What Documents are Included in Advance Care Planning?

Starting discussions earlier helps ensure that a person with dementia stays involved and understands the planning process. In the same fashion, regular reviews of plans over time are beneficial for ensuring that their wishes are carried out.

Health News’ recent article entitled “Can Someone With Dementia Sign Legal Documents?” cautions that, when family members don’t know the preferences of their loved one, they have difficulties and stress in making decisions. Family members may also have feelings of guilt, self-doubt and stress while making advanced care decisions.

Laws in each state may differ. Working with an experienced elder law attorney can help seniors interpret state laws, plan how wishes should be carried out and understand financial options.

Geriatric care managers, trained social workers, or nurses can also offer support to those living with dementia, as well as their families.

While advance care planning, families and their loved ones with dementia should create a plan for long-term care and plan for funeral arrangements in advance.

Advance care planning documents commonly include the following:

A durable power of attorney for healthcare names someone to function as a proxy for the person with dementia, when he or she may be unable to make healthcare decisions for themselves.
A living will includes an individual’s wishes for end-of-life treatment. This can concern specific procedures such as dialysis, tubal feeding, or blood transfusion. If the person becomes permanently unconscious (coma), families can make treatment decisions based on wishes expressed in a living will.
A do-not-resuscitate order (DNR) is put with a patient’s chart when the patient doesn’t want to receive cardiopulmonary resuscitation (CPR) if their heart stops or breathing ceases. A doctor needs to sign these DNR orders before they can be placed in the patient’s charts.

Advance care planning can be a sensitive topic for families and those with dementia.

Getting medical and legal advice early is helpful in planning advance care. Involving the person with dementia in the planning process also helps families ensure that the wishes of the patient are respected.

Reference: Health News (Jan. 11, 2023) “Can Someone With Dementia Sign Legal Documents?”

What Is Needed in Estate Plan Besides a Will?

Having a will is especially important if you have young children, says FedWeek’s recent article entitled “Estate Planning Doesn’t Stop with Making a Will.” In your will, you can nominate guardians, who would raise your children in the event neither you nor your spouse is able to do so.

When designating a guardian, try to be practical.

Remember, your closest relatives—like your brother and his wife—may not necessarily be the best choice.

And keep in mind that you’re acting in the best interests of your children.

Be sure to obtain the consent of your guardians before nominating them in your will.

Also make sure there’s sufficient life insurance in place, so the guardians can comfortably afford to raise your children.

Your estate planning isn’t complete at this point. Here are some of the other components to consider:

Placing assets in trust will help your heirs avoid the hassle and expense of probate.
Power of Attorney. This lets a person you name act on your behalf. A “durable” power will remain in effect, even if you become incompetent.
Life insurance, retirement accounts and payable-on-death bank accounts will pass to the people you designate on beneficiary forms and won’t pass through probate.
Health care proxy. This authorizes a designated agent to make medical decisions for you, if you can’t make them yourself.
Living will. This document says whether you want life-sustaining efforts at life’s end.

Be sure to review all of these documents every few years to make certain they’re up to date and reflect your current wishes.

Reference: FedWeek (Dec. 28, 2022) “Estate Planning Doesn’t Stop with Making a Will”

Is Estate Planning and Writing Will the Same Thing?

An estate plan is a broader plan for your assets that may apply during your life as well as after your death. A will states where your assets will pass after you die, who will be the guardian of your minor children and other directions. A will is often part of an estate plan, but an estate plan covers much more.

Yahoo’s recent article entitled “How Is Estate Planning Different From Will Planning?” says that if you’re thinking about writing your will or creating an estate plan, it can be a good idea to speak with an experienced estate planning attorney.

A will is a legal document that describes the way you want your assets transferred after your death. It can also state your wishes when it comes to how your minor children will be cared after your death. Wills also nominate an executor who’s in charge of carrying out the actions in your will.

Without a will, your heirs may spend significant time, money and energy trying to determine how to divide up your assets through the probate court. When you die intestate, the succession laws where you reside determine how your property is divided.

Estate planning is much broader and more complex than writing a will. A will is a single tool, and an estate plan involves multiple tools, such as powers of attorney, advance directives and trusts.

Estate planning may include thinking through topics even beyond legal documents, like deciding who has the power to make healthcare decisions on your behalf while you’re alive, in addition to deciding how your assets will be distributed after your death.

Therefore, wills are part of an estate plan. However, an estate plan is more than just a will.

A will is just a first step when it comes to creating an estate plan. To leave your family in the best position after your death, create a comprehensive estate plan, so your assets can end up where you want them.

Reference: Yahoo (Oct. 20, 2022) “How Is Estate Planning Different From Will Planning?”

It Is Important to Update Your Estate Plan

Individuals who have a will, a power of attorney for health care, a financial power of attorney and a living will might believe they are done with estate planning. They’re only half right. There are many reasons an estate plan needs to be revised or updated, as explained in the recent article “10 reasons to update your estate plan” from American Legion.

New children, grandchildren, or a change in heirs. Most estate plans make provisions for children and heirs who are living when you die. If you have a specific transfer in your estate plan, a new child or one who has not been included in your will may receive a smaller inheritance, or no inheritance at all.

Here’s an example: Jane Doe has a $1 million estate and left a home valued at $400,000 to her first-born son Jason. She divided the rest of her estate, with 1/6 of the balance going to Jason and 5/6 to Justin. If a third child is born, depending on the laws of her state, the third child might receive nothing. Family strife or litigation could easily be the legacy she leaves. Thus, the arrival of a new heir is a reason to update your estate plan.

If you are married and move to a different state, there may be laws impacting ownership and inheritance. Some states are “common law” property states, others are “community property” states. If you move, clarify the ownership of your property as either separate or jointly owned.

Some states still have state inheritance or estate taxes. Many have taxes applied at lower levels than the federal exemption per person. Depending on who your heirs are and the state, you may be giving heirs a large tax liability, in addition to an inheritance.

Power of Attorney laws also vary from state to state, as do living wills or advance directives. You’ll want to be sure your medical planning documents reflect your state’s laws.

Selling or buying a major asset can change your plan and its results. If you transfer a property which has appreciated in value and a large estate tax is to be paid from your estate, beneficiaries could receive less than you intended.

Most estates contain cash, cash equivalents, stocks, real estate and retirement accounts. If your retirement accounts, including 401(k)s, IRAs, pensions, or other accounts, have become the largest portion of your estate, you should review the accounts and their tax impacts on heirs.

Families with unmarried brothers and sisters often receive an inheritance and remember their surviving siblings with an inheritance. However, if there are two or three unmarried siblings, one will inevitably become the survivor and hold most of the assets. If you have included a sibling in your estate plan, there is also the chance they will die before you.

Single people have different estate plans than married couples. A single person who transfers assets to a former spouse will not qualify for the unlimited marital deduction. If there is a divorce and beneficiary designations on retirement plans and insurance policies are not updated, the named person will receive the assets.

When a will is created, it names an executor and a successor executor. If the primary executor predeceases the person making the will, a new executor will need to be added. It’s always better to have two candidates for a position than one.

Estate plans are impacted by changes in asset value, changes in the family and changes in federal and estate law. Every three to five years, meet with your estate planning attorney to review your plan and be sure it still accomplishes what you want.

Reference: American Legion (Nov. 28, 2022) “10 reasons to update your estate plan”

The Basics of Estate Planning

No matter how BIG or small your net worth is, estate planning is a process that ensures your assets are handed down the way you want after you die.

Forbes’ recent article entitled “Estate Planning Basics” explains that everybody has an estate.

An estate is nothing more or less than the sum total of your assets and possessions of value. This includes:

Your car
Your home
Financial accounts
Investments; and
Personal property.

Estate planning is the process of deciding which people or organizations are to get your possessions or assets after you’ve died.

It’s also how you leave directions for managing your care and assets if you are incapacitated and unable to make financial or medical decisions. That is done with powers of attorney, a healthcare directive and a living will.

Your estate plan details who gets your assets. It also designates who can make critical healthcare and financial decisions on your behalf should you become incapacitated. If you have minor children, your estate plan also lets you designate their legal guardians, in case you die before they reach 18. It also allows you to name adults to safeguard their financial interests.

Your estate plan directs assets to specific entities or people in a legally binding manner. If you want your daughter to have your coin collection or your favorite animal rescue organization to get $500, it’s all mapped out in your estate plan.

You can also create a trust to safeguard a minor child’s assets until they reach a certain age. You can also keep assets out of probate. That way, your beneficiaries can easily access things like your home or bank accounts.

All estate plans should include documents that cover three main areas: asset transfer, medical needs and financial decisions. Ask an experienced estate planning attorney to help you create your estate plan.

Reference: Forbes (Nov. 16, 2022) “Estate Planning Basics”

What Documents are Needed in an Emergency?

Most people don’t have any idea where to start when it comes to their emergency documents. This often keeps them from going anywhere near their estate planning. This is a big mistake, says a recent article, “3 tasks your family needs to complete to ease any anxiety over unexpected emergencies,” from MarketWatch.

Estate planning is not just about wealthy people putting assets into trusts to avoid paying taxes. Estate planning includes preparing for life as well as death. This includes a parent preparing for surgery, for instance, who needs to have the right documents in place so family members can make emergency medical or financial decisions on their behalf. Estate planning also means being prepared for the unexpected.

Power of Attorney. Everyone over age 18 should have a POA, so a trusted person can take over their financial decisions. The POA can be as specific or broad as desired and must follow the laws of the person’s state of residence.

Medical Directives. This includes a Medical Power of Attorney, HIPAA authorization and a Living Will. The Medical POA allows you to appoint an agent to make health care decisions on your behalf. A HIPAA authorization allows someone else to gain access to medical records—you need this so your agent can talk with all medical and health insurance personnel. A living will is used to convey your wishes concerning end of life care. It’s a serious document, and many people prefer to avoid it, which is a mistake.

All of these documents are part of an estate plan. They answer the hard questions in advance, rather than putting family members in the terrible situation of having to guess what a loved one wanted.

An estate plan includes a will, and it might also include a trust. The will covers the distribution of property upon death, names an executor to be in charge of the estate and, if there are minor children, is used to name a guardian who will raise them.

A list of important information is not required by law. However, it should be created when you are working on your estate plan. This includes the important contacts from doctors to CPAs and financial advisors. Even more helpful would be to include a complete health profile with dates of previous surgeries, current medications with dosage information and pharmacy information.

Don’t overlook information about your digital life. Names of financial institutions, account numbers, usernames and passwords are all needed if your agent needs to access funds. Do not place any of this information in your will, as you’ll be handing the keys to the vault to thieves. Create a separate document with this information and tell your agent where to find the information if they need it.

Reference: MarketWatch (Nov. 19, 2022) “3 tasks your family needs to complete to ease any anxiety over unexpected emergencies”

Can I Protect My Elderly Parents?

Estate planning requires the ability to be realistic about current health and assets, while considering the inevitable changes to come. For adults with aging parents, having a well-thought out estate plan, regardless of the size of the estate, becomes more urgent as the time to use the documents draws closer. A recent article, “Accessing needs of aging parents,” from The News-Enterprise explains the steps adult children need to take to protect their parents.

There are four key factors to consider: medical needs, housing and care needs, finances and legal needs. All require candid, non-emotional assessments.

Start with medical, housing and care needs. Consider the next five years. Is it likely their medical condition may decline? How will their present home work, if they are unable to manage steps or need to sleep and toilet on the same level? If their home is not conducive for aging in place, will they consider moving to a better situation—or can they afford to make any changes?

Next, examine health and care needs. Do they have long-term care insurance or do they expect to apply for Medicaid? If one spouse will need memory care or one spouse dies, will the surviving spouse have the resources needed to remain in home and receive the care they need? An experienced estate planning attorney will be able to evaluate their financial situation with regard to becoming eligible for Medicaid, if this will be needed. There is a five-year look-back period for Medicaid, so advance action is necessary to protect assets.

Do they have any estate planning documents in place? Is there a will, and when was it prepared? Ask any estate planning attorney how many times seniors have told their children a will exists, only for the children to learn the will is forty years old, woefully out of date and declared invalid by the probate court. Deceased individuals may be listed as agents for Power of Attorney and Medical Power of Attorney. Funds left for heirs may no longer exist. Laws for power of attorney may not include required provisions as a result of changes to the law.

More complicated issues may exist. If appreciated real estate property has been deeded to loved ones to protect the property from nursing home costs, are the beneficiaries prepared to pay the resulting taxes? If deeded real estate property was intentionally left unrecorded, transferring property could become a legal quagmire.

The best solution is to have an experienced estate planning attorney meet with the parents, review any existing documents and prepare an updated set of documents to achieve the parent’s goals, protect them in case of medical emergencies and allow parents and children to gain the peace of mind of knowing they are ready for the future. This includes a will, power of attorney, health care power of attorney, HIPAA release, living will and, depending upon the situation, may also include trusts.

Reference: The Times-Enterprise (Nov. 5, 2022) “Accessing needs of aging parents”

Major Blunders in Estate Planning

Kiplinger’s recent article entitled “5 Common Estate Planning Mistakes to Avoid” warns that if you overlook an important step or make a misstep in your estate planning, everything could be undone. You could instead burden your family with a challenging and headache-inducing estate.

There are many ways to get things wrong. Let’s look at a few:

Not preparing for incapacity. The main reason to create a will is because we know that some day we’ll pass away. A will lets your family know how to distribute your property and other assets. A well-thought-out estate plan should identify the people authorized to make important decisions on your behalf regarding finances, health care and other critical matters. This is accomplished with powers of attorney. Once you are unconscious or afflicted with dementia, it will be too late. Make a list of decision-makers now, inform them of your wishes and create the necessary powers of attorney.
Failing to include funeral and burial wishes. If you can purchase a burial plot and make funeral plans, put this in your estate planning documents. If you don’t, it may mean a lot of work for your family after your death. Name someone to be in charge of the funeral and burial arrangements and make sure that person understands your wishes. If you don’t detail your wishes prior to your death, it may become an issue for your loved ones.
Ignoring the tax implications of transferring property. As generous as it may seem to give property to your family during your lifetime, it is usually much smarter – and far more generous – to delay the transfer until you’re deceased. If you convey the deed to property to your next of kin before you die, they may see a hefty tax bill whenever they sell the same property. That’s because the basis for that property will be tagged to the date on which you made your purchase, not the date you made your gift. As a result, it could leave your heirs scrambling to pay an enormous sum that would have been averted, had they been granted the deed after your death.
Failing to designate backups for decision-makers. The best of plans can go south without a secondary beneficiary. This will address any unforeseen events. Name backups for your executor and other decision-makers. If they can’t fulfill their obligations, a court will name substitutes unless you’ve already planned for these contingencies.
Not tracking beneficiary designations. In addition to stating the beneficiaries and their respective shares in your will, you must also communicate a directive to your bank that sets forth the interests in your account after your death. If you fail to do this, the bank’s rules will override anything you’re written in your will as to that account. That means your percentages will be different from those expressed in your will.

Take steps now to make certain there are no hidden issues that will haunt your family after you’ve passed.

Reference: Kiplinger (Oct. 17, 2022) “5 Common Estate Planning Mistakes to Avoid”=

Important Documents in Your Estate Plan

The Durable Power of Attorney (DPOA) and a Health Surrogacy or Advanced Health Directive are used for situations where you can’t make decisions for yourself, explains Parent Your Parents recent article entitled “What You Should Know about Durable Powers of Attorney and Health Surrogacies.”

A Durable Power of Attorney (DPOA). This is written authorization to represent or act on another’s behalf in private affairs, business, or legal matters. The person authorizing the other to act is the “principal” or “grantor.” The person given the power is called the “agent” or “attorney-in-fact.” There are two types of power of attorney: (1) a Springing Durable Power of Attorney, which “springs” into action when you become incapacitated; and (2) a General Durable Power of Attorney, which becomes effective as soon as it is signed and continues until you die.

If you live in a “Springing POA” state and move to a “Durable POA” state, the document is treated as a Durable Power of Attorney, and your agent can act without your consent. You should consider who you trust to be your agent.

It is typically a family member, a friend, or a professional agent. You should also have an alternate designated who can step in if something happens to your first choice and he or she is unable to serve.

Health Surrogacy or Advanced Directive. This document is called a variety of things: a Power of Attorney for Health, Designation of Health Surrogate, or a Living Will. No matter what it’s called, you’re appointing an adult to make healthcare decisions for you when you are unable to make them for yourself.

When you’re in an accident, unconscious, or injured and need a specific medical procedure, the designated agent steps in and makes important decisions in your stead.

If you’re in your 60s but still don’t have a legal document describing what you want to happen when you’re incapacitated, speak with an experienced estate planning attorney.

Your family, close friends, and healthcare professionals should know how you feel about end-of-life treatments and have your detailed directions as to various circumstances and how you would like them handled.

Reference: Parent Your Parents (Sep. 15, 2022) “What You Should Know about Durable Powers of Attorney and Health Surrogacies”

How to Manage Aging Parent’s Finances

A day will come when age begins to catch up with your parents and they will need help with their finances. Even if your parents don’t want to feel dependent, when you think they need your assistance, you can approach the issue with sensitivity and extend your support for the management of their finances, says Real Daily’s recent article entitled “5 Tips to Manage an Aging Parent’s Finances.” Here are some tips:

Start the conversation early. Your parents may not need your help with the handling of their financial matters right away. However, it is smart to begin the conversation early. Approach the issue of who will manage the financial responsibilities when they’re no longer able to do it. Parents should select a trusted family member by providing their advance written consent. This will let you to talk about your parents’ financial issues with financial advisors, doctors and Medicare representatives and carry out timely financial planning.
Create a list of all pertinent legal and financial documents. Prepare a list of your parents’ important contacts, bank account details and locations of any stored documents, like wills, property deeds, insurance policies and birth certificates. Make certain all information and documentation is accurate and up to date. If information needs to be modified because of a change of circumstances, this is time to apprise them of it and help them do what’s needed.
Consider executing a power of attorney. A competent adult can sign a power of attorney to authorize another person to make decisions on their behalf. A power of attorney for a specific purpose may cover medical, financial, or other decisions, and it may be designed to give limited or more sweeping powers. When your parents sign a power of attorney with you named as their attorney in fact, it will legally empower you to make key decisions when they can’t. An elder law attorney can help you draft an appropriate power of attorney according to your situation.
Document your actions and keep others in the know. Transparent communication will help you avoid misunderstandings or controversy within your family. Keep your parents, siblings and any other loved ones involved with your family informed about your actions. No matter how noble your intentions may be, if others are kept in the dark, it can raise questions about your motives. Managing the finances of aging parents is a lot of work, and you can ask for the support of family members or at least keep the lines of communication open.
Don’ comingle your finances with your parents’ plans. While it may look to be a convenient or cost-effective thing to do, it’s never a good idea to combine your parents’ finances with your own. Keep them separate. Using your parents’ money for your purposes or your own money to help them out is usually a slippery slope that should be avoided. Don’t forget about your own financial goals and retirement savings while you focus on helping your parents.

Reference: Real Daily (Sep. 9, 2022) “5 Tips to Manage an Aging Parent’s Finances”

Estate Planning Blog Articles

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

What Documents are Included in Advance Care Planning?

What Is Needed in Estate Plan Besides a Will?

Is Estate Planning and Writing Will the Same Thing?