Painful estate planning questions you must answer to avoid disastrous estate planning mistakes

Many of my estate planning clients have put off their estate planning for months, and even years sometimes. Part of this is because death or disability is something we don’t want to think about, and part of it is because some of the questions are difficult to answer.  What my clients do not always understand is that (1) it’s my job to help them to make the decisions, and (2) if they don’t decide, then someone else – a stranger – will decide for them. Here are some questions you need to consider when thinking about estate planning:

1. The guardian for your children. This is probably the most important decision you will make.  In case the unthinkable happens – you and your spouse are out together on date night and get into an accident and are both hospitalized or worse. What do you think will happen to your children, who are at home with the 19-year old neighbor babysitting? The police will likely take your children into protective custody – foster care – until a proper guardian is named.  If you have a formally-named guardian in your estate planning documents (and not some hastily-written page), then you can avoid this awful experience for your children.
2. Who will get your stuff. If you don’t decide who gets your stuff, the state will. And perhaps more importantly than the couch and the jewelry is the estate itself.  Do you have minor children? Do you want them to inherit hundreds of thousands of dollars when they reach 18? Do you perhaps want to hold back some of the estate to pay for college, or at least to let them mature a little before coming into (and losing) a great deal of money right at 18? The only want to do this is through trusts.
3. What do you want the doctors to do if you are in an irreversible coma? If you don’t decide how you want the doctors to treat you and what extraordinary measures will be taken to save your life, then the doctors will endeavor to keep you alive as long as they can.  Do you want to survive by machine alone? If not, then you need to tell someone!  Tell your parents and your children, and create a power of attorney that legally records your wishes.  If you don’t do this, you could cause your family to scramble to determine what YOU would have wanted.
4. Who will help you to manage your assets and estate if you can’t? Most of us are more likely to experience a slow decline than go out with a bang.  Because of the advances in medical and health care, we are living longer and with better-quality lives. But as we slow down, there is a chance that we will start to lose our ability to pay our bills and manage our finances.  To avoid the painful, time-consuming and expensive process of conservatorship, each of us needs to designate someone to make decisions on our behalf if we become unable to.  This is relevant to individuals of all ages, as surviving traumatic brain injuries is getting more and more common.
5. Where are your documents? Part of creating your estate plan in making sure everything is in one place: your will, trust(s), powers of attorney, bank/investment/life insurance/retirement statements, pre-need funeral planning documents, and passwords/keys/online account information.  There is nothing worse than making your grieving family rummage through your stuff to find what they need.

Estate planning is the last thing that you can do for your family to make your passing easier. Isn’t your family worth it?

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Why a power of attorney is not enough: Do you have this critical document in your estate plan?

If you created your estate plan more than a couple years ago, you may be missing a crucial piece to the puzzle.  In the past, a power of attorney for health care decisions, which in California includes your advance directive (or living will), was sufficient to name another person (your “agent”) to make health care decisions on your behalf.  But the enactment of HIPAA (Health Insurance Portability and Accountability Act), which was designed to limit the access to your medical records – and was focused on insurance companies – actually resulted in limiting the access to your medical records for everyone, including your agent on your health care power of attorney.

Worse, if you don’t have a health care power of attorney, you may think that your “next of kin” – your spouse, your children, or your parents – will have access to your medical information and to be able to make decisions on your behalf.  Unfortunately, with HIPAA and the stricter privacy regulations on doctors and hospitals, this is not often the case.  While you may be looked to for decision-making, if you want to see the medical records or tests results themselves, for example to get a second opinion, you won’t be able to, not even with a power of attorney.

What’s necessary now is called a “HIPAA Authorization,” which I have been using for a couple years now.  It allows the individuals you designate to have access to your medical records and can save your loved ones from hassle and hardship should you be incapacitated.  I use a separate form document, though my older health care powers of attorney included the HIPAA authorization in the body of the power of attorney.

I’ve talked already about the importance of everyone having a power of attorney once they turn 18, but what is also critically important is that you have all the correct documents in your estate plan as well, and a complete estate plan includes a HIPAA authorization.

Celebrities and estate planning

There are frequent examples of famous names and faces that pass away, leaving us with reminders of the importance of estate planning at all ages.  In recent weeks:

1. The importance of planning young: Sarah Burke.  We all think that we’re going to live forever.  I think this is part of human nature.  We also think that, if we’re healthy, then we will be healthy forever.  Unfortunately, accidents and illnesses happen to the young and to the healthy, as the death of 29-year old Olympic skier Sarah Burke tells us. If you don’t have a medical power of attorney in place, you don’t choose who will be making the decisions on your behalf.  If you don’t have a living will (part of the power of attorney for medical decisions in California), then your family doesn’t know what your wishes are.
2. The importance of a power of attorney: Etta James.  When Etta James died, her family was in the midst of a conservatorship battle.  A conservatorship is the formal title of the person given legal rights to make decisions on behalf of your estate/assets and of your medical decisions.  If you have a power of attorney, in most cases a conservatorship is not necessary.  Etta James’ husband had conservatorship over the singer, and in just late December, asked the court to release $500,000 for her monthly medical care, the cost of which was $30,000.  The court released $350,000.  Because of concern over her medical care and the cost, her two sons petitioned the court to change the conservatorship over to them.  The last thing you want your family to have to contend with when you are gravely ill is an issue such as this.  If you make plans ahead of time, you and your family will both be protected.
3. The importance of planning, period: Steig Larsson. The author of the widely successful “The Girl with the Dragon Tattoo” trilogy died suddenly of a heart attack at age 50. He had no will.  While his estate went to his family members, his girlfriend of 32 years has possession of a fourth unpublished manuscript, and the legal battle rages on.

Whatever you age, size of estate, or health status, you need an estate plan to protect yourself and your loved ones.  Why wait?  Make a FREE appointment online now.

Why and when you need an estate planning/elder law attorney

Top reasons why you may need an estate planning or elder law attorney:

1. To keep more of your assets and money for your family than for the government/attorneys
2. To have peace of mind that your family and all you have worked for is protected
3. To avoid the state’s plan for the passing of your estate (probate) because it is complex, difficult, expensive, and time-consuming, and you want to make sure you don’t put your family through it
4. To acknowledge that your needs will change as you age, and it takes critical planning to ensure that you and your family are cared for as you grow older
5. Because the government (through Medicare/Medical/Medicaid) will not be sufficient for your long-term care, and you know that an attorney can help you to evaluate your options to make sure you are protected

Top reasons when you may need an estate planning or elder law attorney:

1. Your estate becomes worth $150,000 or more (not including debt)
2. Your loved one has been diagnosed with dementia or Alzheimer’s
3. You are worried that you do not have a plan in place for your estate and family after you’re gone – everyone needs a plan, regardless of age, estate size, or family composition
4. You are concerned about your or your loved one’s ability to cope with rising costs, continue to pay bills, or provide for ongoing medical care

Do you have any of these concerns?

What is a Power of Attorney? Why is it critical that you have and up-to-date one at all times, once you turn 18?

In California, there are two kinds of powers of attorney: one for finances and one for medical decisions, also called an advance directive or living will.  A power of attorney for finances gives another individual the power to handle your financial affairs if you become incapacitated and cannot manage them on your own, like when you are hospitalized.  While you are unable to manage your own affairs, someone else can ensure that your bills are paid and utilities stay on for when you return.  The power of attorney is necessary because banks generally will not allow access to your accounts without a formal document giving specific permission to someone else, even if you are the spouse, parent, or sibling of the person who is incapacitated.

Similarly, a power of attorney for medical decisions gives the power to another person to make medical decisions on your behalf if you are incapable of doing so due to illness, accident, or other problem.  It specifies what kind of medical treatment you do or do not want, and in the absence of one, the doctors will do all that they can to keep you alive as long as they can, even if you are in a persistent vegetative state.  In addition, in California there is the HIPAA authorization for medical records so that the person who is making your medical decisions can also look at your medical records.

Every individual 18 or over needs to have these three documents.  Sometimes, parents assume that their college-age children do not need these documents because they will be listened to as parents.  This is not always the case, so any child going off to college, or just turning 18 needs to have these documents.  Similarly, aging parents need to have one as well to avoid the difficult conservator process if they become incapacitated without proper powers of attorney.

What is conservatorship in California? Part Two: The process

So, you have a loved one who is no longer capable of taking care of themselves.  Last time, we talked about what a conservatorship is and why you may need one.  Now, we’ll look at the process. Unfortunately, the process is long and can be expensive.  Which is why it is so critical to get a power of attorney ahead of time for your loved ones.  Did you know that your children should have a power of attorney once they reach 18?  If your child is injured, you may not get automatic access to medical records and to make decisions on your adult teen’s behalf.  There’s more information in my article, Have a child heading to college? A few legal documents they need before they leave the house.

The bottom line is that every adult – every adult – needs to have a Power of Attorney in place to protect them should they become injured or otherwise incapacitated.  To be able to make decisions on another’s behalf, a power of attorney is required.  In addition, the health information privacy laws (HIPAA) will restrict who can see medical records unless you have a HIPAA-specific waiver.  If you’re concerned about your loved one not having a power of attorney, and their unwillingness to get one, then get one yourself so you can speak to the process and experience.

If you don’t have one and your loved one becomes incapacitated, then you will need to go to court to apply for a consevatorship.  Once the conservatorship is filed, which in California can cost $400 or more just for the court filing, the paperwork needs to be send to all first-degree relatives (children, parents, siblings, etc.).  A hearing is set to grant or deny the temporary conservatorship, and then a hearing is set for the permanent conservatorship, generally a couple months out.  In the meantime, any other relatives can file their own objections to your petition.  In addition, a court-appointed investigator talks with you, the family member who you think needs a conservatorship, doctors, caregivers, and everyone around in order to do a report for the court, either recommending the conservatorship or not recommending it.

In cases where the family is all on the same page, the process generally goes smoothly.  But this doesn’t change the fact that it can take six months or more, and cost several thousand dollars to accomplish.

What is a conservatorship? Part One: When and why you may want or need to get one

It seems to me that recently I have been inundated with questions about conservatorship in California.  In the Bay Area, much like the rest of California and the United States, there are a large number of aging Americans, including the Baby Boomers, who are getting into their 60s.  But most of these inquiries have a lot of confusion and misunderstanding about what a conservator is, when it is possible or appropriate to get, why it’s necessary, who can file for one, and what the general process is.

So, let’s start with the basics.  As we age, many of us will gradually slow down. Perhaps this starts with using the stairs in our house less frequently, and maybe progresses to driving less at night.  Our muscles become weaker, our senses a little duller.  We may get a hearing aid for when we’re out in public.  These are all normal ‘symptoms’ of aging.  As we continue to get older, some of us may have cognitive, or mental, decline as well.  This is more than just forgetting where you’ve put your glasses or keys.

At some point, for some of us as we age, we become no longer able to take care of our own finances and our own health.  We can’t pay the bills, remember to take our medication, or even maintain basic hygiene.  Adult children can spot these issues when they see unpaid or overdue bills lying around the house.  Perhaps a caregiver is noticing and reporting the concerns about hygiene or unusual behavior.  Maybe you are talking to an assisted living community about moving your parent in, and they are concerned about your parent’s mental capacity.

Based on your concerns, you may wish to be the one who makes the financial and medical decisions on behalf of your parent.  It may, in fact, be necessary because your loved one has signs of dementia, paranoia or hostility that make them completely unable to care for their own needs.

If you and your loved one have acted in advance, then you may have a power of attorney that will allow you to make the necessary decisions.  In California, there are two kinds of powers of attorney: one for finances and one for medical care.  An individual who signs a power of attorney must be competent to do so, so if you are in a situation where your loved ones is already mentally compromised, or refuses to cooperate to sign one, then a power of attorney is not an option for you.

This is another reason why advance planning is so critical.  If you wait too long and are unable to get your loved one to sign a power of attorney, then you will need to go through the court process of a conservatorship to obtain decision-making power over your loved one’s finances, medical decisions, or both.  Next time we will talk about the conservatorship process.

Estate planning for smaller estates

Many of my clients do not realize that their property and their family are at risk if they do not create an estate plan.  Many think that they do not have a large enough estate to need an estate plan at all.  The reality is that anyone with $100,000 or more in property – gross, which does not take any debt (mortgage, for example) into account – should have a comprehensive estate plan.  Probate fees alone can cost up to 10% of your total estate, but there are other fees as well.  If your family needs to go to court to obtain a conservatorship for you because you don’ t have a power of attorney, then that can cost thousands of dollars.  If you do not name a guardian for your children, your children could be the subject of a lengthy and expensive custody battle among your family members.  In fact, much of your estate can be taken with the cost and length of the probate process.  Don’t do this to your family: protect them.  This video gives you more information on the importance of comprehensive estate planning for estates with $500,000 or less.

Powers of attorney: What they do and do you need one?

As a part of my comprehensive estate plans, I provide my clients with Powers of Attorney.  In California, there are two kinds of powers of attorney: one for assets and one for health care.  Powers of attorney come into play while you are still alive, but you are incapacitated and/or unable to make decisions on your own behalf.  This can be due to accident, illness, or cognitive impairment such as dementia or Alzheimer’s.  Your power of attorney for assets allows the person of your choice (generally your spouse first, then a close friend or family member if your spouse is unable) to manage your finances.  This means that, while you are incapacitated, your mortgage and electric bills can still be paid.  The power of attorney for medical care allows the person of your choice to make medical decisions on your behalf.  It includes the medical advance directive, which tells the doctors how to treat you if you are in a persistent vegetative state.  If you do not sign a power of attorney and you become incapacitated, then your family must go to court for a lengthy and expensive process to obtain conservatorship over you.  Executing powers of attorney is thus a critical aspect of your estate plan that protects you, your family, and your assets as you move through the stages in your life.  Here is a video on this topic:

Estate planning for the LGBT community: how to navigate through the changing laws

Consulting with an estate planning attorney familiar with LGBT issues is critical to ensure that your rights are protected properly, and in the face of continuous changes. There are still awful stories out there of long-term partners denied access to doctors and hospitals in an emergency, being denied benefits or inheritances, losing child custody after a death or losing the family home. Advance planning with an experienced estate planning attorney can protect you, your partner and your family against discrimination. The most important documents for you are:

1. Will and living trust. These documents will clearly specify who you want to have your assets, raise your children, and also will prevent your estate from going through the agony of probate.
2. Powers of attorney. Having proper powers of attorney for health care/medical decisions as well as management of your assets will ensure that the proper person is making decisions for you if you cannot. In addition, a HIPAA release will allow your partner to get access to your medical records without any problems.
3. Proper beneficiary designations. You must make the correct beneficiary decisions because you cannot expect the default to protect you, your partner, and your children. Don’t leave assets to your minor children, and make sure your designations are updated if your relationship status changes.
These are just a few of the specific concerns for the LGBT community in estate planning.