Estate Planning

Why the right estate planning makes a difference

For many, estate planning is something they will get to eventually.  However, the right estate planning can make a huge difference in what happens should something bad happen to you.  I came across an interesting article in Westword, Homeless Millionaire Alan Fantin Wants his Day in Probate Court, which indirectly highlights the issue.

A Brief Synopsis of the Article

Alan Fantin was severely injured in a severe car accident more than thirty years ago

.  He was 14 when it happened.  The accident left him in a coma for 3 months.  He was forced to relearn how to read and write and was left severely debilitated.  In part as a result of the accident, Fantin’s family life gradually fell apart and he eventually became estranged from his family.

Fantin sued as a result of the accident.  He received money from settlements.  And, it was a lot of money.  A little less than 3 million dollars.

There were issues pretty quickly about whether he could manage his money.  His sister was initially appointed his conservator.  Due to the strained relationship, however, that lasted a short period.  Another was appointed, who lasted for twenty years, until that relationship fell apart in the early 2000s.  Since then, he has had a number of conservators appointed – he has, however, never won his freedom from the appointment of a conservator.

As a brief aside, a conservator is someone who is appointed by the courts to manage a person’s money.  This generally occurs when the person is found to lack capacity and there are no documents such as a power of attorney that allow an agent to control the person’s money and property.  As noted later, this court proceeding can be costly and time consuming, and with proper estate planning, can be avoided.

So what is going on with Alan Fantin’s estate?  Well, it appears that he has a court appointed conservator that has been covering his estate since 2015.  It’s possible, and from the sounds of it, this is truly a court appointed conservator and not a conservator that knows Fantin who was appointed by the court.

What’s the difference you ask?  Not all conservator proceedings are the same.  If no one volunteers to be your court-appointed conservator, like a family member or close friend, of the court doesn’t find the family member or friend capable of representing your financial interests, the courts will find someone to take the job.  In Fantin’s case, it appears the court found someone Fantin did not know to take the job – a fiduciary services agency.  And, Fantin des not appear to be getting along with this court-appointed conservator.  (I’d like to think someone who knows you and is concerned about you would get along with you better than what is insinuated this case.)

So what are Fantin’s complaints?  As follows:

“He claims that Christian refused to provide any funds for his lodging after he was banned from his house; directed him to use a public defender in his domestic-violence case rather than hire his own attorney; threatened to cut off his phone if he continued to complain; and has been less and less responsive to Fantin’s pleas for help even as his firm’s fees for the conservatorship have steadily increased.”

So what’s the deal?

Well, a conservator does have fiduciary duties and is obligated to the conservatee, here Fantin.  A conservator can’t just run amuck with the conservatee’s funds and property.  But, the conservator must also make sure that the client’s estate is protected – that is part of his duties as a conservator.

In this case, it appears Fantin is doing things that perhaps arise to moral grounds that his conservator doesn’t agree with.  And the conservator, is therefore, not paying for items that Fantin wants, or perhaps needs to survive.  While the conservator does have obligations to ensure necessary things such as housing and food are provided for to the conservatee, the conservator can potentially make decisions as to whether the conservatee is using his funds for improper things – such as drugs.

In this instance, there are perhaps shades of gray.  Some of the issues may need to be decided by the court, such as to what extent any of Fantin’s funds can be used to purchase marijuana – for medical purposes of course.  And, whether the conservator is abusing his role resulting in an inflation of fees.

How do you avoid these issues?

While Fantin probably didn’t plan for a car accident at presumably a young age, proper estate planning can help avoid things such as unexpected accidents that leave you incapacitated as well as long term illnesses such as dementia.  However, getting strong and good financial and medical powers of attorney can help avoid this.  First, a power of attorney, drafted and signed before you become incapacitated, generally prevents you from having to go to court if you become incapacitated.  Second, a power of attorney lets you choose who you want to step in and take over your estate and your health instead of it having to be fought in court.  Third, it’s a lot cheaper than court proceedings.  Fourth, it’s a lot less stressful for your loved ones than a court proceeding.  See Using Powers of Attorney by clicking here.

Anyone over the age of 18 can be your agent in your power of attorney.  However, you should select someone you trust – a family member or close friend – who knows you and will make good decisions on your behalf.

It’s not completely fool proof however.  For example,  if you omit to elect or place in your power of attorney a power that is later needed, someone will have to go to court to allow your agent to take control of that issue.  And, if your agent is no longer available and you don’t have a successor agent, then someone will need to go to court to appoint a conservator and guardian for you.

Posted by Elle in Estate Planning, Probate

What should a basic estate plan include?

Introduction

Many people don’t have a basic estate plan, which can get them in trouble.  A basic estate plan is pretty simplistic and should be something everyone gets especially people with minor children.  So what should a basic estate plan include?  Well, for one a last will and testament.  But beyond that, it should also include the following: financial and healthcare powers of attorney, healthcare directives, and guidance on beneficiary designations.  A basic estate plan may also include a declaration of disposition of last remains, HIPPA authorizations, and a parental delegation of authority where there are minor children.  So what exactly are these documents?  Read more…

Last Will and Testament

Most people know what a last will and testament, otherwise known as a will, is.  This is the major document in a basic estate plan.  The will is what the courts use to determine distribution of assets after your death.  The court procedure that makes determinations about a will is called probate.  In a probate proceeding, the court will essentially distribute all of your assets that will pass under the will.

So you ask, which of my assets will pass under the will?  That depends.  Assets that you own and aren’t designated by joint ownership or have beneficiary designations or transfers on death designations.  Thus, real estate that you own by yourself will pass under your will unless you have a beneficiary deed with it or you transfer it to a trust.  If you own the property as a joint tenant with the rights of survivorship and you pass before the other joint tenant(s) will not pass through probate under the terms of your will.  Instead, this property will pass to the survivors.  However, if you are the last person to survive the other joint owners, unless you a beneficiary deed filed with the property, it will pass under your will.

Property that you have beneficiary designations on, such as insurance money or retirement accounts will not pass under your will.  Those will pass out right to the beneficiary or beneficiaries you have named.  Similarly, if you prepare a beneficiary deed for your car, this should pass outright to the beneficiary you designate and will not pass through probate.  Assets that you transfer to a trust will also not pass through a will.

Thus, as you can see, what transfers under your will depends on how you have assets designated.  If there is no joint ownership designation (or you are the last surviving person on a joint designation), you do not have beneficiary designations, or the property is not in a trust, it will pass under your will.

Your will also designates a person called a personal representative who will manage the transfer of your property and your wishes for your estate.  You can put into your will decisions regarding who will take care of minor children, a desire to have property transfer to a trust for later distribution, as well as decisions regarding your last remains.  In essence and generally speaking, a will expresses  your desires regarding your property, your minor children, and your last remains upon your death.

Powers of Attorney

Powers of attorney are other very important documents you should have in your basic estate plan.  Most people end up with both a healthcare power of attorney and a financial power of attorney.  More about powers of attorney can be found by clicking here.  Essentially, powers of attorneys are documents that you execute that allow the appointed agent to make financial or healthcare decisions on your behalf.  The agent is the person you designate to make these decisions on your behalf.  These documents can be drafted in a number of ways.  They are generally used when you no longer have the capacity to make decisions for you.  Your agent will take over to make important decisions for you if it is found that you lose capacity.

Because powers of attorneys are powerful documents, it is best to choose an agent who will be able to execute your wishes.  Your agent can be a family member (frequently a spouse) or a very close friend.  There are also organizations that will act on your behalf as financial powers of attorney.

Your agent does not get to run wild with regards to making decisions for you.  Your agent is controlled by fiduciary duties – i.e. they owe you duties of care and loyalty in how they act on your behalf.  If they fail to act under their fiduciary duties, they can be taken to court.

Healthcare Directives

Healthcare directives provide guidance on what will happen with your body when you are terminally ill or are in a persistent vegetative state AND you do not have the capacity to make decisions for yourself.  In this document, you will direct healthcare providers on whether to remove life-sustaining treatments or continue them for a period of time or indefinitely.  You may also make decisions with regards to organ donation after you pass.  For more guidance on healthcare directives, click here.

Beneficiary Designations and Transfers on Death

Beneficiary designations are not actual documents but are designations you can place on assets that allow for their distribution out of probate.  A beneficiary designation will generally take precedent over any distribution in your will.  Bank accounts, retirement accounts and insurance, for example, frequently have forms that you can complete at any time designating who you would like as your beneficiaries or if you would like to appoint any contingent beneficiaries.

For some assets, such as cars and real property, you can prepare beneficiary deeds. Beneficiary deeds are also known as transfer on death deeds. These documents allow the designated asset to be transferred immediately upon your death to the beneficiary in the deed.  An advantage of these forms, especially for real property, is that the property will not get tied up in the courts during probate.  This can be valuable in a declining real estate market where property values may be dropping and could be substantially less valuable six months after  your death as we saw in the Great Recession.  Similarly, this can be the case with stocks and other financial accounts that have fluctuating values.

Other Documents…

Some basic estate plans may contain a declaration for disposition of last remains, HIPPA authorizations, and a parental delegation of authority.  These are not mandatory.  For example, someone could put into their will what they would like done with their body upon his death.  HIPPA authorizations authorize medical providers to speak with specific people about your health. HIPPA authorizations can be set forth in medical powers of attorney and may even be signed when you enter the hospital, if you have capacity.  A parental delegation of authority will only be useful to parents with minor children.  This document will allow someone to make decisions about your children’s healthcare and education, for example, if you lose capacity.  Without this document, a court will have to make a determination as to who will make these decisions.

In conclusion…

A basic estate plan will guide what happens with you if you lose capacity and what will happen to your property and your body after you pass.  Without these documents in place, your family will have to go to court to make these decisions.  This can be time-consuming, costly, and emotional for the individuals involved.  Making these decisions ahead of time will benefit your estate greatly.  Additionally, letting your heirs and close friends know what your wishes are will greatly simplify what happens with your estate.

Posted by Elle in Estate Planning, Probate