Estate Planning Blog

What Legal Documents Does Every Senior Need?

Legal documents pertaining to health care, end-of-life treatments and allowing others to access medical records are vital to protecting adults at any age. However, they are especially important for seniors, says a recent article from The News-Enterprise, “All seniors need legal documents for medical issues.”

These documents include a living will, health care power of attorney and HIPAA authorization. In addition, they give you the ability to name the individuals you want access to secure medical information and who will be able to make decisions about your health care during incapacity.

The health care power of attorney is the broadest and most important medical estate planning document. Depending upon where you live, it may be known as medical power of attorney, healthcare proxy, or healthcare surrogate.

Here’s where an estate planning attorney is needed: like many estate planning documents, the health care power of attorney can be broad, encompassing both a living will, and a HIPAA authorization within one single document, or it can be extremely limited. By having a document created for you, rather than using a boilerplate form, you can ensure your exact wishes are followed.

The health care power of attorney generally makes specific determinations. The document needs to name one person or agent and a backup agent to act on your behalf. Many people think they can change their agent if the agent becomes incapacitated or unavailable. Still, all too often, they need to remember to have their document updated, and then, when they need to have an agent act on their behalf, no one can do so.

Without an appointed agent, court intervention becomes necessary, which is time-consuming and costly.

The health care power of attorney should specify when the agent may act on behalf of the person and address both access to information and decision-making. The ability to immediately make decisions is critical when the individual is at an advanced age or has urgent medical needs. In addition, other provisions are included to ensure the agent has the full ability to act.

A living will, sometimes called an advance medical directive, may be a separate document or contained within the health care power of attorney. It includes instructions for end-of-life decisions. These may be as detailed as outlining when artificial nutrition and hydration may be used or as simple as naming an agent with the right to remove the person from life support. If you have strong feelings about using life-prolonging devices, your wishes can be legally enforceable through a living will.

Lastly, a HIPAA authorization permits another person to have access to review medical records.

These health care documents should be created with the help of an experienced estate planning attorney to ensure the person carrying out your wishes is the person whose judgment you trust and to clarify your wishes. Preparing for these tough decisions in advance is hard. However, this is a gift to those you love, who will otherwise be left hoping they did what you would have wanted.

Reference: The News-Enterprise (May 27, 2023) “All seniors need legal documents for medical issues”

Do Joint Accounts With Rights of Survivorship Work?

A common request from seniors is to add their children to their bank accounts, in case something unexpected should occur. Their goal is admirable—to give their children access to funds in case of an emergency, says a recent article from Kiplinger, “Joint Account With Rights of Survivorship and Alternatives Explained.” However, making a child joint owner of a bank account, investment account or even a safe deposit box, can have unintended consequences.

Most couple’s bank accounts are set up by default as “Joint With Rights of Survivorship” or JWROS, automatically. Assets transfer to the surviving owner upon the death of the first spouse. This can lead to several problems. If the intent was for remaining assets not spent during a crisis to be distributed via the terms of a will, this will not happen. The assets will transfer to the surviving owner, regardless of directions in the will.

Adding anyone other than a spouse could also trigger a federal gift tax issue. For example, in 2023, anyone can gift up to $17,000 per year tax-free to anyone they want. However, if the gift exceeds $17,000 and the beneficiary is not a spouse, the recipient may need to file a gift tax return.

If a parent adds a child to a savings account and the child predeceases the parent, a portion of the account value could be includable in the child’s estate for state inheritance/estate tax purposes. The assets would transfer back to the parents, and depending upon the deceased’s state of residence, the estate could be levied on as much as 50% or more of the account value.

There are alternatives if the goal of adding a joint owner to an account is to give them access to assets upon death. For example, most financial institutions allow accounts to be structured as “Transfer on Death” or TOD. This adds beneficiaries to the account with several benefits.

Nothing happens with a TOD if the beneficiary dies before the account owner. The potential for state inheritance tax on any portion of the account value is avoided.

When the account owner dies, the beneficiary needs only to supply a death certificate to gain access to the account. Because assets transfer to a named beneficiary, the account is not part of the probate estate, since named beneficiaries always supersede a will.

Setting up an account as a TOD doesn’t give any access to the beneficiary until the death of the owner. This avoids the transfer of assets being considered a gift, eliminating the potential federal gift tax issue.

Planning for incapacity includes more than TOD accounts. All adults should have a Financial Power of Attorney, which allows one or more individuals to perform financial transactions on their behalf in case of incapacity. This is a better alternative than retitling accounts.

Retirement accounts cannot have any joint ownership. This includes IRAs, 401(k)s, annuities, and similar accounts.

Power of attorney documents should be prepared to suit each individual situation. In some cases, parents want adult children to be able to make real estate decisions and access financial accounts. Others only want children to manage money and not get involved in the sale of their home while they are incapacitated. A custom-designed Power of Attorney allows as much or as little control as desired.

Your estate planning attorney can help you plan for incapacity and for passing assets upon your passing. Ideally, it will be a long time before anything unexpected occurs. However, it’s best to plan proactively.

Reference: Kiplinger (March 30, 2023) “Joint Account With Rights of Survivorship and Alternatives Explained”

What Kinds of Powers of Attorney Are There?

A “durable” power of attorney remains in effect once the principal is deemed incompetent. On the other hand, a “springing” power of attorney is ineffective until the principal is judged incompetent, according to Fed Week’s recent article entitled, “‘Springing’ vs. ‘Durable’ Powers of Attorney.”

Some people prefer a springing power, so no one will be authorized to act on their behalf while they’re still capable.

A springing power might go into effect after two physicians have certified your loved one’s incapacity.

Nevertheless, some experienced estate planning attorneys prefer a full power of attorney rather than a springing power of attorney because if your loved one becomes incapacitated, the situation will be stressful enough.

You also don’t want hassles and waste time and energy at the bank or their brokerage firm. It may not be easy to establish the principal’s incompetency and put a springing power into effect.

In addition, some financial institutions are highly reluctant to accept powers of attorney unless their forms are used. These banks and credit unions may be concerned about the liability they might have if they allow transactions under a form that’s not valid.

Therefore, you should make sure that your financial institutions will accept your power of attorney.

In addition, it’s probably better to have just one person authorized to exercise the power.

If two or more people are named, the financial institution may insist that they all sign off, even if one party is authorized to act alone.

You can see that using a joint power is more cumbersome.

Ask an experienced estate planning attorney to help you draft an effective power attorney for your specific circumstances.

Reference: Fed Week (May 1, 2023) “‘Springing’ vs. ‘Durable’ Powers of Attorney”

How Estate Planning Protects Unmarried Couples

Many couples make the choice not to wed, even after being together for decades, for personal or financial reasons. For example, some clients don’t marry so as not to impact their children’s inheritance, while others would rather not bother with the legalities, says a recent article, “Estate Planning for Unmarried Couples” from My Prime Time News. In some cases, marriage would cause the couple to lose pension or Social Security benefits, if they remarried.

However, unmarried couples must take extra care to have estate planning documents in place to make their wishes clear and to protect each other in case of incapacity, serious illness and, ultimately, death.

From any statutory priority, a significant other does not have the legal rights granted to a spouse to serve as a personal representative or executor for their loved one’s estate. In addition, there is no statutory right to inherit property, including any family allowance or exempt property allowance.

The significant other also has no rights regarding acting as guardian or conservator for their partner and no ability to make medical decisions, if they become incapacitated or disabled.

All of these issues, however, can be resolved with the help of an estate planning attorney. Both partners should execute a will, health care power of attorney, general power of attorney and a living will to protect each other.

The last will and testament designates a personal representative or executor who will be in charge of the decedent’s estate and inherit the person’s assets. With no will, a partner will inherit no assets, unless they are owned jointly or the partner is a named beneficiary.

Having a health care power of attorney and a financial power of attorney gives a partner the power to make decisions if their loved one becomes incapacitated. In addition, these power of attorney documents are necessary for adult children to have priority in making these decisions, and guardianship proceedings will be required if there are no children or family members.

Disputes between the adult children of unmarried couples are common if a comprehensive estate plan still needs to be completed. For example, imagine a partner of many decades becoming too ill to communicate their end-of-life wishes. Even after a lifetime together, the adult children will have the legal upper hand, regardless of what the couple has discussed as their wishes for this situation.

It may be challenging for unmarried couples to discuss their living arrangements and family dynamics. However, the experienced estate planning attorney has met with and helped families of all kinds and will have the knowledge to prepare an estate plan to address all family dynamics.

Once this work is done, the couple can rest easy, knowing they have protected each other in the best and worst circumstances.

Reference: My Prime Time News (May 1, 2023) “Estate Planning for Unmarried Couples”

What Do I Do If I’ve Lost an Important Document?

Many important documents may be decades old. Therefore, if they get lost, you should know how to replace them. AARP’s recent article entitled, “You’ve Lost an Important Document. Now What?” breaks it down for you.

Passport. To avoid becoming a victim of identity theft, report a lost or stolen passport by calling 877-487-2778 or completing Form DS-64 online at travel.state.gov. You can also print the form at the website and mail it to the U.S. State Department. To get a replacement passport, you must submit a Form DS-11 in person at a passport office.

Birth certificate. Contact the vital records office in the state where you were born and order a replacement.

Marriage certificate. Contact the clerk of the county where the license was issued. This office will let you know the documents required, the cost and how the copy can be issued (online, by mail, or in person).

Social Security card. First, consider the need for a replacement because you rarely need the physical card. However, a replacement should be obtained if you’re starting a new job or live in a state where you need it to apply for a Real ID. To obtain a new Social Security card, you’ll need a birth certificate, driver’s license, state-issued identification card, or a passport. You should then complete an application on the Social Security website (ssa.gov) and mail or take your application and original documents to your Social Security office (the website has information on locations). The replacement card is free.

Will. Laws relating to estate planning are different in each state. However, generally, if your will was accidentally lost or destroyed and not revoked, it will still be valid and represent your wishes. A copy of the will can be submitted to the court at your death. However, you must have left behind clear evidence that you didn’t revoke it—proof that it was accidentally destroyed or lost or testimony from an impartial third party stating that you didn’t plan to change it. Your heirs will also need evidence that it’s a true copy, which the original witnesses or attorney can confirm.

Car Title. The replacement process for the title to your vehicle varies by state. Contact your Department of Motor Vehicles. You may be able to submit a form, or you have to submit a photo ID, vehicle registration, or registration renewal notice.

Reference: AARP (Feb. 14, 2023 ) “You’ve Lost an Important Document. Now What?”