign that Health Care Proxy

April 7, 2009

Filed under: Estate Planning — Tags: , , — Alexis @ 11:30 AM

Who even knew we had a National Healthcare Decisions Day?  But what better time to get that Health Care Proxy in order.  That’s the document that allows another person to make healthcare decisions for you when you cannot make or communicate them yourself.  Without a Health Care Proxy in place, if you can’t make a decision or express yourself, your medical team’s hands are tied – they are going to make the decision that they feel is appropriate, and it might not be one that you would agree with.

When clients sign their Health Care Proxies, I also give them two more things  – one is a wallet card for keeping emergency contact information and a list of medications, both vital for EMT’s, and the second is a workbook that helps them work through their choices for end-of-life care and share those thoughts with their family.    

Once you have decided whom you want to name as your agent within the Health Care Proxy, it does not take much time for the attorney to produce the document.  It’s National Healthcare Decisions Day – why not get it done today? 

Write a Letter of Intent for Your Special Needs Child

February 23, 2009

So you’ve met with the lawyer and signed all the legal documents needed to ensure that your child will be properly cared for after you are gone.  Congratulations, that’s an accomplishment to check off your list.  But you’re not quite done.  

Sit down and write a “letter of intent” to the people you have nominated to care for your child in the future.  Include all the technical information, like doctors’ and therapists’ names and numbers, allergies, bank accounts, contacts at the school or day program or other place where your child spends her time.  Then write down all the things that make your child who she is: What are her strengths?  What makes her happy?  When he is in a bad mood, or gets anxious, what soothes him?  If you are walking with her and she sits, does this mean she is tired?  Doesn’t want to go where you are taking her?  Something else?  Does he shave himself in the morning or do you need to do it for him?  Does he have a favorite song?  If you take her on vacation or a day trip, are there certain comfort items you must pack?  What is her morning routine?  Bedtime routine?

Providing all of this information to the ones who will be caring for your child in the future will help to make her transition to the next stage of life a bit smoother.  And you will know that in addition to providing her legal and financial footing, you have also helped her to continue living life to her full potential. 

“Do Your Documents” Now – and Avoid Guardianship Later

Imagine… you grow older and your memory starts to go.  You fall and sustain and injury requiring surgery, and the anesthesia corrupts your mind to the point that you can’t handle finances, make decisions, or even participate meaningfully in your health care.  If you didn’t execute a Durable Power of Attorney and Health Care Proxy when you were well, then your family will have no choice but to pursue a guardianship. 

Guardianships cost money, perhaps $2000 if there are no arguments within the family.  Your children will have to hire a lawyer and go through a lengthy court process.  In the end, the court will appoint someone a “guardian” and from that moment on you will be legally stripped of your power to handle your own affairs and the guardian will make every decision for you.  Is there room for abuse here?  Absolutely.  This story from Minnesota shows both high litigation costs driven by disagreeing family members and also seemingly self-interested decisions by a third-party “professional” guardian – burning through $673,000 of the woman’s assets in two years. 

Instead, get thee to a lawyer and “do your documents.”  For just a few hundred dollars – and that’s including the initial consultation – you can draft a Durable Power of Attorney and a Health Care Proxy that allows you to name exactly who you want handling your affairs someday, in the event that you can’t speak for yourself.  Sure beats spending a lot of money to go through a court process that could easily appoint someone you wouldn’t want making your decisions. 

Your Estate Plan Will Work Only if You Tie Up the Loose Ends

November 11, 2008

Filed under: Estate Planning — Tags: , — Alexis @ 2:45 PM

Have you set up your estate plan?  You signed your will, trust, special needs trust, durable power of attorney, health care proxy, stand-by guardianship for your minor children – it’s a lot of work, congratulations!

One last task before you are done – you MUST remember to change beneficiary listings on your various assets if you want your estate plan to work.  If, for example, your plan depends on directing your CD’s into a special needs trust for your disabled child, then you must contact your bank to complete the paperwork that will change the beneficiary listing.  Other assets with beneficiary listings include 401(k)’s, IRA’s, and life insurance policies.  

Your lawyer should have provided you with a letter of instructions detailing what assets you will need to tend to.  Follow those instructions carefully.  If you can’t find it, call her and she will remind you of the steps you need to take. 

You paid a lot of money for your estate plan, now just finish the job and make sure it works. 

A Family Only Needs One Special Needs Trust

November 6, 2008

Have you set up a Special Needs Trust (SNT) to receive your disabled child’s share of your estate when you die?  Are there other family members who might also want to leave something to your disabled child, for example grandparents or a doting uncle?  Or even non-family members, such as god-parents or very close friends?

If so, be sure to tell them about your trust – there is no need for them to spend time and money asking a lawyer to draft another special needs trust as part of their own estate planning package.  That person’s attorney will simply need to see a copy of your special needs trust and she will reference it in your family member’s will. 

While it may feel awkward, you will save your family time and money by mentioning to them that you have already established a trust for your child and that they can direct inheritances into it rather than drafting separate trusts with their own attorneys.

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