Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

pandemic

Does Pandemic have an Impact on Financial Powers Of Attorney?

If you’re concerned about the consequences of contracting COVID-19, you’d typically create an advanced directive, a medical power of attorney and a HIPAA release to give authority to those you want to have access to your medical information. These documents are intended to both state your medical care wishes and specify who can make medical decisions for you, if you’re unable.

Forbes’s recent article entitled “If You Lose It, Don’t Lose It: Financial Powers Of Attorney In A Covid-19 World” says that sometimes the issue of money is lost in the confusion. If you’re in the hospital or otherwise unavailable, who do you want to take care of any of your immediate financial issues?

People frequently associate this issue with just writing checks, like paying the mortgage. If it’s deducted automatically, it should be okay, and the other bills can wait until they recover. However, some financial issues are planning-related, and those can’t wait, like in late December when you want to make a Roth IRA conversion but you’re in a hospital. You might also want to make a contribution to your favorite charity, since the CARES Act provides a $300 non-itemized charitable deduction. If you are incapacitated, you need a trusted agent who can make important financial decisions for you and execute them on your behalf.

A financial power of attorney (POA) is often the answer. It is separate from a medical POA but equally as important. Without a binding financial POA, your incapacity will have a major financial impact. A financial POA gives you the power to name an agent to act on your behalf, if you lose the physical or mental capacity to handle your own finances.

If you are worried about the financial risk related to a sudden impairment from an event, such as the coronavirus, ask an experienced estate planning attorney about creating a springing and durable POA. “Springing” means the power doesn’t trigger until you’ve lost legal capacity to handle your own finances. “Durable” means that your agent continues to retain the power to act on your behalf, until you either recover or die. This is the preferred approach because they retain control until something bad happens (causing it to “spring” into action) and then their agent maintains control, even if some unscrupulous individual attempts to hijack the process (proving the power is “durable”).

Note that a POA may not be recognized when it is presented to an individual or company. Financial institutions have been hesitant to accept a financial POA submitted by the principal’s agent because they’re concerned about liability if the POA turns out to be fraudulent, or if the agent acts contrary to the accountholder’s desires. Without the institution’s agreement, the incapacitated person’s plans won’t happen. However, many states have addressed this.

Many people are creating “just in case” estate planning documents to deal with the possibility of contracting COVID-19. Ask an experienced estate planning attorney about creating a financial POA.

Reference: Forbes (Oct. 27, 2020) “If You Lose It, Don’t Lose It: Financial Powers Of Attorney In A Covid-19 World”

estate plan audit

Does My Estate Plan Need an Audit?

You should have an estate plan because every state has statutes that describe how your assets are managed, and who benefits if you don’t have a will. Most people want to have more say about who and how their assets are managed, so they draft estate planning documents that match their objectives.

Forbes’ recent article entitled “Auditing Your Estate Plan” says the first question is what are your estate planning objectives? Almost everyone wants to have financial security and the satisfaction of knowing how their assets will be properly managed. Therefore, these are often the most common objectives. However, some people also want to also promote the financial and personal growth of their families, provide for social and cultural objectives by giving to charity and other goals. To help you with deciding on your objectives and priorities, here are some of the most common objectives:

  • Making sure a surviving spouse or family is financially OK
  • Providing for others
  • Providing now for your children and later
  • Saving now on income taxes
  • Saving on estate and gift taxes in the future
  • Donating to charity
  • Having a trusted agency manage my assets, if I am incapacitated
  • Having money for my children’s education
  • Having retirement income; and
  • Shielding my assets from creditors.

Speak with an experienced estate planning attorney about the way in which you should handle your assets. If your plan doesn’t meet your objectives, your estate plan should be revised. This will include a review of your will, trusts, powers of attorney, healthcare proxies, beneficiary designation forms and real property titles.

Note that joint accounts, pay on death (POD) accounts, retirement accounts, life insurance policies, annuities and other assets will transfer to your heirs by the way you designate your beneficiaries on those accounts. Any assets in a trust won’t go through probate. “Irrevocable” trusts may protect assets from the claims of creditors and possibly long-term care costs, if properly drafted and funded.

Another question is what happens in the event you become mentally or physically incapacitated and who will see to your financial and medical affairs. Use a power of attorney to name a person to act as your agent in these situations.

If, after your audit, you find that your plans need to be revised, follow these steps:

  1. Work with an experienced estate planning attorney to create a plan based on your objectives
  2. Draft and execute a will and other estate planning documents customized to your plan
  3. Correctly title your assets and complete your beneficiary designations
  4. Create and fund trusts
  5. Draft and sign powers of attorney, in the event of your incapacity
  6. Draft and sign documents for ownership interest in businesses, intellectual property, artwork and real estate
  7. Discuss the consequences of implementing your plan with an experienced estate planning attorney; and
  8. Review your plan regularly.

Reference: Forbes (Sep. 23, 2020) “Auditing Your Estate Plan”

estate planning documents

What Estate Planning Documents Do I Need for a Happy Retirement?

Estate planning documents are made to help you and your family, in the event of your untimely demise or incapacitation.

These documents will give your family specific instructions on how to proceed.

The Winston-Salem Journal’s recent article entitled “4 Must-Have Documents for a Peaceful Retirement” looks at these critical documents in constructing an effective estate plan.

  1. Power of Attorney (POA). If you become incapacitated or become unable to make your own financial decisions, a POA will permit a trusted agent to manage your affairs. Have an estate planning attorney review your POA before it’s executed. You can give someone a limited POA that restricts their authority to specific transactions. You can also create a springing POA, which takes effect only at the time of your incapacitation.
  2. Will. About 40% of Americans actually have a will. Creating a valid will prevents you from leaving a mess for your heirs to address after you die. A will appoints an executor who will manage your affairs in a fiduciary manner. The will also details your plan for the distribution of your property. Make certain that your will is also in agreement with other documents you’ve set up, so it doesn’t create any questions.
  3. TOD/POD Designation Forms. A Transfer-on-Death (TOD) or Payable-on-Death (POD) designation lets you to assign your investment accounts to a named beneficiary. The big benefit here is that accounts with a named TOD/POD beneficiary pass directly to that person when you die. Any accounts without a TOD/POD beneficiary will be subject to the terms of your will and will be required to go through the probate process.
  4. Healthcare POA/Advance Directives. These are significant health-related documents. A healthcare POA allows your named agent to communicate your wishes to medical professionals, if you are unable. They also include instructions as to whether you want to have life-saving measures performed, if you have a cardiac or respiratory arrest. These healthcare documents also remove the need for your family to make difficult decisions for you.

Reference: Winston-Salem Journal (Sep. 20, 2020) “4 Must-Have Documents for a Peaceful Retirement”

Join Our eNewsletter

Recent Posts
Categories