Estate Planning Practice Blog

Naming Guardians for Minor Children.

Did you know that a Will is the only document where you can nominate guardians for minor children?

Did you also know that Anna Nicole Smith's Will failed to nominate guardians for all of her minor children and that she only nominated a guardian for her son Daniel? By only nominating a guardian for her son Daniel, she effectively excluded nominating guardians for any after-born minor children.

The lesson here? Be sure to have an up-to-date Will that names guardians for all of your minor children.

The clause should read, "if a guardian of the person, estate, or person and estate is necessary for any minor child of mine, I nominate [Jane Smith], my sister, to serve as that guardian."  A broader clause like this one effectively nominates Jane Smith to serve as guardian for all of your minor children whether born at the time you executed the Will.

Sure, there are other clauses that could make a Will not effective for after-born children, but don't restrict the guardianship clause at the same time.

Do More Than Just a Trust -- Write a Family Love Letter.

An article posted in February in Seattle Post-Intelligencer newspaper caught my eye that I book-marked it a long time ago.

It's about writing a Family Love Letter to your family about various things affecting your estate, your affairs and other things you wish to leave behind in the form of notes, memories, computer passwords (an important thing actually) when you pass away.

Note that preparing a Family Love Letter is not legally binding, like a will or trust. 

"It is designed to help survivors work through someone's death."

Click here to read the entire article and start your own Family Love Letter.

Storing Your Documents.

Generally clients tend to store all of their estate planning documents in the same place. So when someone needs to access a power of attorney or advance health care directive, they will come across the will and trust at the same time.  And when people come across these documents, they will read it!

Just be warned that if your will or trust have special provisions in there that would upset someone, it might be wise to keep your will and trust separate from the other documents.

In other words, the last thing a loved one needs to be distracted with when you need care because of a sudden hospitalization is for them to also discover that they are disinherited or "differently-inherited" (a cool term that I picked up from estate planning attorney Leanna Hamill from Massachusetts) in your estate plan.

Asking Your Attorney-in-Fact.

So you want to prepare a power of attorney? This is a document that names someone else to act as your behalf with regard to financial affairs. It is an important legal document and you are trusting your affairs to someone else.

A power of attorney is usually effective upon your incapacity where two medical doctors or the court must state that you are unable to manage your affairs. Some people will create a power of attorney that is effective immediately. This may be useful if you need someone to manage your affairs while you take a month long vacation out of the country.

A power of attorney that has the word "durable" in front of it or within the document means that the power of attorney is also effective when you are incapacitated. How this works is that you create a power of attorney effective immediately and then later you become incapacitated then this power of attorney remains valid.

One thing that people forget when they prepare their power of attorney to ask their suggested attorney-in-fact, the person you wish to name to act on your behalf, if they are willing to act for you.

Ask first and then prepare!

Some people are adverse in dealing with other people's financial affairs, some people live too far away and some people have their own families to care for whether it be their elderly parents or young children.

The "Nursing Home" Visits.

Recently I visited three different clients at their home or care facility regarding initial intake and execution of documents relating to their care. 

We don't mind making the visits, but they are harder to schedule as we are busy and driving across town does require more time than if you were able to come into the office. It is also a little bit intrusive having an attorney walk into your world rather than you walking into our world (via our offices) for the legal assistance you need.

It all starts when a family member calls me to tell me that they need a power of attorney to manage their loved one's financial affairs and an advance health care directive to make medical decisions.  Sometimes they ask for a Living Trust too. By then, however, they are most concerned with making immediate decisions and not so much about what happens when the person passes away.

Granted, it is a hard situation for everyone. 

No one enjoys getting too old to be able to manage their own affairs as they once did.  And younger family members and other loved ones do not know what to do or how to tap into community and government resources for their elderly loved ones.

But having estate planning documents in place while you are able to manage your own affairs and initiate contact with an attorney of your own choosing can go a long way to protect you when you get older. It will make it easier for your loved ones to help you if that time comes.

Naming Attorney in Fact for a Power of Attorney.

Clients generally have  hard time naming or nominating attorney in facts for their durable power of attorney.

Remember, a durable power of attorney is an important legal document that allows someone else to manage your financial affairs while you are still alive, but either unavailable or not doing well. It is either effective immediately or upon your incapacity.

An attorney in fact is someone you choose to act on your behalf.

So, if you are naming your spouse or partner as your attorney in fact, who should you name as a back-up? Some folks name their adult children. Some folks name other loved ones.  Some folks name another trusted individual like their CPA or financial advisor.

Regardless of you who nominate, it is wise to consider nominating individuals who live near you.

Recent case in point:  Client is not doing well. His durable power of attorney nominates his cousin who lives in New Jersey. Client is in hospital in Long Beach. His cousin in New Jersey is too busy, swamped and otherwise unavailable to assist client with immediate management of his financial affairs. Client's family who lives nearby wishes that client nominated someone much closer to handle his financial affairs. It's something to think about.

Reviewing Your Estate Plan.

Just a friendly reminder that your estate planning documents should be reviewed periodically.

You don't have to see an attorney every year for a review, but it is  good idea to arrange for a check up or review of your estate planning documents every few years or so with your attorney.

Also, if you have recently married, divorced or had children, you will want to update your beneficiaries and estate plan to reflect that fact.

When reviewing your estate planning documents, you should also contact the financial institutions where you have bank accounts, brokerage accounts or life insurance policies to ensure that the beneficiaries of your various accounts and life insurance policies are as you intended. This also means checking in with your employer and other institutions holding your retirement accounts as well.

Never Make Minors a Beneficiary for Life Insurance Policies.

We have been meaning to educate everyone about this very important nuance with regards to minor children and life insurance policies. It's hard to explain and here's the best explanation we've read so far:

Suze Orman, the excellent, down to earth financial columnist from O, The Oprah Magazine has articulated this very clearly in the May 2007 issue:

"Never make an underage child the beneficiary of your life insurance policy. If you die, the insurer will force your relatives into court to get someone appointed as guardian of the estate (this is separate from any guardian you may have specified in your will to care for your children).

That's going to take time and money, and your heirs will still have a major headache: The court may demand that the funds be placed in a "blocked" account that requires approval for withdrawals. Everytime your children's guardian needs money, she'll have to go to court (that usually means hiring a lawyer and spending more cash) to request it.

Again, the solution is to make your trust the beneficiary. Insurers will happily transfer the money to the trust, and the distribution of assets will be handled exactly as you specified. That's going to be a serious benefit for your heirs."

She could not have said it any clearer. It is important to have a Living Trust and name the trust as the beneficiary for your life insurance policies. It's the easiest and most cost-effective way to protect your children in case Mom or Dad pass away.

Where Are They?

Estate planning documents need to be kept in a safe place. But not in a place too safe.

In other words, the safe place has to be such a place where you can locate them again should you need to review them and a place where your loved ones can also find your documents if they are needed.

Your assignment today is to make sure you can locate your estate planning documents. Be sure you have the originals in your possession. Then contact your trusted loved ones and tell them where you are keeping your documents.

Estate planning documents should not be kept secret. Just safe so that they don't get lost or destroyed inadvertently. Yet not too safe that they cannot be easily retrieved when needed.

Case in point: I am assisting an elderly lady with locating estate planning documents for her adult child. She needs to locate his documents because he was recently diagnosed with a terminal illness and no longer has capacity. The mother is the next of kin as her child has no children or a spouse. It makes it hard for her to handle her son's affairs if she has to spend time looking for estate planning documents or spend money to get a temporary conservatorship from the court. We know that documents exist because we found some correspondence with an attorney and have proof that some of his assets are held in a trust.