Wills, Trusts & Estates Prof Blog

Tips on Having a Successful Family Meeting

Family meetings are common after a medical crisis, but they can also be invaluable in resolving complicated financial issues as well as legal planning for elderly family members.  Here are some tips on starting, and getting the most out of, family meetings:

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    • Be inclusive by finding a date where everyone in the family can meet.  And ensure everyone has a chance to get their opinion across, especially any person you’re making decisions for.
    • Have family meetings before any serious health issues arise.
    • Hire a professional with expertise in the area of dispute to help resolve conflicts.  Consider a mediator if disputes get heated.
    • Set an initial agenda and invite any suggestions of other items that need to be discussed

See Kelly Greene, When It’s Time to Huddle, The Wall Street Journal, May 10, 2013.

Article on Power of Appointment Legislation In New York

Ira Mark Bloom (Justice Josiah Brewer Distinguished Professor of Law, Albany Law School) recently published an article entitled, Power of Appointment Legislation In New York: It's Time For Modernization, 76 Alb. L. Rev. 9 (2013) Provided below is the introduction to his article:

Power of appointment legislation has existed in New York since 1830. Indeed, the 1830 legislation remained largely intact until 1964 when the legislature effectively repealed existing power of appointment legislation that was contained in Article 5 of the Real Property Law and replaced it with a new Article 5. In turn, new Article 5 was essentially reenacted under Article 10 of the New York Estates, Powers & Trusts Law (“EPTL”) effective on September 1, 1967. With few exceptions, current New York power of appointment legislation has remained unchanged since 1967.

Although New York power of appointment legislation has remained largely static for almost fifty years, major developments in the area have occurred. Two significant developments were made under the Second and Third Restatements of Property. Published in 1986 as an entire volume of the Restatement (Second) of Property, the power of appointment division effectively updates the treatment of powers of appointment that is found in the First Restatement. A significantly updated treatment of powers of appointment, running over two hundred pages, is found in the Restatement (Third) of Property: Wills and Other Donative Transfers, which was published in 2011.

There is another important and very recent national development in the power of appointment area. A draft Uniform Powers of Appointment Act (“Draft UPOA”) is in progress, which is effectively based on translating the power of appointment provisions in the Restatement (Third) of Property into statutes.

The purpose for this article is to recommend updated power of appointment legislation for New York. Specifically, I will recommend specific statutory treatment for important substantive aspects in the power of appointment area. The Restatement provisions as well as their translation into statutes by the Draft UPOA will frequently provide the basis for my recommended statutes.

Before addressing how New York law should be changed, a few preliminaries are in order. First, Part II provides a brief explanation of powers of appointment, as many readers may not be familiar with this fairly arcane, but important, topic. Next, Part III briefly considers the historical development of power of appointment legislation in New York.

Parts IV-VII recommend specific power of appointment statutes for New York in four major areas: general provisions, creation, exercise, and creditors’ rights. Part IV involves general provisions, including definitions. Part V focuses on the creation of powers of appointment. Part VI recommends statutes involving the exercise of powers of appointment while Part VII addresses the importance of creditors’ rights. 

Parts IV-VII are structured similarly. First, I provide the current New York law on the particular issue; in most cases this will be by reference to existing New York statutes. Next the applicable Restatement provision or provisions are identified. I then set forth my recommended statute for the issue. Finally, I include a discussion which explains my recommendation.

Article on Estate Planning Tools That Protect People With Declining Capacity

Jalayne J. Arias (JD, MA, Fellow, Cleveland Fellowship in Advance Bioethics, Cleveland Clinic) recently published an article entitled, A Time To Step In Legal Mechanism For Protecting Those With Declining Capacity, 39 Am. J.L. & Med. 134 (2013). Provided below is the introduction to their article:

Ms. Jones, a seventy-five-year-old widow, lives independently in a home located in a retirement community. Her neighbors watch over her by stopping in from time to time, often bringing groceries and cooking meals. A neurologist diagnosed Ms. Jones with amnestic mild cognitive impairment three years ago, shortly after her husband passed away. Her physicians believe her impairment is of the Alzheimer’s type and she will likely progress to dementia. She has two daughters and a son. Her daughters live out-of-state and visit regularly around the holidays and for special events. Her son lives thirty-five minutes away and comes to see her once a week. Recently, Ms. Jones began demonstrating apathy towards previously enjoyed hobbies and regularly complains of forgetting parts of books she has read or movies she has seen. During a recent visit, her son inquired about bank notices on the kitchen table. Ms. Jones calmly explained that her account was overdrawn and that it was a “silly mistake.” Her son is concerned that she may no longer have the capacity to manage her own finances. Yet, only Ms. Jones has access to her bank accounts, opened when her husband was alive. This prevents her son from reviewing bank records without her approval, which she refuses to provide. He struggles to determine whether to pursue legal actions. Because she has been able to get by thus far, he is reluctant to take away her freedom through a guardianship before it is necessary.

 An aging society in the United States will place an increased burden on families, probate courts, and others to manage societal and personal challenges. Current estimates approximate that the population over sixty-five years of age will increase from 40 million in 2010 to 72.1 million by 2030. As society ages, the number of elderly with cognitive deficits will also increase. While cognitive decline is commonly associated with normal aging, an additional subset of the population experiences an increased burden of cognitive and functional deficits resulting from neurodegenerative conditions. Age-associated neurodegenerative diseases include Alzheimer’s disease, Parkinson’s disease, and multiple classes of dementia. While similar cognitive decline may be associated with ““normal aging,” those that suffer from neurodegenerative conditions will experience significant impairments that heighten the types and frequency of challenges experienced by the individual and family. Attributes of neurodegenerative conditions, like Alzheimer’s, challenge caregivers and family members to address concerns relevant to the patient’s day-to-day living needs. Ms. Jones may be experiencing a decline in her executive functions and memory. These declines may cause her to forget that she made a specific purchase or cause challenges with balancing a budget. These progressive deficits will challenge her son, as well as her daughters, to address how to effectively help her manage finances and other daily tasks without prematurely restricting her autonomy. Individuals with cognitive deficits are at an increased risk of lacking capacity in one or more contexts (e.g., medical consent, financial management, and living independently). Family members who are unable to assist loved ones with these tasks through informal interventions often look to clinicians and the legal system for guidance.

The guardianship and probate system provides legal protections for those incapable of managing their own person or affairs. A legal determination of incompetency is a prerequisite to a judicial order appointing a guardianship or other protective mechanism. The significance of incompetency determinations challenges probate courts to balance an individual’s autonomy with necessary protective measures. Autonomy, an individual’s right to control her decisions and actions, requires that others respect her decisions or actions. For example, a healthcare provider must respect an individual’s request to refuse treatment. A legal determination of incompetence removes an individual’s legal authority to manage her own affairs and has broad implications for her daily interactions and activities. The right extends to those decisions that are objectively risky or dangerous. Nevertheless, when an individual lacks capacity or a court declares her incompetent, her decision-making authority may be restricted.

The dynamic relationship between competency and capacity are at the cornerstone of a state’s parens patriae right to limit autonomy. Though often used interchangeably, capacity and competency reside in two different contexts. A judicial body, usually a probate court, determines whether a person is legally incompetent. In contrast, clinicians--physicians, psychiatrists, or other experts--determine whether an individual has decision-making capacity. Yet, determinations of incapacity and incompetence result in similar restrictions of an individual’s autonomous decision-making authority. Standards for capacity and competency determinations are interrelated. Judicial decisions and statutory language inform clinical capacity criteria and assessments. Similarly, judicial and legal standards are derived from clinical capacity criteria and clinically based research. Despite the interrelated attributes of competency and capacity, these concepts adhere to different structures. Capacity is a continuum and is context-specific. Conversely, most state laws define competence without providing for an intermediate determination that allows for gradation. Instead, competency is determined largely through a global structure. Under this structure, an individual is declared either competent or incompetent. The complicated dynamic between competence and capacity leaves judges to determine where along the capacity continuum an individual becomes incompetent.

The current legal-medical model for competency determinations fails to accurately reflect the complexities of declining capacity in an aging population. A global structure for competency determinations leaves a critical gap between competent and incompetent. This not only raises concerns about how to classify those that fall between the two, but also highlights the lack of legal protections for those within the gap. Ultimately, it limits protections available to individuals who do not yet meet the threshold for incompetency. This leaves family members and caregivers with more questions than answers: When do I intervene? Who will serve as a guardian if my siblings live out of state? Where will my mother live? Who will manage her finances? Who will make medical decisions? Ultimately, family members, like Ms. Jones’s son, are left with the burden of protecting their loved one from potential risks related to cognitive and functional impairments.

A revised model is needed to provide protections to individuals who do not yet meet the threshold for incompetence but require additional protections for their personal or financial welfare. The cyclical relationship between law and medicine demands convergent approaches to evaluating an individual’s abilities to engage in financial, medical, and other critical decision-making processes. A revised legal model will include additional legal mechanisms that provide protective measures tailored towards individuals’ deficits. This Article provides an unprecedented examination of the legal model for determining competence through a comparison of the medical model for evaluating capacity. While a number of legal scholars have examined the appointment and oversight of guardians, few have critically examined the process by which individuals are declared incompetent. This Article presents a comprehensive overview of competency and clinical capacity determination procedures, legal mechanisms available to protect individuals with declining capacity, and policy recommendations for improving legal protections in light of inefficiencies related to legal competency determinations.

Part II provides an overview of the medical model for determining capacity, providing a basis for assessing the effectiveness of the legal model for competency determinations. Part III critically examines the current legal approach for competency determinations and protective mechanism orders. Through an overview of the current structure, flaws in the current approach are illustrated. Specifically, the current judicial process of declaring incompetency fails to provide a balance between autonomy and needed protections. Finally, Part IV discusses two recommendations to address faults in the current system: (1) judicial determinations of incompetence should adopt a gradient structure that reflects the realities of capacity; and (2) legal protections should be implemented and improved that apply to those who fall in the gap between incompetent and competent, such as limited guardianships. These recommendations seek to create a more effective system that provides needed protections, prevents overly restrictive measures, and provides families and caregivers mechanisms to intervene when necessary.

New Jersey Man Defrauds Dying Woman by Posing as Nephew

James J. Demitro, a 43-year-old man from Matawan, New Jersey, admitted to stealing about $1 million dollars and the family home of a terminal cancer patient with dementia. 

Demitro defrauded the 87-year-old Red Bank woman by posing as her nephew and hiring attorneys to draft a will naming him executor and full beneficiary of her estate.  Demitro also had attorneys transfer the deed of the woman’s home to himself for $1.  He was arrested with over $600,000 found in his bank accounts and a $150,000 Ferrari Spyder in his possession.  Under the terms of his plea agreement, Demitro now faces eight years in prison for attempted impersonation and theft by deception.

See Rob Spahr, Matawan Man Admits to Stealing $1M, House from Dying Woman with Dementia, www.nj.com, Apr. 12, 2013.

Parkinson's Awareness Month: Financial Arrangements

As I have previously discussed, it is important for those with a disease like Parkinson's Disease to ensure that they have appointed someone to make health care decisions on a patient's behalf. It is equally as important for those with Parkinson's Disease to consider who will manage their finances should they become unable to do so themselves. A patient might want to consider appointing someone to have a durable power of attorney over his or her property. The key aspect of this type of power of attorney is the "durable" aspect. The power of attorney borrows from principal/agency law. Usually when a principal is rendered incapacitated, the agent loses his or her authority to act on behalf of the principal. A durable power of attorney will remain in effect even if the principal is rendered incapacitated. 

The patient has the right to limit the authority granted to the power of attorney. A patient might want to give the power of attorney broader powers to ensure that the he or she has the authority to sell or protect assets when it comes time to apply and qualify for Medicaid. Thus, it is important to define the power of attorney with the future in mind. Furthermore, the power of attorney becomes effective immediately the minute its signed. Therefore, a patient might want to consider choosing a trustworthy adult, but a patient could also choose to a non-profit agency or corporation. Regardless of what decision a patient makes, it is important for a patient to select a person that will act only to benefit of the patient and will comply with the wishes of the patient.  

See Janna Dutton, Delegating Decisions For Financial Management, Parkinson's Disease Foundation, Winter 2011.

Estate Planning Lessons Learned, Part 7

Dwayne Carter, otherwise known by this stage name Lil Wayne, was hospitalized in critical condition in the Intensive Care Unit this month after he suffered from several severe seizures. The primary lesson to learn is that it is important for a person to have their health care and advance directive documents ready in case they are needed. According to Evan Guthrie, "[a]dvance directives are legal documents that allow for a person to express what kind of health care they want or not want in a written form." The most common type of health care directive is a health care power of attorney. This type of document allows a person to appoint an agent to make decisions on behalf of the person who made the power of attorney. Without this type of document, a family member is usually left to make the difficult decisions.

Lil Wayne did not have this type of document and so his mother had to fly in to make his health care decisions. He was only 30 years old, which shows that really a person can never be too young to make a health care power of attorney. Lil Wayne did not also have a durable power of attorney, which would appoint someone to manage his financial assets. This could have also been helpful when Wayne spent time in jail in 2010. The durable power of attorney would have appointed someone to take care of his affairs.

See Lil Wayne: Estate Planning Lessons About The Rock Star Lifestyle, Estate Planning At Evan Guthrie Law Firm, Mar. 18, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

CLE on the Fundamentals of SNT Administration

Professor Rebecca C. Morgan and the Center for Excellence in Elder Law will sponsor a webinar entitled, Fundamentals of Special Needs Trusts Administration Webinar on Friday, April 19, 2013 from 1:00 to 5:00 pm EDT. Provided below is a description of the webinar from the Stetson Law Registration Page:

This webinar will address challenging SNT administrative issues faced by trustees, attorneys and others involved in SNTs. The faculty of nationally known leaders will discuss:

• Changes to the POMS
• Taxation of SNTs
• Impact of the ACAs
• Medicaid expansion for trustees, beneficiaries and families
• What attorneys want trustees not to do

The webinar will also feature a Q&A session. Questions can be submitted ahead of time on any topic dealing with SNT administration. The cost to participate in the webinar is $125....

In order to participate in this webinar, please note our technology guidelines below. We recommend that participants perform the following procedures:

To view the webcast on PC/Mac Desktop computer:

• Install/Update the latest Flash Player

Users of mobile devices will need to download a free Ustream app.  

To view webcast on iPad/iPhone:

• Download free Ustream app from iTunes Store

To view webcast on Android phone/tablet:

• Download free Ustream app from Google Play Store

You can register here. For registered parties, the login information for the event will be sent before the event. 

Two Changes in the Budget Agreement that Affect Long-Term Care

The budget agreement to avoid the fiscal cliff included two key measures that could matter to people who receive long-term supports and services.  The first repeals the Community Living Assistance Services and Supports Act and the second creates a new national commission to develop a plan to better finance and deliver long-term care services. 

The Obama administration had already abandoned the CLASS Act so the repeal of the act was not surprising.  And unfortunately, the commission seems like it will end up being more like a classic congessional study that does not actually make any changes. The commission is on a very tight time frame and the commission "would live in the bureaucratic ether," meaning that the commission has no natural supporters inside any Administration.  Additionally, there is no actual requirement that Congress ever actually vote on the panel's recommendations, which does not seem promising for any real results.

Howard Gleckman, Fiscal Cliff Repeals CLASS Act, Creates Long-Term Care Commission, Forbes, Jan. 1, 2013.  

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Looking Out For Aging Parents This Holiday Season

Now that the holiday season is upon us, this is an excellent opportunity to ensure that our aging parents are doing well. Sometimes parents would like to re-assure us that they are doing well and that everything is fine. The holidays are an excellent chance to make sure that this is what is actually happening. Unfortunately, in some instances, it is obviously to their adult children that their parents might have lied to them about how well they are doing. 

The purpose of this is to ensure that our aging parents can still maintain their independence. Therefore, the son or daughter of an aging parent might want to look for signs of trouble. For example, they might want to see if their parents have kept up with their bills, the mail, or even the food in their refrigerator. They might also want to check to see if the house that they are living in is still safe for them or if there are any potential falling hazards. If they discovers that their parents can no longer sustain themselves independently, they might want to consider discussing the matter with their parents and begin looking into long term care insurance. Some insurance providers note that the holiday period is the time when insurance policies increase by 15%. 

See Things To Look For When Visiting Aging Parents This Holiday Season, PRNewswire, Nov. 20, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Estate Planning Lessons Learned, Part 3

Mike Ditka, Head Coach of the Super Bowl XX Champion Chicago Bears, recently suffered from a stroke in November of 2012. While Ditka is thankfully expected to recovery from this ordeal, we can still take a lessons from his illness. 

The most obvious lesson that this incident reminds us about is that estate planning is not only used to determine what happens to our property after we die. Many people are under the delusion that the only document that they need is a will. However, that is not case. It is important to remember that a person should also plan for incapacity. A will alone does not provide for incapacity. In the absence of instruction, a probate court will likely "appoint a conservator or guardian to make financial and health decisions for" him or her. Now, a person can avoid the extra costs and paperwork with the courts by creating a durable power of attorney, which allows them to appoint someone to step-in and make decisions when that person is no longer able to. This type of incapacity could occur when a person has a stroke like Mike Ditka had. Thus, it is important to get ones affairs in order here so that there can be someone to take care that person's affairs should they become incapacitated.

See Evan Guthrie Law Firm, Estate Planning: Lessons Learned From Mike Ditka, JD Supra, Nov. 20, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Lessons From Zsa Zsa Gabor's Estate Gone Awry

As I have previously discussed, Zsa Zsa Gabor has had her share of probate problems. Most recently, her husband Prince Frederic von Anhalt won a temporary conservatorship over her and the management of her property. Now, it looks as if the probate court is set to invalidate the power of attorney that granted her husband nearly unlimited power in controlling both her health care and her finances. The court has stated that he must now provide monthly reports to her daughter, Francesca. Furthermore, the court stated that he can no longer keep Francesca from her mother. Francesca won a huge victory because it was she who originally alleged that Prince von Anhalt was abusing his position of power. Francesca alleged that he abused his power by using her "money for birthday parties, billboards, and his own mayoral campaign in L.A." As I have discussed in the past, Francesca also accused Prince von Anhalt of sedating her mother and intentionally keeping Francesca from seeing her.

The lesson that we can learn from this instance is the importance of choosing a good fiduciary. A person should make a thoughtful decision considering who should be appointed to make decisions on that person's behalf. Not only will it ensure that the fiduciary follows the person's wishes, but it very well could prevent probate fights over the control of that person's property. 

See Bonnie Bowles, Zsa Zsa Gabor Might Have Chosen A Better Fiduciary, examiner.com, Nov. 15, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

From Evan Guthrie Law Firm: Lessons Learned From Alex Karras

The following is an anecdote from the blog written by the Evan Guthrie Law Firm that discusses the need for disability planning when a person completes his or her estate planning documents. Particularly, this article focuses on the debilitating effects that work injuries can have on people and how people should prepare in their estate planning documents for disability. This article does this by providing the story of Alex Karras, a NFL football player for the Detroit Lions. Provided below is the excerpt:

Alex Karras was a multi talented performer that excelled as a pro football player and actor. Nicknamed the "Mad Duck", Karras played defensive tackle for the Detroit Lions for twelve seasons. Karras is most well known as an actor with such roles as the sheriff in the movie Porky's and the father on the long running sitcom Webster. There are several estate planning lessons that we can learn from Alex Karras. Alex had an occupation that had inherent dangers in being a football player for numerous years from high school to college to the professional ranks. Karras and several other former professional players joined in a lawsuit against his former professional league that sought damages for chronic injuries and effects that he suffered as a result of his play. Karras was diagnosed with dementia later in life and linked it to his career taking hits to the head as a football player. Karras is not alone in working in an occupation that may have adverse health effects. There are numerous lines of work outside of being a professional athlete that may shorten the quality and length of life. It is important for those that may work in such a job that has inherent risks to plan ahead and make arrangements for advance health care directives such as a health care power of attorney and a living will, a durable power of attorney to allow someone to take over a person's finances in case of incapacity, and a will or living trust to ensure that assets go to the parties a person wants them to go to.

There is also the need for long term care planning and disability that should be though of before one needs it. While one is making a salary that may be higher by working in a risky profession it is important to save and prepare for a time in the near or distant future when the effects of the hits or impact of years of work add up. For Alex Karras he may not have known that a professional football career may lead to a shortened lifespan with health complications such as dementia, but a current pro playing football would be wise to preparing himself and his family for the future when he may no longer be in position to earn. Karras was able to supplement his football earnings with an acting career, but a second career is not always guaranteed to most people.

See Evan Guthrie Law Firm, Estate Planning: Lessons Learned From Alex Karras, JD Supra, Oct. 16, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Life Care Planning Takes Burden Off Family Members

Wesley E. Wright (Partner, Texas) and Molly Dear Abshire (Partner, Texas) recently published an article entitled, Planning For Illness and Death, Senior Living Section, Houston Chronicle. Provided below is their article:

Death is the one indisputable life event we all must face.  Yet, many of us are afraid to consider our own demise.  Either we believe we will live forever, or we superstitiously think that talking about dying will trigger “The End.”

Ambivalence to planning for sickness and dying could leave loved ones in a quandary when the inevitable time comes; the time when important, costly decisions must be made.  Life care planning is an integrated way to prepare for all aspects of the inevitable. 

Early in life someone plans for us – our parents or guardians.  Eventually we become responsible and take on the planning process for ourselves, for things like college, careers, marriage, children, home purchases, etc. 

Unfortunately, most of us do not contemplate planning for illness or death, one of the fundamental expenses of our lives.

Treating the end of life with disdain is costly and difficult for grieving loved ones. Why not continue planning as you always have? 

Life care planning not only involves elder law services such as estate planning documents, protecting assets and income, and public benefits eligibility. It includes provisions for care coordination, family education and decision-making, nursing home advocacy, ensuring appropriate care at home or in a facility, utilizing public and private sources of funds to pay health care costs.

A key tool in a life care plan is estate planning.  Having a Will allows you to make decisions about how your estate should be handled while you are still able to do so.

Important ancillary documents that allow you to appoint an agent to make decisions about your financial property, your healthcare, whether or not you want to be kept alive on life support, who you want to be your guardian if you become incapacitated and to disqualify a person from being serving in this position.

Long-term care insurance, another aspect of life care planning, can be obtained prior to 80 years of age but isn’t an option for people in bad health.  Insurance for some or all of long term care can make a significant difference in the quality of care one receives, whether at home or a facility, as well as preserve assets and income. 

Likewise, the sooner pre-need funeral contracts and burial spaces are purchased, the less cost is incurred.  Making the pre-need irrevocable is necessary when applying for public benefits like nursing home Medicaid.

Though planning for illness and death may seem a morbid exercise it is as necessary as planning to buy a home.  Begin your life care plans by getting out and looking at places, considering what you might like at each potential juncture, getting information on what each level of care costs, determining what you may and may not be able to afford, and putting your plans in writing. Learning how professionals like an elder law attorney or financial planner may assist with creating your life care plan could reduce future costs and help keep you comfortable when the inevitable comes.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Checklist After a Client Dies

Financial advisors might want to consider making a checklist, so that they do not make a mistake in the days proceeding a client's death. This is not only to the advantage of the client but the advisor too. According to The Trust Advisor, "[a]dvisors who manage money have an 8 out of 10 chance of getting fired if they do the wrong things when a client dies." Therefore, a financial advisor might want to consider do the following:

• An advisor might want to offer his or her condolences to the family and take the necessary first steps a few days after the death of the client. The advisor should get the death certificate and locate the likely heir to the family's wealth. In addition, the advisor will probably need to inform the compliance officer at his or her particular firm and follow the necessary procedures that begin when the client dies. 
• This whole process would likely be made easier by the existence of a trust and a trustee. Because trustees have a duty to remain in contact with the client, the trustee will likely know when the grantor of the trust has passed away. Furthermore, the trustee will know what to do when the client passes away and will often continue to manage the trust in the absence of the grantor. If a trust is involved, an advisor might want to ensure that he or she is listed "as the advisor in any successor or transfer [instrument]."
• Before the client passes away, the advisor might want to learn about the client's estate plan and get in contact with his or her estate planning attorney, insurance agent, or any other person that might have helped the individual plan for the future. The advisor does need to get the client's permission before moving forward on this. 
• If the person is an elderly client without a family or relatives, the advisor might want to take note of the location of all of the important documents that a person owns, a person's funeral arrangements, and any important medical documents that the person might own, such as an advance directive and health care proxy. If the client does not have one, then the advisor might want to have the client create an advance directive and health care proxy. 

See Roland McMillan, What To Do When a Client Dies, The Trust Advisor, Sept. 16, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Special Needs Trusts

As I have previously discussed, it is important to consider using special needs trust when creating a person's estate plan if that person has a child or an adult relative with a disability. I feel the following story can illustrate why it is important to carefully structure a special needs trust.

There are times when a person who is meant to protect the disabled person actually takes advantage of his or her fiduciary position. In this particular case, the trustee of the estate of Lucia Fiorani took advantage Ms. Fiorani through theft and mismanagement of the trust. The criminal actions of the trustee continued for years before action was taken to protect the interests of the beneficiary. The misconduct was only discovered after a relative became concerned for Ms. Fiorani's well-being and where the money was going that was left by Ms. Fiorani's parents for her care. Since the discovery, the proper authorities have filed claims against those responsible pursuant to California's elder abuse laws. Thus, it is important to taken into great consideration who should be named the trustee the trust. When these trusts are well-structured, they can protect the beneficiary of the trust from losing any money that was intended for his or her beneficiary. The trust itself has no limit to the amount of funds that someone can place within the trust. In addition, the assets that are placed within the trust do not count towards a person's qualifications for social security benefits. 

See Janet Brewer, The Importance of Special Needs Trusts, JDSupra.com, Aug. 17, 2012.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.

Difficult But Necessary Estate Planning Questions

While many people are probably uncomfortable dealing with issues that force them to confront their own mortality, a testator might want to consider asking himself or herself the following questions so that they provide the following information to his or her attorney.

• The testator might want ask themselves who should raise his or her children if both him and his spouse die?
  • This question could also apply to pet owners, in that a testator might want to think about who will take care of his or her pet following the owner's death.
• A testator might also want to ask himself about who should the receive the testator's property if every person that the testator would normally bequest their property all died in a common accident?
• A testator might also want to disclose information that could alter the estate plan, such as if the testator has descendants from a prior marriage or children that his or her spouse is not aware about.
• Aside from other children, a testator want to consider disclosing information about other relationships that the testator might still have or has had in the past. 
• Recently, ART children have become prevalent. Therefore, a testator might want to disclose information about whether the testator has preserved and frozen genetic material. 
• A testator might want to consider disclosing information about whether the person is a transgendered person.
• A testator might strongly want to think about whether the person has made gifts to family or friends.
• While it might be uncomfortable for many people to think about, it is important for a testator to consider drafting a durable power of attorney and a health care proxy. Furthermore, a testator might want to consider signing a health care directive, which is a document that provides information on whether a testator wants nutrition and hydration after that person is no longer able to make the decision themselves.
• With the rise of the information age, more and more people are using online accounts. A testator might want to consider leaving his personal account information available for his executor to access his accounts.
• A testator needs to think about whether that person has a prenupital or postnupital agreement because these could affect an estate plan.

See Wendy S. Goffe, 12 Estate Planning Questions That Might Make You Squirm, Forbes, Deborah L. Jacobs Blog, July 24, 2012.

More Horror Stories

The following below is an excerpt from Mr. Jeffrey Cramer's blog about a client who faced some difficult problems that the client could have resolved had she and her husband kept their estate planning documents updated. It is especially important to note that not only could the client have avoided these problems, the costs of doing would be less than the cost to correct the problems.

Recently, I consulted with a young woman who has been married approximately one (1) year. Her husband is waiting on a liver transplant and has been for some time. Despite his precarious health situation, the couple did not do any estate planning after being married. She told me she felt like they had “plenty of time” to get around to estate planning.

However, while the husband was recovering from a fairly routine knee surgery, something went horribly wrong and he now suffers from brain damage. He no longer is capable of making decisions on his own. In fact, before his condition was fully understood, he emptied his bank account and ran up his credit cards to buy a boat (which wasn’t even worth close to what he paid for it) and the family is now broke, except for his social security and retirement income.

The wife came to me to talk about establishing a guardianship for her husband. When I explained that it would cost a minimum of $5,000 to $6,000 to establish a guardianship, she indicated that they could not afford to do this. All of their savings are gone. Had they only come to me for basic estate planning, the total cost would have been $1,250 for a complete will package for both of them, there then would have been no need for a guardianship. Instead, the only planning that the husband had done has placed an additional burden on his wife.

He had a several year old power of attorney in which he named an old Army buddy in south Florida as his agent. The Army buddy would prefer not be involved and to let the current wife handle everything. Unfortunately, he is forced to be her go-between because he is the only one with the legal power to manage her husband’s finances.

We always explain that the cost of estate planning involves not only the initial cost, but the costs of updating or “failing to update.” Here is a vivid example of both the financial and emotional cost of “failing to update.”

See Jeffrey A. Cramer, Another Estate Planning Horror Story From The Real World, Cramer Law Center, July 12, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

CLE on Special Needs Planning

The ABA is sponsoring an eCLE entitled, Special Needs Planning: What You Need to Know About Government Benefits. The telephone seminar/audio webcast will be held on Wednesday, July 18, 2012 from 11:00 a.m. to 12:30 p.m. EDT. Please click here to register and receive more information.

CLE on Developments involving the Americans With Disabilities Act

The ABA is sponsoring a CLE entitled, Recent Developments Related to the Americans with Disabilities Act: Resorts, Hotels, Communities for 1.5 CLE Credit Hours.The telephone seminar/audio webcast will be on Wednesday, July 25, 2012 from 1:00 p.m. to 2:30 p.m. EDT. Please click here for more information. A description of the program is provided below:

There have been significant developments under the U.S. Americans with Disabilities Act (ADA) during the past two years. Amendments to the ADA enacted in 2008 became effective during this period. The Justice Department also issued new regulations under ADA that became effective during this period. Meanwhile, the Justice Department has increased its enforcement of the ADA, notably including a significant consent decree in an enforcement action against Hilton Worldwide, Inc. Most recently, the American Hotel & Lodging Association has resisted the Justice Department’s efforts to implement new standards that would require installation of lifts alongside virtually all public accommodation’s swimming pools in the country. This includes hotels, timeshares and condo hotels.

Special Needs Trusts For Disabled Children of Veterans

A military veteran and retiree can use up to 55% of his or her retirement pension to provide for his or her family after death. Under the Survivor's Benefit Plan, a retiree can give up to his current income so that his or her family can receive a monthly stipend. While this is an excellent program, this type of situation can create problems if the retiree has a defendant disabled child. The stipend counts as income and could preclude a disabled child from receiving Medicaid. 

Therefore, Congressman Jim Moran proposed H.R. 4329, or the Disabled Military Child Protection Act, which provides long-term care for the disabled children of members of the armed forces. In addition, the law ensures that the stipend does not preclude a disabled child from receiving Medicaid. It does this by establishing a special needs trust for the child and transferring any benefits to the trust. Income from trusts are not considered to be available assets for Medicaid qualifications; therefore, the stipends cannot affect a child's Medicaid qualifications.

See Bernard A. Krooks, Disabled Military Protection Act Allows Military Families To Include Special Needs Trusts Within The Survivor Benefit Plan, Forbes, Apr. 20, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.