Posts tagged ‘power of attorney’
‘nest egg’ planning – an important end-of-year goal
The end-of-the-year rush is in full swing. You’re busy shopping for holiday gifts, planning and attending gatherings with family and friends and (hopefully) simply enjoying the magic of the season . . . so why make time in the midst of all this to think about your nest egg?
Because it’s the *ideal* time to focus on the simple steps to take to properly preserve and protect your nest egg. You can chart a course, follow it (at whatever pace YOU choose) and in the process check off some very important items from your to-do list. The bottom line: the greatest gift you can give your family is to put an organized and thoughtful estate plan into place – one that protects your nest egg.
We’ll go through the steps incrementally, starting out with the first seven estate planning items on the checklist. (My next post will cover insurance planning, which ties in directly to a thoughtful estate plan for most people.)
- Make (or update) your will document. If you don’t already have a will document, now is the time to put one in place. This isn’t a complicated or expensive task. I’ve written previously about why everyone should have a will – check out these posts for more information HERE and HERE. And if you already have a will, you should review it on an annual basis to make sure that it continues to carry out your wishes. Obviously, if you’ve had a change in life circumstances in 2010 – marriage, divorce, new child, etc. – then a review of your will is imperative.
- Create (or update) your powers of attorney and living will. Everyone should have two powers of attorney in place, if you reside in Tennessee: a general durable power of attorney and a power of attorney for healthcare. With these two documents, your family will be able to manage your affairs in the event you’re disabled. Without these documents, a conservatorship may be necessary – go here to read my article on this topic. And as with your will documents, the powers of attorney should be reviewed annually – make sure that the people you’ve designated are still appropriate for this position. As well, terms for the documents do change, so check with your estate planning attorney to see if your documents require substantive revision. A living will sets out your end-of-life health care preferences and is important information for health care providers and your family.
- Create a letter of instruction. This letter goes hand-in-hand with your will and powers of attorney documents. In this letter, you provide invaluable information to your heirs: where important documents are located, where your financial accounts are located, special burial wishes, and the like. I’ve written before about compiling this information for your heirs – you can read this article here.
- Calculate (or review) your net worth. The amount of your estate – e.g. the value of all of your assets – determines in large part what kind of estate planning you can/should do to protect your nest egg for your heirs. You should review your net worth annually and consult with your tax and/or estate planning advisors to determine if your plan requires any substantive changes in order to achieve your goals.
- Consider creation of a trust. Your annual review of net worth may lead to a recommendation that you establish a trust – either living (created and funded in the present) or testamentary (created and funded following your death). A trust often can be an effective vehicle for transferring wealth and protecting assets.
- Consider funeral pre-planning. This is a simple step to take, and can save cost and time for your family. It’s as simple as contacting local funeral homes and requesting pre-planning information.
- Arrange for the orderly transfer of business assets. If you are a small business owner, planning for the smooth operation (or sale) of your business in your absence requires more than a simple reference in your will document. Your entity documents (or legal agreements with business partners) should address what happens to the business upon death, and should be reviewed annually to confirm that the plan continues to meet such goals. As well, you should consider the purchase of life insurance as a vehicle for funding the transfer of business assets at death.
Take the above steps, one-at-a-time and at your own pace. But just do it. In my next post, I’ll add a few more to-do items to the list. And in the meantime, feel free to call (615.595.7776) or email (cnm@csquaredlaw.com) if you have question about your year-end planning.
As I write this post, my satellite weather station reports the temperature at 19 degrees, with a ‘feels like’ temperature of six degrees. I hope you’re staying warm and enjoying this holiday season!
With *warm* regards,
Caitlin Moon
Conservatorships in Tennessee: a brief primer
Conservatorship – families often encounter this word for the first time in moments of great emotional stress. A conservatorship describes the legal process required in order to gain legal control over many aspects of another person’s life. Why would this process be necessary?
In my practice, I’ve worked with many families throughout the conservatorship process, both as an attorney for the petitioner (the person who seeks to be appointed a conservator) and as a guardian ad litem (the person who investigates the situation on behalf of the disabled person who is the subject of the action). The reasons have been many and varied, but the focus is always on the individual who simply can’t care for him- or herself, thus prompting a family member or caregiver to take action to assume legal control over the disabled person’s life.
Disability can happen at any time. We commonly think of an elderly person who becomes too ill or frail to manage her own affairs – if she doesn’t have the proper powers of attorney (for both general and health care purposes), then a conservatorship action must be initiated in order to legally manage both her general and medical decisions. However, disability also happens to younger people. A serious accident or illness can leave anyone – even a young and previously healthy person – disabled.
Another common reason families seek conservatorships is to care for a family member born disabled. When a disabled person reaches the age of 18, his parents can no longer exercise legal control over his affairs. Thus, in order to maintain control of medical care, for instance, the parents of a disabled child 18 years or older must establish a conservatorship for their child’s care.
What does this mean in Tennessee? If you’re caring for a disabled individual and this person hasn’t executed a durable power of attorney for health care, then you must establish a conservatorship in order to have access to the disabled person’s medical records or make any health care decisions for the person. Additionally, a person born with certain disabilities may not have the capacity to execute a power of attorney, thus making a conservatorship the only option for family members or caregivers.
The conservatorship process in Tennessee is set out in Tennessee Code Title 34 : Guardianship. (This section also address guardianships, which apply to persons under the age of 18.) The process requires very specific information be presented to the Court, before an individual’s legal rights will be removed and placed with another person as the conservator.
In a nutshell, the petitioner (the person who seeks to be appointed conservator) must include the following in a petition for conservatorship:
- the basis for the petition – e.g. why the disabled person is unable to care for him/herself
- a doctor’s sworn statement, based upon a physical examination within 90 days of the filing date of the petition, setting out the disabled person’s specific disability(ies) along with a statement that a conservator is recommended for the disabled person’s care
- a complete listing of the disabled person’s property
- a complete listing of the disabled person’s income
- a complete listing of the disabled person’s living expenses
- a proposed property management plan, explaining how the conservator will manage the disabled person’s property and income in order to meet the living expenses obligation
After the petition is filed, the Court will appoint a guardian ad litem, whose duties are set out in Tennessee Code Section 34-1-107. Generally, the Guardian must interview the disabled person, present him or her with the petition, and investigate the facts set forth in the petition. The Guardian then files a report with the Court, expressing the Guardian’s findings and his or her opinion as to whether the conservator should be appointed.
After the conservator is appointed, this person has a continuing obligation to the Court to file accountings on an annual basis. The accounting reports all income and expenses of the disabled person, and should reflect the property management plan approved by the Court during the conservatorship proceeding.
A couple of things to keep in mind:
- In a conservatorship, the Court maintains oversight of all financial matters, for as long as the conservatorship is in place. The purpose is to insure that the disabled person’s income is being used properly – for the disabled person – and is not be used in inappropriate manners.
- In a conservatorship, the Court maintains control over many of the Conservator’s actions. For example, the sale of certain types of property belonging to the disabled person must first be approved by the Court.
In most instances that require a conservatorship, the action could have been avoided if proper planning been done at the right time. Why does this matter?
On a practical level, if your mother becomes disabled without having powers of attorney in place and you’re appointed conservator through a legal action, you now have to account to the Court for every dime you spend on her behalf. For most families I work with, this is not the ideal outcome, as it imposes restrictions on the actions of the person serving as conservator and inserts the Court into a situation that otherwise would not require such keen oversight.
Of course, not every instance can be addressed through the use of powers of attorney – but such a plan often is a simple and inexpensive way to avoid the expense and emotional toll that a conservatorship action can exact.
If you have any questions about conservatorships in Tennessee, including how to put a plan in place that renders a conservatorship action unnecessary, I’m glad to talk with you. Please contact me – 615.656.4044 or cnm@csquaredlaw.com – to schedule a no-cost, no-obligation consultation.
Do you know where your will is? Crucial documents + information everyone should update annually.
I always urge my estate planning clients to compile the following information – and update it annually. Doing this as you gather information for your tax return is ideal – just add to your ‘to-do’ list for the first quarter of each year.
Having this information in a location accessible by your appointed power(s) of attorney and executor(s) will save incredible amounts of time, and possibly expense, should access be required. Note that this information should be kept in a secure location – if this is an institutional lock box, then make sure that someone in addition to you (and your spouse, if married) also have access.
DO NOT disseminate this information along with copies of powers of attorney and will documents, as it contains sensitive data that should be kept securely and updated at least annually.
(1) A list of key references
(a) Contact information for accountant, attorney, insurance agent
(b) Location of birth certificates, marriage license, financial records
(c) List of user names/passwords for all accounts
(2) Investments
(a) Detailed tabulation by security, to include the following:
(i) owner’s name
(ii) current value
(iii) cost basis
(iv) beneficiaries (if any)
(v) tax status (e.g. taxable, tax-exempt, tax-deferred)
(vi) account number(s) and contact person
(b) Record of each bond or certificate of deposit (CD)
(i) divide each record and organize by category (e.g. EE, I, Muni)
(ii) call or maturity date
(iii) current yield
(3) Social Security: directions on how to notify SSD upon the death of a spouse, and a record of what benefits are expected.
(4) Pension: whom to contact at the company and what the revised pension amount will be.
(5) Estimated income tax: provide a rough estimate to ensure that withholding is appropriate.
(6) Insurance: summary of each policy, to include the following:
(a) Policy number
(b) Death benefits
(c) Contact at company
(d) Any details re: medical insurance policies that will continue for the surviving spouse
(7) Estate documents:
(a) Will:
(i) With the will, keep a current list of the various people who may be needed to assist: attorney for probate, trustee for testamentary trust, accountant to prepare estate return
(ii) Keep the original documents in a location that may be accessed by someone in addition to the spouses; give copies to all people who are named as primary or alternate executors and trustees
(b) Powers of attorney (general and health care) and living will: keep copies in a location that may be accessed by someone in addition to the spouses; give copies to all primary and alternate powers of attorney and discuss with them any particular wishes you may have in regard to your health care and advance directives.
Is elder planning just for the elderly?
The very term ‘elder planning’ would seem to define the scope of its reach, on first blush. But if we consider exactly what comprises effective elder planning, I propose that there are many aspects that apply regardless of age.
I use elder planning in general to refer to the analysis, goal-setting and implementation of strategy to plan for life’s various needs as one ages, particularly as these needs intersect with areas of the law. Simple elder planing will address, at the very least, creation of an estate plan, and organization of assets in such a way to plan for the appropriate care a person may needs as he or she ages. More advanced planning involves sophisticated structuring of assets, which often includes both estate planning (e.g. planning for disposition of one’s estate after death) and planning during life (e.g. the creation of a living trust – either revocable or irrevocable – to shelter assets for one reason or another).
A VERY important – I cannot stress how important – part of an estate plan is the most simple. It is this incredibly simple planning that all adults – regardless of age, health, financial status, etc. – should put in place and update on a regular basis. This simple planning is the part of elder planning that is not just for the elderly.
The three documents I’m referring to are a general power of attorney, a power of attorney for health care, and a living will. I refer to these documents by the names most commonly used in Tennessee, which is my jurisdiction of practice. Other jurisdictions may use different names, but the purposes are the same or very similar. I cannot overstate the difference these three simple documents can make for a family faced with managing the life and healthcare of a suddenly disabled person.
A general power of attorney gives the person you name in the document (your ‘attorney-in-fact’) the ability to make all business, financial, property and other non-healthcare related decisions on your behalf, in the event you’re unable to do so. Why is this important? Consider this scenario: A 32-year-old father of three suffers life-threatening injuries in a car accident. While he is hospitalized and unconscious, his wife discovers that many of her husband’s business accounts are in his name only. For this reason, she’s unable to pay bills timely from these funds for her husband’s business, which leads to serious financial problems both for the business and this family. Had her husband executed a general power of attorney naming his wife, she would be able to take care of all financial matters related to his business without legal action (e.g. establishing a conservatorship), thereby avoiding this unfortunate effect of his accident.
Likewise, a power of attorney for health care gives your attorney-in-fact the power to make all of your healthcare-related decisions in the event you’re unable to do so. Almost every married couple I’ve worked with in estate planning asks me the same question, “We’re married. Why would I need to give my husband [wife] power of attorney for health care?’ The answer is simple: health care providers are bound by ethical and legal regulations which can prohibit them from disclosing medical information to anyone but the person being treated. And while medical professionals must honor the wishes of the person being treated, if that person can’t speak for herself, the professional is obligated to do what he or she believes is the ‘right’ thing to do given the circumstances. This may or may not be what the patient, or the spouse, would choose. The only way to insure that your proxy’s voice is heard if you can’t speak for yourself is to give them your power of attorney for health care.
A living will works in conjunction with a power of attorney for health care. This document sets forth your wishes for care in the event your condition is deemed imminently terminal. In Tennessee, the following language is used, ‘If at any time I should have a terminal condition and my attending physician has determined there is no reasonable medical expectation of recovery and which, as a medical probability, will result in my death, regardless of the use or discontinuance of medical treatment implemented for the purpose of sustaining life, or the life process, I direct that medical care be withheld or withdrawn, and that I be permitted to die naturally with only the administration of medications or the performance of any medical procedure deemed necessary to provide me with comfortable care or to alleviate pain.’
Medical professionals are obligated to follow your wishes as set forth in the living will, and if you’re unable to communicate, your attorney-in-fact for healthcare decisions is obligated to do so on your behalf.
Very few of us who are yet to be considered ‘elderly’ think that these documents can be of any use to us. But unforeseen events happen. Young people become disabled. Having these three simple documents in place can ease the work ahead for your family, in the event you become unable to make decisions for yourself. In Tennessee, a conservatorship (a legal action whereby the court appoints someone to manage your care, with court oversight) is generally required if a disabled individual hasn’t executed power of attorney documents. (More information about the conservatorship process in Tennessee will be the topic of an upcoming blog entry.)
Of course, putting in place an appropriate will document and taking steps to manage assets in preparation for care when you’re elderly are important, as well. But it doesn’t get much more simple than signing the three documents I discuss above, and the expense is minimal – typically between $100 – $200. Considering that a conservatorship action costs many times more, and takes time to establish, this investment yields an excellent return in the event of disability.
Make it a new year’s resolution. Do a little elder planning while you’re young.
