Tag Archives: durable power of attorney

Conservator alternative

A Last Will and Testament

  • If you have a will and become incapacitated, nothing in your will can help manage your assets while you are living.

A Living Trust

  • If you have a living trust, your co-trustee or successor trustee can continue to manage trust assets without a court supervised guardianship.
  • A court supervised guardianship costs money and requires the courts to supervise how someone manages your assets.

A Testamentary Trust

  • A testamentary trust is created after you die.  It does not provide value if you become incapacitated.

Just living together can cause unwanted estate planning problems

k11782415Many couples, especially those who get together later in life, are just living together.  For whatever reason, they’ve decided not to get married.  Living together, they accumulate stuff but who owns what?

One of the biggest problems with just living together is estate planning.  If you’re one of these couples and you’re not careful, your loved ones might end up losing their home and getting nothing.

If a partner dies without a will, this is called dying intestate.  In this instance, state intestacy laws determine who will inherit that partner’s assets.  In most cases, that means a biological relative may inherit those assets, not the surviving partner.  This is probably not what either of the partners really wanted.  To alleviate this problem, a will should be drafted and executed by each of the partners.   It should include a statement that directly disinherits biological relatives and leaves the assets to the surviving partner.

Another document each partner should prepare is an advance  healthcare directive and durable power of attorney.  Unless these documents specifically name the other partner to make their medical decisions for them, a physician will not follow the instructions of anyone except a biological relative because of potential family objections.

A further document that should be considered – a revocable trust.  This will enable the partners to transfer property and money between them and will allow one partner to transfer control of his or her assets upon death.

A last point you should be aware of – the unlimited marital estate inheritance exclusion.  This exclusion cannot be used by an unmarried couple.  Instead, there may be sizable inheritance tax repercussions if estate planning is not done correctly.

It would be smart for any couple living together without the protection of marital laws to consult an estate attorney to find out what the best plan of action is for them.

For more information about estate planning, check out our website www.diesmart.com.

 

Financial Directives

You can prepare a durable power of attorney for finances giving your agent the right to manage your assets when you can’t.   However, some organizations don’t recognize a durable power of attorney as authority to act on your behalf. You must complete another form authorizing a designated agent to manage these assets on your behalf.

Make sure the agent you named in your durable power of attorney for finances has the right to complete these forms for you.

These assets have special rules:

Social Security

Q. How can you give someone the right to manage your social security benefits?

A. Treasury department regulations do not permit a power of attorney or a durable power of attorney to be used to manage your social security benefits.  A family member or other person must complete a Social Security Representative Payee form designating a “representative payee” to act on your behalf regarding social security benefits.

Social Security will then send your social security benefits to the representative payee.  The representative payee is required to prepare and file an annual report describing how they spent the money on your behalf.

The representative payee is also obligated to report any change in circumstances impacting your eligibility to receive social security benefits.

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Brokerage Accounts

Q. How will your attorney-in-fact be able to manage your brokerage accounts?

A. Brokerage accounts have special rules for your attorney-in-fact.  If your attorney-in-fact needs to buy or sell stocks held in physical form or held in a brokerage account, your attorney-in-fact will need to add a medallion signature “guarantee” to their power of attorney form.  The medallion signature is a stamp provided by a financial institution guaranteeing to a transfer agent that the signature of your attorney-in-fact is actually their signature.

Requests to buy or sell stocks are reviewed by someone referred to as a Transfer Agent.  The Transfer Agent cannot authorize transactions requested by your attorney-in-fact without the medallion signature guarantee evident on the power of attorney form.

Your attorney-in-fact may need to locate a bank participating in the medallion signature program.  The bank should be one the attorney-in-fact does business with that is willing to guarantee its signature.  The bank will place the medallion stamp on the power of attorney form.

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Safe Deposit Box

Q. How will your attorney-in-fact get access to your safe deposit box?

A. If you open a safe deposit box in the name of your trust, the trustee or successor trustee has the legal right to access the safe deposit box.

When you open a safe deposit box in your name, or as a joint tenant, ask whether your bank will accept your power of attorney as authorization for your attorney-in¬fact to access your safe deposit box.  Some banks will not.  These banks may require you to complete a separate form they provide designating a safe deposit box agent. The box renters will complete the form naming a safe deposit box agent in the presence of a bank employee, which gives the bank greater assurance about the validity of the authorization.

Banks and other financial institutions struggle with accepting your power of attorney. Currently, there is no way for banks to know if you have revoked your power of attorney or changed the name of your attorney-in-fact.

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An important holiday gift

present-clipart-Present-Clip-Art-932As we approach the end of another year, it’s a good time to have an important discussion with your family and other loved ones about what will happen when you die. It may be uncomfortable but it’s a gift you should give them before any more time passes.

You should tell them about your estate plan – not necessarily all of the details but where it can be found, that it is up to date and who you have named as your executor. The estate plan should, at a minimum, include your will and your advanced directive; it might also include a trust, a healthcare proxy and a durable power of attorney. You should reassure them that the plan is current and reflects your wishes at the present time. (If it doesn’t, you should get it updated immediately.)

Another critical thing you should discuss is your digital assets. If you pay your bills and conduct other financial transactions online, your executor should be able to access your accounts. The only way to ensure that this is possible is if you leave a list of your passwords for all of them.

You should make sure they know about any accounts that have beneficiary designations and that those designations are up to date. Otherwise, someone who is no longer in your life may inherit from those accounts rather than the person you really want the funds to go to.

Finally, you should discuss with your family and other loved ones your end of life care wishes. It’s not a pleasant topic but you should not burden them with having to make decisions which may not agree with what you would have wanted.

This is an important holiday gift that you should give to your loved ones this year.

For more information about making a digital asset inventory and other end of life decisions, go to www.diesmart.com.

 

5 Legal Documents every caregiver needs

biyExXGATIf you think a relative may be at risk of dementia or some other disease that will affect their reasoning ability, there are 5 legal documents you should get that relative to complete while still able to do so. Otherwise, when you become that person’s caregiver, you will need to go to court to apply for guardianship and the right to make decisions on his behalf. That court application will typically take 6 – weeks and cost you thousands of dollars. If another family member contests your application, it will only take more time and cost even more money. Don’t wait too long or it might be too late. Your relative may no longer be competent to make these critical decisions.

The 5 advance directive documents are:

  1. A durable power of attorney – It gives you the right to make financial decisions for that relative. Those can be things like paying bills, selling property and making investments.
  2. A healthcare proxy – This gives you the right to make medical decisions on the incapacitated relative’s behalf. This can include things like what course of treatment to follow, which physician to choose and where treatment should be performed.
  3. A living will – This states the medical treatment the person wants, or doesn’t want, so the decisions have been made before you take over. They include things like whether medical personnel should try resuscitation if the person’s heart stops, whether heroic measures should be taken, whether pain killers should be administered, etc.
  4. A current will – If the person has an old will, it should be reviewed to make sure that it reflects his or her present wishes and circumstances. Perhaps the will was written several years ago and needs to be changed. The will should state what should happen to all assets after he or she is deceased.
  5. You might want to also consider a living trust.   A living trust can make it easier for your fiduciaries to manage those assets while following the instructions of an incapacitated or deceased person.

State laws vary so you might want to consult an attorney when preparing these documents. And for more information about advance directives and wills versus trusts, go to www.diesmart.com.