Legal Tip of the Week – 2/2/18!

It's hard to believe that the holiday season is well behind us and we are into the first week of February!  This post was originally scheduled for a January submission but due to a recent good interruption last week (my attendance at the Heckerling Conference on Estate Planning in Orlando, Florida), there was a slight delay.  Stay tuned for my musings of the conference in the coming weeks.  Thank you!

Incapacity Planning

We all know that people download Wills off of Legal Zoom thinking that “some” plan in place is better than none at all; rather than incur the expense of engaging an attorney, their thought is to come up with a quick solution to ensure their family’s protection.  The problem with this approach is that one may actually be causing more harm than good.  For ex. if all a person created was a Last Will & Testament, then what happens if that person got hit by a truck and went into a coma for several months or years?  What does the family do when they need to pay bills, run the household or just take care of the incapacitated person?  Any good estate planning attorney will offer as part of the estate planning package along with a Last Will & Testament, a broad and robust Financial Power of Attorney as well as a Health Care Directive naming an Authorized Representative to make decisions upon incapacity.   Okay, so I know you are thinking: "Fine – I’ll just download these Powers of Attorney and I am all set.   From what you say, these documents are all I need to cover me then, right?"  Not so fast!  Drafting your own legal documents with the help of Legal Zoom or other online software tools is like trying to fix your car using a manual.  I don’t know about you but I know I will not get very far fixing a carburetor using a manual.   There are specific powers in a power of attorney that we look for when we help families - from the Medicaid planning perspective, I am looking for certain powers of the agent to help an aging parent or spouse set up trusts or apply for government benefits; for banks, I want to ensure that the agent has all of the proper authority under the document that banks are looking for; gift giving provisions are hugely helpful where there is a taxable estate and assets need to be transferred out of the estate when someone is incapacitated but where death may be imminent.  Finally, most people are clueless when you talk to them about the difference between probate and non-probate assets.  To give you some perspective - let's talk about a widowed surviving spouse who takes it upon himself to draft all of the required documents discussed above and gets them properly signed, witnessed & notarized.  And let's also say that this individual was savvy enough to ensure that his two minor children do not get the assets from his estate outright but rather he designed the Will to put those assets into a trust for his children until age 30.  Now let's assume that this individual has a primary residence that he owns "joint tenants with a right of survivorship or JTWROS" with his brother and the only other asset he has is a significant life insurance policy where he has named his children as primary beneficiaries in equal shares on the designated beneficiary form.  Imagine this individual's surprise when he is told that his beautifully designed Will cannot work as intended because at his death, these assets would bypass the Will and be handed to the named beneficiaries directly!  These are red flags that a good estate planner will point out and take it upon himself or herself to ensure that the documents are designed in a way that fulfill the Testator's objectives.   It's difficult to understand the work estate planning attorneys do on the back-end.  Although I have heard people stating this quite often, good estate planning is never about simply "copying & pasting" or using "boiler-plate" documents.  Each family's situation is unique and even the most straightforward family situation may present nuances that are unique only to that family.  My job is to ensure that you or your family never have to spend wasted money undoing mistakes and hopefully never have to enter a court of law to contest or dispute the provisions contained within the documents.