California Probate - Law Offices of Janet Brewer Blog

What Estate Planning Documents Should I Have when I Retire?

“Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.”

Research shows that most retirees (53%) have a last will and testament. However, they don’t have six other crucial legal documents.

Money Talks News’ recent article entitled “6 Legal Documents Retirees Need — but Don’t Have” says in fact, in this pandemic, 30% of retirees have none of these crucial documents — not even a will — according to the 20th annual Transamerica Retirement Survey of Retirees.

In addition, the Transamerica survey found the following among retirees:

• 32% have a power of attorney or medical proxy, which allows a designated agent to make medical decisions on their behalf
• 30% have an advance directive or living will, which states their end-of-life medical preferences to health care providers
• 28% have designated a power of attorney to make financial decisions in their stead
• 19% have written funeral and burial arrangements
• 18% have filled out a Health Insurance Portability and Accountability Act (HIPAA) waiver, which allows designated people to talk to their health care and insurance providers on their behalf; and
• 11% have created a trust.

The study shows there is a big gap that retirees need to fill if they want to be properly prepared for the end of their lives.

The coronavirus pandemic has created an even more challenging situation. Retirees can and should be taking more actions to protect their health and financial well-being. However, they may find it hard while sheltering in place.

Now more than ever, seniors may need extra motivation and support from their families and friends.

The Transamerica results shouldn’t shock anyone. That is because we have a long history of disregarding death, and very important estate planning questions. No one really wants to ponder their ultimate demise, when they can be out enjoying themselves.

However, planning your estate now will give you peace of mind. More importantly, this planning can save your heirs and loved ones a lot of headaches and stress, when you pass away.

Talk to an experienced estate planning attorney today to get your plan going.

You can read more about how our process works, how we can make sure we are a good fit for your needs, and how to get started today right here.

Reference: Money Talks News (Dec. 16, 2020) “6 Legal Documents Retirees Need — but Don’t Have”

What are Options for Powers of Attorney?

“Powers of attorney come in different forms, each suited for a specific purpose. They serve as useful tools in any estate-planning effort.”

Power of attorney (POA) documents are an important component of an estate plan. There are four types. You should review each carefully to see which one will work best for you in your situation. What is required for a power of attorney, depends upon what power you want to authorize, says Carmel’s Hamlet Hub in a recent article titled “4 Types of Power of Attorney.”

Limited Power of Attorney. If you need someone to act on your behalf for a limited purpose, use a limited power of attorney. This will specify the date/time after which the power no longer is in effect.

General Power of Attorney. This is an all-encompassing power of attorney, in which you assign every power and right you possess as an individual to a certain party. It’s typically used where the principal is incapacitated. It is also used with those who don’t have the time, skills, knowledge, or energy to handle all of their financial matters. The power you assign is in effect for your lifetime, or until you are incapacitated (unless it is also “durable”). However, you can elect to rescind it before then.

Durable Power of Attorney. The key distinction with a durable power of attorney is that it stays in effect, even after you’ve become incapacitated. Therefore, you want to sign a durable power of attorney if: (i) you want to give the designated agent authority ONLY if you’re unable to act for yourself; or (ii) you want to give the agent immediate authority that continues after you’re unable to act for yourself.

Note that a limited or general power of attorney ends when you become incapacitated. At that point, a court will appoint a guardian or conservator to handle your matters. You can rescind a durable power of attorney at any time prior to becoming incapacitated.

Springing Power of Attorney. This document serves the same purpose as a durable power of attorney, but it’s effective only upon your becoming incapacitated. When drafting this, your experienced estate planning attorney will help you make clear your definition of “incapacitated.”

Remember that you’ll need to state in your power of attorney document which powers and duties you are assigning to the attorney-in-fact.

Regardless of the type of power of attorney you implement, the attorney-in-fact has the power to do only what your POA indicates.

Reference: Carmel’s Hamlet Hub (Dec. 16, 2020) “4 Types of Power of Attorney”

Does My Business Need a Power of Attorney?

“As a business person you may have seen the term "durable power of attorney" in several situations. Power of attorney is a strange term because it's not immediately clear what powers an attorney for the business may have.”

Some business owners may need a power of attorney (POA). However, what type would be of benefit the most is the question. This article looks at the types of power of attorney and in what circumstances a business owner may need each of them.

Entrepreneur’s recent article entitled “Does Your Business Need a Power Of Attorney?” reports that the Consumer Financial Protection Bureau (CFPB) defines power of attorney as a legal document that permits a trusted agent the authority to act on your behalf. Accordingly, signing a power of attorney allows the business owner to authorize another person to conduct business in his stead. The person designated in the document is called the "agent" or sometimes the "attorney-in-fact." There are three main types of power of attorney:

Financial Power of Attorney. This document allows the agent to deal with the financial responsibilities and functions of the “principal” (the person who signs the document), if the principal is unable to do so themselves. Some functions for the agent of a financial power of attorney include the following:

• Delegation of the operation of your business
• Hiring an attorney and making decisions in lawsuits
• Filing and paying taxes
• Conducting transactions with banks and other financial institutions
• Making decisions on your investments and retirement plan
• Entering into a contract
• Purchasing of selling real estate or different types of property; and
• Using your assets to pay for your living expenses.

Special Power of Attorney (or Limited Power of Attorney). A business owner may need to accomplish a task for the company, but she’s unable to be there because of other responsibilities. This document permits a particular agent to conduct business on her behalf, concerning a specific and clearly outlined event, like opening a bank account, settling a lawsuit, or signing a contract.

Healthcare Power of Attorney. An individual who is incapacitated and can't communicate, can use this to permit an agent to make medical decisions on his behalf. Note that a healthcare power of attorney isn't the same as a living will. A living will focuses on a person’s preferences for healthcare treatment, such as do-not-resuscitate and other religious or philosophical beliefs that they want to be respected. A healthcare power of attorney is more flexible and leaves the decisions regarding healthcare to the agent. A living will concerns end-of-life decisions only, where healthcare power of attorney applies in all medical situations.

Durable Power of Attorney. A POA usually becomes effective when a person is incapacitated and stops once they’re able to make their own decisions. However, a durable power of attorney or enduring power of attorney may be applied to any of the types mentioned above. As a result, the agent can make decisions on behalf of a business owner when they aren't incapacitated.

A POA provides considerable protections that will help a business deal with regular operations, while the owner is unable to lead the company. If the business is an LLC or corporation, a power of attorney for the company may not be needed. However, it’s wise to have one for your own estate planning. Ask an experienced estate planning attorney about the types of power of attorney and how they might help your business.

Reference: Entrepreneur (Nov. 3, 2020) “Does Your Business Need a Power Of Attorney?”

Does the COVID-19 Pandemic have an Impact on Financial Powers Of Attorney?

“We have all seen the heartbreaking stories about people dying in hospitals from Covid-19 without family present. We’ve also heard about the tragic decisions healthcare workers must make when time and resources are spread thin. Compounding these sad situations is that often the person who can speak for the individual suffering from Covid-19 is not present because of hospital procedures designed to prevent contagion.”

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 the 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.

If you have any questions about your current estate plan, please call or email us today.

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

Estate Planning During COVID: Smart Documents to Update

What are some documents you should update as part of your estate planning during Covid? You might be surprised. 

The COVID-19 pandemic has introduced uncertainty and anxiety into many peoples’ lives. For some, it has also brought into focus their mortality. While we hope that the pandemic is controlled quickly, current times are unpredictable. If you haven’t already, it’s a good time to think about ensuring that your financial affairs are in order and that you have an estate plan in place. 

Give the rapid spread of the virus, it’s important to update your estate plan as soon as possible. 

Documents to Update

There are several key documents that you should review to see if you need to make any changes in light of the current pandemic. These include:

Power of Attorney: A power of attorney provides the legal authority to assign an agent authorized to carry on your financial affairs in the event that you become incapacitated. These individuals have the authority to handle financial transactions – including paying bills, writing checks, making deposits, selling or purchasing assets, and completing tax returns – on your behalf. Without this document, there is no other person who could legally conduct these financial transactions; family members would have to request that the probate court identify someone to take over these duties. Since this process can be lengthy and emotionally-taxing, it’s always better to have a power of attorney in place before it becomes necessary. While any adult can serve as your designated power of attorney agent, you should ensure that you choose someone who is trustworthy and responsible.

Healthcare Proxy/Healthcare Durable Power of Attorney: A durable power of attorney for healthcare, or health care proxy, allows you to name someone to make healthcare decisions for you in the event you are incapacitated but still alive. This role can be incredibly difficult for loved ones to fill, so it’s crucial that you discuss your wishes with the individual beforehand, so that they have a good idea of what you are asking of them before they agree to it. 

Last Will and Testament:  In California, it is strongly encouraged that individuals develop a living trust to distribute asssets in order to avoid having to go through probated court. However, if you have minor children, you can also appoint guardians for them through the use of a last will and testament. If this document is necessary, you will also have to appoint an executor who can ensure that the terms of the will are met as you intended them to be. Without a will in place to name a legal guardian, your family may go through long and drawn out court proceedings . You can spare your loved ones from going through this process by updating your last will and testament to ensure that it reflects your current wishes for  minor children. 

Living Trust (aka Revocable Trust or Revocable Living Trust: A revocable trust or a revocable living trust is recommended to handle the transfer of one’s assets rather than a will. Having a living trust in place ensures that you will not need to go through probate court.  It is generally much less expensive and far less time consuming to administer. You can also make decisions about how and when you would like to terminate life-saving effors and discuss your wishes related to organ donation. 

HIPAA Authorization: The Health Insurance Affordability Portability and Accountability Act (HIPAA) put in place federal regulations related to privacy when obtaining healthcare. Authorization to release these records is required for you to name people that can have access to your medical records. Essentially, this document allows you to decide who the treating clinicians can discuss your medical treatment with in the event that you are hospitalized. 

Assets, Accounts, and Insurance Policies: When you are updating your other estate plan documents, it’s worth taking a little time to update your account information, insurance policy information, and your inventory of assets, including digital assets and their related passwords. This action will make it much easier for your executor to carry out their duties and your family members to access any accounts or assets they may need to.

In addition to updating all of your documents and information, it’s also a good time to convey information to other family members. These conversations can help them to better understand your final wishes for a funeral or burial arrangement, as well as address any other items, such as who may be available to care for any pets left behind.

While nobody wants to think of their own mortality, the COVID-19 pandemic is forcing many people to do just that. There are many things that are currently out of our control. However, you can control what happens in the event of an untimely death. The best way to ensure that things go as you wish is to make sure that you have the right legal documentation in place through an updated estate plan.  

Is My Estate Plan Set with a Power of Attorney?

“When do you need your estate plan to “go to work” for you? While you may think the right answer is “after I die,” the actual answer is “if I lose the ability to manage my own affairs.”

A June 2020 Transamerica Center for Retirement Studies survey showed that a mere 28% of retirees have a financial power of attorney (POA)—and many people don’t understand that there are two types of these advance directives that serve different purposes.

MarketWatch recently published an article “Does your estate plan use the right type of Power of Attorney for you?” that says knowing how both types work is crucial in the pandemic, especially in the event that you get sick with coronavirus.

A Durable Power of Attorney for Finance can be either “springing” or “immediate.” “Durable” refers to the fact that this Power of Attorney will endure after you have lost mental or physical capacities, whether temporary or permanent. It lists when the powers would be granted to the person of your choosing and the powers end at your death.

An “immediate” Durable Power of Attorney for Finance is effective, as soon as you sign the document. In contrast, a “springing” POA for Finance means two physicians must first examine you and confirm in writing that you can no longer manage independently.

Therefore, to begin paying your bills, your agent must have those two physicians’ letters, and he or she doesn’t automatically have the authority to ask for them.

When issues, such as doctors’ letters, are required before the agent you chose can serve you, ask your estate planning attorney for guidance.

An obstacle for a Durable Power of Attorney for Finance can come upon you very fast and possibly include you and your spouse at the same time. For example, you both might get COVID-19.

The powers granted by a typical POA for Finance are often broad and permit selling and buying assets; managing your debt, car and Social Security payments; filing your tax returns; and caring for any assets not named in a trust you may have, such as your IRA.

If you recover your capacity, your agent must turn everything back over to you when you ask.

Remember that your advance directive documents are only as good as the people who implement them. You should also make certain anyone named knows that they’ll have the job if needed. They must know where to find your POA and all other important information.

If you have any questions about your current estate plan or power of attorney documents, please call or email us today.

Reference: MarketWatch (Oct. 9, 2020) “Does your estate plan use the right type of Power of Attorney for you?”

How Do You Ask Parents about Estate Planning?

“Do you expect your parents to leave you a financial legacy? Nearly half of working-age Americans assume that they will receive an inheritance that will support them later in life, according to a survey by financial services company HSBC. Perhaps the bigger question, though, is how to even approach this topic with your parents.”

How do you ask your parents about their estate planning? No matter how you slice it, it’s a touchy subject to bring up.

You don’t want to come off as greedy when asking your parents about their estate planning.  However, you may need answers to certain questions to ensure that their financial wishes are carried out and there is a smooth transition of wealth and assets.

Yahoo Finance’s recent article entitled “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)” shows us how to approach this touchy subject and get the info that you need.

Begin by asking your parents about whether they have an estate plan. You can tell them that they don’t need to share the numbers and that you just want to be able to follow their instructions. A good way to start this conversation is to acknowledge how awkward and difficult this conversation is for you. You should emphasize that you don’t want to think about their deaths but are just trying to sort things out.

Experts say that you’ll likely get a better reception from your parents if you let the conversation happen organically and not schedule a time to talk. No matter how you approach the topic of an inheritance from your parents, the objective of the discussion is to make certain they have a plan in place, so there will be a clear path for whoever is left behind to go forward. You can start by asking if they have these key legal documents:

• A will
• A power of attorney; and
• A living will or health care directive.

Ask where your parents keep these documents and how you can access them, if necessary.

You should also ask if your parents have written funeral or burial instructions. You also need to ask them to give you other important information, so you can handle their finances if they are unable to or when they die. This includes account numbers and passwords, insurance policies, information on their retirement plan or pension administrator, as well as the contact information for their accountant, attorney, financial planner, or other financial professionals.

If you have any questions about your current estate plan, please call or email us today.

Reference: Yahoo Finance (Oct. 7, 2020) “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)”

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

“Most people can't wait for retirement, and even more would likely opt for some form of early retirement if they had the opportunity. Whenever you ultimately decide to cut down your time at work or leave the workforce altogether, you need to ensure that you have a full slate of estate planning documents in place.”

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”

Am I Worth More Dead than Alive?

“If you are like many moderately successful Americans, chances are you are worth more dead than alive. In many cases a lot more.”

A long-time federal worker or retiree may in fact be worth more dead than alive, especially if you own a house and are still married to your original spouse. If you have life insurance and a Thrift Savings Plan account, it’s also most likely true.

Federal News Network’s article entitled “Wonder if you’re worth more dead than alive?” says that in this pandemic, we’re all at risk and some a lot more than others. Therefore, if you have family you want to leave something to, if you leave unexpectedly, is everything in order?

Do you know the difference between having a last will and setting up an estate? Should you have one or both?

If you’re struggling with the answer, you need to sit down with an experienced estate planning attorney and figure out what you want to do.

Do you know the function of a power-of-attorney or of a medical directive? If you become gravely ill or injured—perhaps you fall into a vegetative state—do you want the healthcare staff to take heroic measures to keep you alive?

If you don’t make that decision beforehand, you may force a family member to make that decision.  It may not be what you had wanted. It can make a very stressful time even worse for them.

Let’s look at some things you need to consider.

A basic estate plan includes powers or attorney and some documents that instruct your executor how to distribute your assets at your death.

You should have an advance medical directive or health care power of attorney, which designates an individual that you select to make health care decisions for you, if you’re unable to make these decisions for yourself. This document will also include end of life instructions in the form of a living will that state the types of actions you want to have taken on your behalf if you’re terminally ill, in a vegetative state, and if you’re unlikely to recover. A primary concern of a living will is whether you want to be kept alive by artificial means, such as with a ventilator.

You also should have a durable financial power of attorney. This document allows your chosen agent to manage your financial affairs, if you’re incapable of managing your own affairs.

Estate planning is more than just a last will. A last will is essential but most people have many assets that won’t be impacted by their last wills like a jointly owned property, and life insurance or retirement plans with a designated beneficiary. You must specify how you want your assets to be distributed after your death.

Reference: Federal News Network (July 15, 2020) “Wonder if you’re worth more dead than alive?”

What Basic Estate Planning Documents Do I Need?

“At this stage of your life, preparing these must-have documents is one of the most profound acts of love that you can bestow. This paperwork can shield your family from needless heartache, hassle and expense.”

AARP’s recent article entitled “Sign These Papers” suggests that the following documents will give you and your family financial protection, as well as peace of mind.

Advance Directive. This document gives your family, loved ones and medical professionals your instructions for your health care. A living will, which is a kind of advance directive, details the treatment you’d like to have in the event you’re unable to speak. It covers things like when you would want doctors to stop treatment, pain relief and life support. Providing these instructions helps your family deal with these issues later.

Durable Power of Attorney for Health Care. This document, regularly included in an advance directive, lets you name a trusted person (plus a backup or two) to make medical decisions on your behalf, when you’re unable to do so.

Revocable Living Trust. Drawn up correctly by an experienced estate planning attorney, this makes it easy to keep track of your finances now, allow a trusted person step in, if necessary, and make certain that there are fewer problems for your heirs when you pass away. A revocable living trust is a powerful document that allows you to stay in control of all your finances as long as you want. You can also make changes to your trust as often as you like.

When you pass away, your family will have a much easiest task of distributing the assets in the trust to your beneficiaries. Without this, they’ll have to go through the probate process.  It can be a long and possibly costly process, if you die with only a will or intestate (i.e., without a will).

Will. Drafting a will with the guidance of an experienced estate planning attorney lets you avoid potential family fighting over what you’ve left behind. Your will can describe in succinct language whom you want to inherit items that might not be in your trust — your home or car, or specific keepsakes, such as your baseball card collection and your Hummel Figurines.

Durable Financial Power of Attorney. If you’re alive but incapacitated, the only way a trusted person, acting on your behalf, can access an IRA, pension or other financial account in your name is with a durable financial power of attorney. Many brokerages and other financial institutions have their own power of attorney forms, so make sure you ask about this.

These five documents (sometimes four, if your advance directive and health care power of attorney are combined) help you enjoy a happier, less stressful life.

In drafting these documents, you know that you’ve taken the steps to make navigating the future as smooth as possible. By making your intentions clear and easing the inheritance process as much as you possibly can, you’re taking care of your family. They will be grateful that you did.

Reference: AARP (August/September 2018) “Sign These Papers”