Estate Planning

Tuesday, December 20, 2011

Holiday Traditions: Really Check in With Your Neighbors and Relatives

On Friday night, we gathered with neighbors old and new to celebrate a cherished tradition – our annual progressive dinner.  Traditionally, we begin the year.  We find out about the new babies, weddings and graduations to come.  We learn what colleges the children will attend, and where soon-to-be college graduates will start their careers.  We also check in on aging neighbors to find out about their health scares, their difficulties, the loss of their loved ones.  After moving from house to house for salads, and main courses, we end up with more wine and sweet treats to reminisce about dinners past.  How many have we had?  No one can remember.  But by the end of the evening, we’re looking forward to next year’s dinner, and assigning tasks to make it happen.

Continuing this tradition is important to my family and my neighborhood because it allows us to connect with our neighbors, to get to know them when times are good so that we can help each other when times are not so good.  Without our traditional yearly gathering, we might not realize when our neighbors need our help.

In my practice, I see many people who see their aging or ill family members and friends at the holidays and realize that all is not well.  Sometimes, all has not been well for so long that those family members are now in crisis.

If you are visiting family members who are aging or ill, take the time to talk with them to find out about their health.  Are they seeing a doctor?  What medications are they taking?  How do they keep track of their medications on a daily basis?  Ask them if they have a healthcare proxy or advance directive for healthcare?  Who will make healthcare decisions for them if they are not able?

Although it can be difficult to have a conversation with parents about their finances, ask them if they have appointed someone to make financial decisions for them if they are not able.  Look around the house and see if there are stacks of unopened bills.  Find out if they have long-term care insurance.  Ask where their important financial and legal documents can be found.  If they haven’t appointed anyone to make decisions for them, urge them to do that while they still can.

If your aging family members are still driving, ride with them to see if they are still able to drive safely.  Are they stopping at the stop signs?  Do they forget to look before making a turn?  Do they still remember how to get to places they have been to many times before or do they forget where they are going?  If they are having trouble driving, would a driving school help?  Or, can you help them find transportation so they won’t need to drive anymore?

With married couples, try to talk with each one alone.  Sometimes couples get so good at covering for each other, you don’t realize that one of them might be suffering from dementia.  If one of the couple is ailing, find out how the well spouse is coping.  Is he or she eating and sleeping right?  Is he or she getting help in the home so he or she can get out to see friends, or just get some time to rest and recharge?

Look in the refrigerator, freezer and cupboard.  Is the food in the refrigerator or cupboards moldy or out of date?  Are they going to the grocery store on a regular basis?  If you suspect that they are not eating right, is there a meals-on-wheels program that they might qualify for?

I hope that you will enjoy holiday traditions with family, friends, and neighbors this year.  Will you take time to talk with your family and friends to see whether they might need help in the coming year?

Happy Holidays!

Patti Elrod-Hill





Sunday, December 4, 2011

Medicare: Treat it as Part of Your Financial Plan


Medicare changed things up a bit this year by scheduling open enrollment early.  Because Medicare is in the news, I’ve been getting a lot of calls from clients to ask me about Medicare. While most people understand that they can become eligible for Medicare when they turn 65, they wonder about the types of Medicare plans available, and what plan they should choose.  Today, we’ll talk a little bit about the basics of Medicare, and about how to choose a Medicare Part D prescription drug plan.

Here is the basic Medicare alphabet:

Medicare Part A covers hospital insurance that can help pay for inpatient care at hospitals, skilled nursing facilities, hospice, and home health care.

Medicare Part B covers medically-necessary service such as doctor’s services, outpatient care, home health services, and some other services.  You will pay a premium to be covered by Part B.

Medicare Part C is a Medicare Advantage Plan.

Medicare Part D is the prescription drug coverage.

In order to become eligible for Medicare, you must be age 65, or you must have been receiving Social Security Disability benefits for 24 months.  Most people who are on Social Security or Railroad Retirement benefits will automatically get Medicare Part A and B starting on the first day they turn 65, or when they have completed the full 24 months after beginning to receive Social Security Disability.  One exception is that if you have ALS – Lou Gehrig’s disease- you are eligible for Part A and B in the month your disability begins.

Every year, for those who are qualified for Medicare, there is an open enrollment time when you have the ability to sign up for a new Medicare Part C or Part D plan. 

Normally, the open enrollment period begins in January.  However, this year the open enrollment period began on October 15 and ends on December 7.  If you want to know when to enroll in Social Security Part A and Part B, and when to enroll in Part C and Part D here is a handy chart:

Medicare Part D is probably the most confusing of the Medicare Alphabet Programs.  Medicare Part D is the program that offers prescription drug coverage to those who are qualified for Medicare.  In order to get the drug coverage, an eligible person must join a plan.  The plans are run by private insurers or other private companies approved by Medicare.

Medicare Part D is available if you are otherwise-eligible for Medicare A & B.  If you don’t enroll in Part D when you become eligible, you might have to pay a slight penalty when you do join at a later date.  You can enroll in two basic types of plans:  Medicare Prescription Plans or Medicare Advantage Plans.  The Medicare Advantage Plans are usually HMO’s or PPO’s that give you all of your Part A and B coverage, and in addition may give you drug coverage.  If you choose another Part D plan while already enrolled in a Medicare Advantage Plan that offers a drug plan, you may become disenrolled from your HMO or PPO plan and returned to regular Medicare.

How can you choose the right Medicare Part D plan?  The plans are run by private insurance plans, or private companies, and the cost of the plan is generally based on the prescriptions you use, the “formulary” of the plan, and whether you go to a pharmacy that is within your plan’s network.  The formulary is the list of drugs that a Medicare plan covers.

The website is full of information about the plans that are available, and is also full of advice on how to choose a plan.  To choose a plan, you can enter your zip code and your prescriptions in the formulary finder on Medicare’s website.  The plan finder will then give you a list of providers and will tell you the cost of the plan and the cost of the drugs.  You can then call the providers with any questions you might have.

Erica Dumpel, with Czajkowski Dumpel & Associates, Inc. an experienced healthcare plan advisor, emphasizes that you should research the plans on a yearly basis.  If you have a number of prescriptions, hunting down the right plan can take a lot of time – but can also save you a significant amount of money each year. 

If you miss this year’s open enrollment period, or if you decide not to change plans, be sure to put a reminder on your calendar to review your plan again next year.  In fact, I recommend that you schedule a yearly financial and legal checkup, which should include a thorough review of all of your insurance premiums, co-pays and prescription costs.

Will you start treating your Medicare Plan as part of your Financial Plan?









Wednesday, November 2, 2011

Minor Guardianships: Letters of Instruction In Case of the Unimaginable

Writing Instructions to Potential Guardians


If you have minor children, or children with disabilities, the thought of leaving them suddenly is unimaginable.  Parents know their children- their schedules, their health, their likes and dislikes- but keep most of that knowledge in their heads.  When my kids were growing up, I knew when they needed to be at soccer practice and church, who their doctor was and how to reach her, and how to tell when they were sick.  Other than abbreviations on my calendar and names in my database, there was no formal written schedule of activities or list of important contacts.

Most parents can’t imagine how someone would be able to step in and take care of their children.  It is difficult to comprehend that someone else would have to figure out your children’s complicated schedule, let alone how to raise your child with the values you want them to have.

One of the ways you can help someone who might have to take over for you is to create a letter of instruction for a potential guardian.  What should go in that letter?  Here are some suggestions:

1.  Healthcare Information

The letter should include a detailed guide to your child’s healthcare, including vaccination records, contact information for their physicians and dentists, information about any allergies or prescriptions.  Note which pharmacy you have used in the past, and any over-the-counter medications your child uses on a regular basis.

2.  Your child’s Preferred Activities and the Important People who help with those activities

Although your children’s schedules will change monthly and yearly, the letter could include information about the activities your child enjoys, contact information for coaches, scout leaders and church youth leaders.  You might include a sample of the weekly, monthly or yearly schedule you and your family currently follow.  If your child goes to a summer camp, include information about deadlines for registering for camp.

3.  How to find Important Papers

The letter should include instructions on where to find the child’s birth certificate and passport, and should include the child’s social security number and a copy of the social security card.

4.  Religious Philosophy

If you practice a religion, include instructions on your religious philosophy along with contact information for the church you attend.  Let the potential guardian know if you would like your child to continue to be involved in the religion you practice, or whether you would like your child to accompany the guardian to their religious activities.

5.  Educational Philosophy

Discuss your thoughts and hopes for your child’s education.  Do you want your child to go to public or private school?  What are your plans for secondary education for your child?

6.  Family Tree and Other Important People

List all of the important people in your child’s life – and include contact information for those people.  If you nominate a person who is not a family member, will they know who your family is and how to reach them?  Let the guardian know if it is important for your child to be able to spend time with grandparents, aunts and uncles, or other important people.   

7.   Things that Comfort

What does your child like to do when he or she is upset, unhappy or frightened?  Do they have a special toy or piece of clothing?  Do you read a certain book to them or play music?  Do they have any pets that they rely on for comfort?

8.  Food Likes and Dislikes

Maybe the guardian won’t want to fix macaroni and cheese every night, but they may wonder why your child won’t eat what they fix for dinner.  Let them know any food preferences – as well as quirky food habits.  Be sure to mention any food allergies your child has and any reactions they’ve had to foods in the past.

Of course, this list is just a suggestion for some basic points you might want to cover.  Remember that the information in the letter will need to be updated on a regular basis as your child grows and changes.  If the letter is never needed, you will have a great written record of your child’s life that you can give them when they are adults and don’t remember that they refused to eat anything but hot dogs and used to love to cuddle with Winnie the Pooh when they were sad!




Monday, October 24, 2011

Naming Guardians for Minor Children



Phew!  I’ve reached that point in life where I can relax – not much, but a little- because both of my children are adults and, for the most part, out of the nest.  Until just a couple of years ago, I broke out in a sweat every time I had to go out of town on business by myself.  Not only did I worry about whether my kids would get fed, get their homework done and make it to soccer practice on time, but I also worried about what would happen to them if I had an accident and didn’t make it home. 

If you have minor children, children under the age of 18, I’m sure you worry about that, too.  If you are not around, who will feed them, help them with their homework and get them to soccer practice?

Choosing someone to care for your children is difficult.  No one will care for and love your children the way you do, and, as far as I know, we can’t clone you.  However, if you don’t choose someone to raise your children if you’re not there, the probate court will have to make that choice and the court may not choose someone that you would like to raise your children. 

The only way to nominate a guardian in Georgia is in a will.  However, many people put off doing their estate plan because this choice is so difficult.  Here are a few tips for choosing guardians for your children.

First, make a list of everyone you would trust to take care of your children.  When making this list, don’t restrict yourself to the obvious choices.  Remember that if you choose no one, your children could end up in foster care.  If you had the choice of this person or foster care, would you choose this person?  If so, put them on the list. 

Most people limit their list to family members – parents and siblings- but think about your extended family.  Maybe your aunts, cousins, nieces or nephews would be good choices.  Try to think about whether their philosophy about raising children is similar to yours.

Second, would any of these people truly love your children?  Would they raise the children with the religious, social, and moral values that you would like?

Third, look at the personality.  Are they affectionate?  Good role models?

Fourth, be practical.  Would raising children hamper their lifestyle?  If a couple divorced, or one died, would you choose either one of them?

Fifth, look for someone who’s good, not necessarily perfect.  Remember, as we discussed above, you cannot be cloned.

Sixth, talk to everyone you are thinking of naming.  Make sure they are willing to serve, and explain what will be required of them.  Let them know that they should tell you now if they do not want to be nominated as a guardian of your children.

Finally, above all, make sure that you are the one that makes the choice – not the court.

In the next blog post, we’ll talk about writing letters of instruction for guardians.




Sunday, August 28, 2011

Protecting People with Special Needs: Guardianship of Young Adults

Most parents are conflicted when their children reach their 18th birthday.  For many families, that means their child will soon be leaving home for college, a new job, or the military.  For parents of children with developmental disabilities, it can be very scary when that child turns 18, because the law presumes an 18-year-old is an adult with the legal rights and responsibilities that come with adulthood.  When a child turns18, the parent no longer has the legal authority to make decisions for that child.

Joshua, a good-looking young man with a developmental disability, turned 18 six months ago.  Josh is friendly and outgoing.  They say he never met a stranger.  Josh, who functions intellectually on the level of a second grader, has been known to give his lunch money away on more than one occasion.  Josh does not tell his parents when he is feeling sick, and once cut his arm and used the wall to stop the bleeding. His parents came to me because they are conflicted about whether to seek guardianship of Josh.

Guardianship is a legal relationship created by a court. The guardian has the legal authority to make decisions about the healthcare and living arrangements of another person, called a ward.  The guardian also has the duty to look out for the welfare of the ward.  The relationship is very much like that of parent and child, where the law presumes that the ward is not able to make his or her own decisions about his or her healthcare or living arrangements.

Whether to seek a guardianship can be a difficult decision because parents want their children to gain independence, to learn to function in the world on their own and to make their own decisions.  When someone becomes a ward, they lose the legal ability to make healthcare decisions, to choose where to live, to enter into contracts, and to marry. 

Guardianship in Georgia is granted if the adult “lacks significant capacity to make or communicate significant responsible decisions” about his or her health or safety.  In order to decide whether to grant a guardianship, the court reviews a petition filed by the proposed guardian, appoints a professional to evaluate the proposed ward, and then holds a hearing in the courthouse to gather evidence about the decision-making ability of the proposed ward.

Josh’s parents ultimately decided that they need to become Josh’s guardians in order to continue to make decisions about his healthcare and where he lives, but also to ensure that he would not be enticed into signing any contracts that might bind him to spending money he doesn’t have.  Although they would like for Josh to get married some day, I explained that they can petition the court if and when Josh meets the right person and they believe he is mature enough to marry.

Please give our office a call if you have questions about whether you might need to seek guardianship of a young adult.

Next week, we’ll talk about when guardianship of minors, when that  might be necessary and how to choose guardians for your minor children.

Sunday, July 10, 2011

Planning For a Loved One With Special Needs

 If the last few years have taught us anything, it is that life is not predictable.   The economic crash seemed to come out of nowhere.  The weather appears to be totally weird and unpredictable, with tornadoes and floods occurring with fierce and dangerous intensity.

So, too, our health and physical wellbeing are not entirely predictable.  Despite our best efforts to eat healthy food and exercise regularly, we can have a car accident or suffer a bad reaction to medication and become ill or disabled.

For some of us, our financial resources and health insurance may not be enough to cover our care needs.  When that happens, we sometimes have to seek governmental assistance to provide for our healthcare.

Many of my clients had no idea they would end up depending on Supplemental Security Insurance (SSI) or Medicaid for assistance, but those progams can be a lifeline for those with disabilities and longterm care needs.

How can we plan for our loved ones and family members who are on governmental assistance programs?  How can we provide for their needs without jeopardizing their public benefits programs?

One way is to establish a special needs trust for the benefit of the person with a disability.  A special – or supplemental needs trust, as I’ll call it- is an entity established to hold assets so that those assets are available for  the needs of the person with a disability that are not provided by the governmental benefit.  The person with the disability is not the trustee, does not own the assets, and cannot control the assets, so the assets aren’t counted for purposes of qualifying for benefits.

SSI and Medicaid generally restrict the recipient of those programs from having more than about $2,000 in assets, but the assets in the trust aren’t calculated in that $2,000.  Most of the time, the trust is established by a parent or grandparent, but If the assets did not belong to the person with a disability to begin with, anyone can establish the supplemental needs trust and anyone can contribute assets to that trust.  The trust can be the recipient of gifts or inheritance.

We’ve discussed how to choose a trustee in previous blogposts,  but for a supplemental needs trust I usually recommend appointing a professional trustee to manage the assets in the trust.  The intricacies of public benefits programs can be daunting for most people, so even though they charge for the management,  professionals with experience with supplemental needs trusts can save money in the long run.

So, even though life seems unpredictable, you can at least plan for some of the supplemental needs of your loved one with a disability.


Sunday, July 3, 2011

When Bridget Came To Visit: On Being Prepared

 When Bridget came to visit, she wanted to take my blue and white teacups home with her.  They were shiny and pretty, and fit in her hand just perfectly.  Dick promised they would go to the mall and buy some teacups just like them.

Bridget was in the mid to late stages of Alzheimer’s disease when she and Dick first visited my office.  Dick, a wonderful, patient husband and caregiver to Bridget, was determined to be prepared for whatever legal and financial zingers might hit the couple.  Years before, after Bridget was first diagnosed with Cognitive Memory Impairment, Dick and Bridget had prepared living trusts, powers of attorneys, and healthcare directives.  They came to me to make a few changes to Dick’s living trust and financial power of attorney.   I always recommend that clients update advance directives and powers of attorney to avoid having someone decide that the documents are “stale” and, therefore, not valid.  We prepared new advance directives for Bridget and Dick.  On the day Bridget came to sign, she could not remember that the children whom she had nominated as agents were adults.  In fact, I’m really not sure she could remember who her children were.

With sadness, I told Dick that Bridget could not sign any documents that day.  We agreed to try another day, since those with dementia often have times when they are very alert, and other times when they are not.  Bridget never was able to sign her new advance directive, and soon went to stay in a wonderful memory care facility.   The health care and financial proxies she had already signed worked fine for her, and Dick was able to make her healthcare and financial decisions without any challenges.

Susan, on the other hand, had never executed advance directives for healthcare, financial powers of attorney, or any wills or trusts.  She didn’t think she needed to, since her husband made most of the financial decisions for the couple.  Her family did not push her to do any planning, since they thought it would upset her.  When I visited Susan at the nursing home after her husband died, she told me the nurses were stealing her underwear, she no longer recognized her family members, and she wondered why I was visiting her at work.   Susan swore like a sailor, and insisted that she would not sign “any g. . d. . . papers”, believing that I was trying to steal from her, too.

As a result, her family had to spend months and thousands of dollars to seek guardianship and conservatorship of Susan, a court proceeding which is expensive financially and emotionally for all involved. 

Many folks with Alzheimer’s and other dementias become paranoid and distrustful.  When they hit that stage, it is extremely difficult to get them to agree to do advance directives, financial powers of attorney, or wills.  Why would they agree to sign something that they believe allows folks to steal from them?

As an attorney, I preach that every adult needs to have an advance directive for healthcare, a financial power of attorney, and at least a basic will.   In Susan’s case, her fear of planning led to heartache and hardship for her family.   Could all of this expense and difficulty have been avoided by visiting an attorney’s office while Susan was able to plan for her and her family’s future?

As a footnote, I want to tell you all about Dick, Richard J. Farrell, whom I mentioned above.  Dick has written a book Alzheimer’s Caregiving about his life with Bridget, joys and trials of caregiving, and about his grief when Bridget died after living with Alzheimer’s for nearly 20 years.  Check out his website at to see how you can order a copy.


Sunday, June 26, 2011

Elder Abuse - It's Right Under Your Nose

 Sometimes bad things happen right under our noses, and we don’t want to – or can’t – see.  Elder abuse is like that – we can’t – or don’t want to admit that we see it.

June 15th was Elder Abuse Day, a day intended to draw our attention to a problem that is often ignored. The term “elder abuse” is often in the news, but what exactly is elder abuse?

The World Health Organization defines elder abuse as “a single, or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person.”

Elder abuse is not confined to the poor.  Mickey Rooney, the 90-year-old actor, has accused his 52-year-old stepson of abusing him and taking his money.  He testified before Congress about the growing problem of elder abuse.  

Just last week, I learned of two events which I characterize as elder abuse. 

The daughter of my client, Fred, used the Financial Power of Attorney her father had granted her to transfer almost all of his money into her own bank account.  Before she accomplished this feat, though, she had carefully isolated him from other relatives, friends, and even from me, his attorney.  The assisted living facility (ALF) where he lived was instructed not to allow him to see or talk with a laundry list of people.  In fact, almost everyone he knew was on that list.  The daughter was heard to swear at him, and call him foul and demeaning names.  She neglected to take him to the optometrist and audiologist, with the result that he could not hear or see, and was diagnosed with dementia. 

The other case also involved the caregiver daughter.  She physically abused her mother, and also transferred her mother’s money into her own account.

In both of the cases I described, the elder parent trusted their adult child to care for them in their time of need.  My client, Fred, had only one child, and he hoped and believed he could trust her completely.  He was sure that she had his best interests at heart when she told him that she would help him manage his money and would watch out for all of his healthcare needs.

Fred’s daughter had two documents that she used inappropriately to take advantage of Fred.  She used the fact that she had been named as his agent under an Advance Directive to limit access to her father, and she used a Financial Power of Attorney to transfer all of Fred’s money out of his bank accounts.

What can be done to help elders in these situations?  In Fred’s case, the signs were missed by those around him.  The ALF should have been suspicious of the daughter’s attempts to limit visits and phone calls from friends and relatives.  People in assisted living facilities are presumed to have the capacity to make their own decisions about whom they will visit.  ALF’s should respect the resident’s rights to communicate with whomever they wish, unless the resident has a guardian appointed by a court of law. Here is a link to an article by the State Bar of Georgia on Long-term care residents’ rights:

Those who witnessed the daughter call him names, could have intervened to ask Fred if he needed help or could have reported the daughter to Adult Protective Services.  Here is a link to the website for DHS:

Sometimes we have to be willing to see things we don’t want to see.

Sunday, June 19, 2011

Trust Me - Who Should Be My Trustee?

Once I convinced my client, Mary, that a trust is a safe, and not so scary, way to protect herself and her stuff during any incapacity, she wanted to know who could possibly serve as a backup trustee?   According to Mary, her daughter was a kind and loving person who would do everything she could to support her mother, but her daughter’s financial skills were somewhat suspect.  Mary’s son is a busy family man with a great job, but he seems too busy to help Mary now.

Who could she choose? 

First, what does a trustee do exactly?  A trustee is a fiduciary, which means that he or she has a legal or ethical duty regarding the management of property for another.  Although a trustee may have either the duty to manage the trust assets or the duty to distribute those assets, many trustees both manage and distribute.  A trustee is usually responsible for investing the assets in the trust, distributing those assets to the beneficiaries according to the trust terms, and making sure any required accountings are prepared and that taxes are paid when necessary.

A trustee can be an individual who is a family member or friend.  Parents often want their children to succeed them as trustee.  When deciding whether to have a child as a successor trustee – or when choosing which child – be sure to be realistic about your adult child’s financial abilities.  Make sure that the person you choose understands that the trust will be managed for the benefit of beneficiaries – and that the trustee might not be one of those beneficiaries.  Be aware that a trustee might have a conflict of interest if the trust assets will eventually pass in part or whole to the trustee or his or her family members.  Also, it is best not to choose someone who has financial problems such as large debts, a failing business, or a looming bankruptcy.  Someone with financial issues might be tempted to borrow or use trust assets for his or her own benefit, despite the terms of the trust.

A trustee can also be a professional individual, like a lawyer or CPA, who can be hired to serve as a trustee.  Trustees may charge a percentage of the assets in the trust, or an hourly fee for any time spent administering the trust.

Of course, a bank or trust company may also serve as a trustee.  Generally, a bank or trust company will have a trust department and will hire employees to serve as Trust Officers with primary responsibility for administering the trusts.  The bank or trust company will charge a fee – usually a percentage of trust funds – to serve in that capacity.  Many banks and trust companies will only serve as a trustee if the assets in the trust are whatever minimum amount the bank or trust company deems appropriate for their business.

You can also choose co-trustees who will work together to administer the trust.  Sometimes it makes sense to have a professional or corporate trustee along  with a family member.  In that case, the family member’s role might be to make sure the professional or corporate co-trustee is aware of the needs of the beneficiary and is making investment and distribution decisions appropriate to the circumstances.

The best way to choose a trustee is to start with a list of relatives, friends, business or professional people you know, and banks and trust companies, and think hard about their ability to manage money.  Think about their character and ethics, and choose the best from that list. 

Sunday, June 5, 2011

Trust Me, It's Like A Little Red Wagon


Trust Me, It's Like A Little Red Wagon

Mary, an independent, strong-willed woman all of her life, realized that she might need help managing her finances.  She came to me with concerns that her memory might be slipping a little, and she was afraid that she might forget to pay her bills.  After assuring her that she was fine, I encouraged her to consider placing her assets in a trust so that she could write her own rules for management of those assets.  Mary was skeptical.  “Trusts are way too complicated for me!  I don’t even know what a trust is. And who would be the trustee?” 

I explained that a trust is very much like that little red wagon you had when you were a kid.   I have a picture of my sister hauling me around in a red Radio Flyer wagon when I was about three years old, and I remember using that wagon to cart my Barbie dolls to the neighbor’s house.  I also remember that I was the boss of that wagon, and would only let my best friend, Paula, touch that wagon and the Barbies in it.

So, how is a trust like that wagon?

A wagon is a receptacle – a place to put your “stuff”.  When you were a kid, you probably put all of your important toys, and things you found by the side of the road, inside that wagon.  You took the handle of the wagon and pulled the “stuff” wherever you wanted it to go.  You could take things out of the wagon, or put new things in the wagon, whenever you wanted.  When you got tired, you put down the handle.  If you wanted, you could allow someone else to take the handle and haul your stuff for you.  You made the rules for your wagon.

A trust is like that.  You put your assets – your adult “stuff” – in the trust.  While you are alive and well, you can be the trustee.  The trustee is the person that puts the stuff in the trust, makes sure the stuff in the trust is taken good care of, and takes the stuff out of the trust whenever necessary.  When you no longer want to be the trustee, or you can no longer serve as trustee because of incapacity or death, someone else will pick up the handle and serve as the trustee. 

As the trust maker, you get to decide the rules of the trust.  Just like you could decide who got to pull your wagon, you get to decide who will be the trustee.  You can also decide who will benefit from the things in that trust and when they can benefit. 

Unlike the rules you made up as a child, though, the rules of the trust are written in a document so that the person serving as trustee knows the rules and must legally follow those rules. 

In the next blog post, I’ll discuss how to decide who should be the trustee – who can pull your little red wagon.

Sunday, May 22, 2011

Alternatives to the Joint Account: The Pros and Cons of a Power OF Attorney




So, if you’re telling me not to put my daughter on my accounts, what are the alternatives?  How can I be sure I will have someone to take care of my financial affairs if I’m not able to?

In my last post, I told the story of Mary and her daughter, Nancy.  I pointed out the pitfalls to having adult children – or other people- as joint owners on real estate and bank accounts.  I promised I would share some alternatives to joint accounts.

One alternative is to appoint someone as an agent under a financial power of attorney.  The agent is authorized to make financial decisions for you if you are not able to make decisions – or if you just don’t want to make those decisions any more.  A financial power of attorney can be for a one-time transaction – like buying or selling your home – or it can be for any and all financial transactions.  A financial power of attorney should be durable, meaning that it will still be in effect even if you no longer have the mental capacity at the time of the transaction.  

Some advantages are that if you become suddenly incapacitated, you have someone with the legal authority to step in and make your financial decisions while you are incapacitated.  In addition, if you are okay but just need  someone to help you make sense of information, your agent can discuss your financial affairs with your insurance company, your financial institutions or your CPA.  Your agent can then explain the information and help you understand  so that you can make your own decisions. You can also appoint an agent under power of attorney to have authority to sign checks for you if you need some help paying your bills.

What are some downsides to the financial power of attorney?  We sometimes call a power of attorney document a “blank check.”  When you appoint someone as your agent under power of attorney, you are giving them lots of power with no instructions on how to use that power.  Imagine giving someone a blank check and telling them to go out and buy you a house without telling them where you want to live or how much you have to spend.  Chances are that person would buy a house in a neighborhood where you had no desire to live at a price you couldn’t afford.  Giving someone the authority to spend your money without giving them instructions can be frustrating and dangerous for both you and your agent.

Another downside is that the financial power of attorney dies when you do. The agent under a financial power of attorney has absolutely no legal authority to handle your finances after your death.  That means that upon your death, there is no one with the legal authority to deal with your finances, and your family must often wait until the probate court judge appoints someone to administer your estate before they can access your bank accounts.

I generally recommend that clients have an agent named in a durable power of attorney for finances, but I also warn them to have a discussion with the agent about when it is appropriate to use the power, and to point out the limits of that power.

In my next post, we’ll talk about another alternative to the joint account – the living trust.


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The Elrod-Hill Law Firm,LLC assists clients with Estate Planning, Veterans Benefits, Medicaid, Elder Care Law, Probate, Special Needs Planning and Pet Trusts in the North Atlanta area including the counties of Dekalb, Gwinnett and Fulton.

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