Estate Planning

Estate Planning for Problematic Children

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It's unfortunate, but clients who meet with me to do their estate planning will sometimes mention that one or more of their children is "problematic" for one reason or another.  

And although the clients want to leave something to that child, there's a concern that their hard-earned money will be "wasted" once the child receives his inheritance.

The best approach in such a situation is usually to have that child's inheritance go into what is commonly called a "spendthrift" trust.  I prefer the term "protection" trust just because it sounds kinder.  

In any case, using such a trust as a component of your estate planning is generally a wise approach when a child (or any beneficiary who is not a child) is in one or more of the following cicumstances:

  • The child is irresponsible with money management, does not have a history of saving and investing, and there is a concern that your hard-earned estate will be wasted;
  • The child has a history of creditor problems, actually has current creditor problems, or you are reasonably certain that creditor issues will arise in the future based on the child's behavior;
  • The child is in an unstable marriage where a divorce is more than likely, in which case the trust can prevent the estate from becoming part of a divorce settlement process;
  • The child is addicted to drugs, alcohol or gambling;
  • The child has a history of being influenced by an overbearing spouse in regards to money management;
  • The child joins an unorthodox religious group (a.k.a. "cult") or some similar organization and you do not want some/all of your estate to ultimately be donated to such a group;
  • The child would be prone to "financial predators" and scam artists.

Please note that this is not always the best approach, but those of you with unstable children should discuss this issue with your estate planning attorney.  Otherwise, your child's inheritance may tragically disappear...and perhaps make your child's problem worse.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Save Your Health Care Document on Your Smart Phone

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This is one of the better "document maintenance" tips I've come across: Keep a copy of your health care instructions (a.k.a. advanced medical directives, health care proxy) on your smart phone and have your health care agent do the same.

The health care document (a standard item in the estate planning "package") is what I would call an "emergency document" meaning that there may be a sudden and immediate need to use the document at any given time. However, it's hard to have your original health care instructions on-hand at all times. That's why having a PDF of the document on your smart phone can come in handy!

I can't quote a particular study, but I can state with confidence that a steadily growing number of my clients (of ALL ages, by the way) carry smartphones with them just about everywhere they go. This means that they have the ability to carry a copy of their advanced medical directives with them everywhere they go.

Please note that it's always better to have an original health care document on-hand.  That's because many doctors and hospitals get nervous when relying on something other than an original document. But it's certainly better to have a PDF of the document on your phone than nothing at all. 

Of course, explaining how to get your health care instructions document onto your smart phone is beyond the scope of this post.  Click here for iPhones, and here for Android.    

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Gifting with a Power of Attorney

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Not surprisingly, I am not a big fan of fill-in-the-blank estate planning documents that you can get online or from an office store.  There are many reasons for that, but one big reason is that online forms for a durable power of attorney (POA) often do not offer a "gifting" provision.  Or they do offer such a provision but there is no advisor involved to explain the benefits (or occassional pitfalls) of including such a provision in your POA.

The take-home lesson for today is this:  An agent under a POA cannot gift assets on your behalf without express authorization to do so in the POA document. 

At first glance, this may not seem like a big deal.  But it certainly becomes a big deal if/when transferring assets out of your name for Medicaid or tax purposes becomes highly advisable.  

In the context of a Medicaid application, the State of Connecticut will most likely pretend that such a gift (made by a POA agent without authorization) didn't happen and treat the gifted asset as an "available asset" for the Medicaid applicant. 

For real estate title purposes, if a POA agent transfers property without express authorization in the POA document then title to the property has not been effectively transferred.

These are just two examples of big problems that can occer when your POA document does not have adequate gifting language.

It is also worth mentioning that if you want your agent to have authority to make gifts to himself/herself, which is often the case when a spouse or trusted child is the agent, then that should be specifically spelled out in the document. 

Of course, having said all of that, there can be good reasons to not include gifting powers in a POA, depending on the circumstances.  The point is that this particular POA issue should be discussed thoroughly with your attorney.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

The Ever-Evolving Last Will & Testament

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Many of my clients tend to procrastinate when it comes to finalizing their estate planning documents. They struggle over who to appoint as guardians for the kids, or who should be the "back up" executor if the surviving spouse can't act, or who's going to end up with the tool collection.  Sometimes these questions can be tough ones and people "freeze up" and stress out over whether or not they're making the right decision.

As the estate planner I'm always concerned that the infamous bus is going to run my clients over while the drafts of the wills sit on my desk, unsigned.  So I try to gently nudge my clients along towards finalizing everything. 

One factor that I try to impress upon my clients is the fact that their wills are not set in stone; that they should conceptualize their wills as "evolving documents". In other words, as developments occur in the family (if people pass away, someone becomes disabled, someone gets divorced, there's a "falling out", etc.) it is very easy to tweak the documents in order to address the new family situation.

I also emphasize that, thanks to computers, tweaking the documents is very easy and very inexpensive, assuming that the changes are not overly-complicated.  I always keep the documents on my computer, so re-printing the documents with small changes and a new date and re-signing everything is awfully easy. And there is nothing exotic about my law practice; this is the case with just about any law practice out there. 

So, don't stress out about it too much when you set up your will and other documents.  Make the best decision you can given the current circumstances and facts.  Then schedule a signing date with your attorney knowing that you can easily change things later if you need to. 

And remember that once your documents are signed you will experience a wonderful, liberating "peace-of-mind", and that's what estate planning is all about.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Tips on Where to Keep Your Will

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This is one of those standard questions that nearly every client asks me after their will or living trust is finally executed, and it is a vitally important question.  I have more than enough stories about the angst and chaos that has ensued when families cannot locate the original will after a loved one passes.

First thing's first: I'm not a fan of keeping your will in a safe deposit box at a bank even though most clients assume that is the best place.  Unless you have someone else's name on the list as a signatory, it is very difficult (albeit not impossible) for someone else to gain access to the box.  Also, even if the family knows that you have a safe deposit box, it is sometimes difficult for the family to determine which bank and at which branch the box is located.  Those tiny, little keys don't really tell you anything, other than the fact that it opens a safe deposit box somewhere.

What I usually tell clients is that they should keep their wills wherever they keep their other important documents. That location is different for every client, but if the family knows that all of the important stuff is in your file cabinet, or a strong box, or your bottom dresser drawer, or the freezer (I did have one client who argued that that was the most fireproof place in his house) then it shouldn't be a problem for your loved ones to find your will upon your passing. 

Ideally, having your will in a strong box at home (with your other important documents) is the best arrangement since such boxes are usually fireproof.  But don't panic if you don't have one since the chances of a fire that completely destroys your house and everything in it are quite slim. You should also keep the box unlocked for ease of access. Trust me...a third party will have no interest in stealing your will since it has no value on the open market.

However, if you have one of those families in which good chemistry is somewhat lacking, and there are some family members who may be motivated to destroy your will, then you may have to be a little more secretive.  In fact, the safe deposit box at the bank with a trusted person as a co-owner would probably be the best way to go in that type of situation.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.