Sunday, March 03, 2013
Estate Planning for Gay Familes, Part I: The 4 Essential Documents
Minnesota Lawyer Lists the Critical Documents Every Same-Sex Couple Must Have.
Under current Minnesota (and Federal) law, gay couples do not have any rights to such basic things as: 1) inheriting from each other; 2) making medical decisions for each other; 3) handling financial matters for each other; 4) naming a guardian for a minor child; or 5) continuing to live in the family home if only one partner is listed on the deed.
Will – A will tells who should inherit your property when you pass away, who you want your executor to be, and who will become guardians of any minor children. These issues are all especially important for unmarried individuals. In most states, an unmarried partner does not have inheritance rights, so any property owned by his or her deceased partner would go to other family members. Also, in the case of many gay and lesbian couples, the living partner is not necessarily the biological or adoptive parent of any minor children, which could lead to custody disputes in an already very difficult time. Therefore, it’s critical to nominate guardians for minor children.
Financial power of attorney – A power of attorney (for financial matters) dictates who is authorized to manage your financial affairs in the event you become incapacitated. Otherwise, it can be very difficult or impossible for the non-disabled partner to manage the disabled partner’s affairs without going through a lengthy guardianship or conservatorship proceeding.
Advance healthcare directive – A power of attorney for healthcare, informs caregivers as to who is responsible for making healthcare decisions for someone in the event that a person cannot make them for himself, such as in the event of a serious accident or a condition like dementia.
HIPAA Waiver - allows the persons named to discuss your care with a doctor BUT not to make decisions.
If you don't have these documents, your partner may be prohibited from keeping your assets, living in your home, paying your bills, or making your medical decisions.
Call now to protect your family!
Monday, August 13, 2012
Estate Planning for Unmarried Couples
A Minneapolis Estate Planning Attorney Examines the Importance of Estate Planning for Unmarried Couples
Estate planning is important for everyone. We simply don’t know when something tragic could happen such as sudden death or an accident that could leave us incapacitated. With proper planning, families who are dealing with the unexpected experience fewer headaches and less expense associated with managing affairs after incapacity or administering an estate after death.
If a person fails to do any planning and becomes involved in a debilitating accident or passes away, each state has laws that govern who will inherit assets, become guardians of minor children, make medical decisions for an incapacitated person, dispose of a person’s remains, visit the person in the hospital, and more. In some states, the spouse and any children are given top priority for inheritance rights. In the case of incapacity, spouses are normally granted guardianship over incapacitated spouse, though this requires a lengthy and expensive guardianship proceeding.
In today’s world, increasing numbers of couples are choosing to spend their lives together but aren’t getting married, either because they aren’t allowed to under the laws of their state, such as in the case of gay and lesbian couples, or simply because they choose not to. However, most states don’t recognize unmarried partners as spouses. In order to be given legal rights that married couples receive automatically, unmarried couples need to do special planning in order to protect each other.
In general, unmarried individuals need three basic documents to ensure their rights are protected:
A Will – A will tells who should inherit your property when you pass away, who you want your executor to be, and who will become guardians of any minor children. These issues are all especially important for unmarried individuals. In most states, an unmarried partner does not have inheritance rights, so any property owned by his or her deceased partner would go to other family members. Also, in the case of many gay and lesbian couples, the living partner is not necessarily the biological or adoptive parent of any minor children, which could lead to custody disputes in an already very difficult time. Therefore, it’s critical to nominate guardians for minor children.
A power of attorney – A power of attorney (for financial matters) dictates who is authorized to manage your financial affairs in the event you become incapacitated. Otherwise, it can be very difficult or impossible for the non-disabled partner to manage the disabled partner’s affairs without going through a lengthy guardianship or conservatorship proceeding.
Advance healthcare directives – A power of attorney for healthcare, informs caregivers as to who is responsible for making healthcare decisions for someone in the event that a person cannot make them for himself, such as in the event of a serious accident or a condition like dementia. Another related document is a HIPAA waiver, which allows the persons named to discuss your care with a doctor BUT not to make decisions.
A fourth document to consider is the use of a revocable living trust. A trust document is nothing more than a set of instructions you leave to instruct your trustee on how, when and to whom to distribute your assets. There are numerous advantages to a trust that are especially appliable to unmarried couples:
It's private unlike a will at probate
You can determine where any remaining assets may go at your partner's death
Avoids court intervention if you're incapacitated
Beyond these documents, it is also critical that you check your beneficiary designations to ensure that the proceeds of your life insurance, retirement accounds, CDs, moneymarket or bank accounts go to your loved one. While your partner may still be able to inherit even without those designations, it will take time and effort to prove to a court that he/she is entitled to the benefits.
Estate planning is undoubtedly more important for unmarried couples than those who are married, since there aren’t built-in protections in the law to protect them and their loved ones. It’s imperative that unmarried couples establish proper planning to avoid undue hardship, expense and aggravation.
Tuesday, May 15, 2012
What is a Conservatorship?
The Basics of Conservatorships
Sometimes, bad things happen to good people. A tragic accident. A sudden, devastating illness. Have you ever wondered what would happen if a loved one became incapacitated and unable to take care of himself? While many associate incapacity with a comatose state, an individual, while technically functioning, may be considered incapacitated if he cannot communicate through speech or gestures and is unable sign a document, even with a mark. In some cases, an individual may have no trouble communicating, but may not be able to fully appreciate the consequences of their decisions and hence may be deemed to lack capacity. With proper incapacity planning which includes important legal documents such as a durable power of attorney, healthcare proxy and living will, the individuals named in such documents are empowered to make necessary financial and medial decisions on behalf of the incapacitated person without obtaining additional legal authorization. Without proper incapacity planning documents, even a spouse or adult child cannot make financial and healthcare decisions on behalf of an incapacitated individual. In such cases, a conservatorship (or guardianship) proceeding is necessary so that loved ones are able to provide for their financial and medical healthcare needs.
A conservatorship is a court proceeding where a judge appoints a responsible individual to take care of the adult in question and manage his or her finances and make medical decisions. The court appointed conservator will take over the care of the conservatee (disabled adult). When appropriate, the court may designate an individual “conservator of the estate” to handle the disabled person’s financial needs and another person “conservator of the person” to manage his healthcare needs. One person can also serve as both. If you are planning to serve as someone’s financial conservator, be prepared to possibly post a bond that serves as a safeguard for the conservatee’s estate. Individual states have their own guidelines for conservators, so check your local rules for more information.
To minimize the incidence of mismanagement or fraud, the court holds the conservator legally responsible for providing it with regular reports, called an accounting. Additionally, the conservator may not be able to make any major life or medical decisions without the court’s approval and consent. For example, if you have been named the conservator for a relative, you may not be able to sell his or her house without the approval of the court.
The best safeguard to avoid going through court to get a conservatorship, however, would be to establish a durable financial power of attorney, a power of attorney for healthcare, each authorizing a family member or trusted individual to act on your behalf in case of incapacity. While your agents have a legal obligation to act in your best interest they won’t have to post an expensive bond either. Make sure the power of attorney clearly states that it will be effective even if the principal becomes incapacitated.
Wednesday, April 04, 2012
Guardianships & Conservatorships and How to Avoid Them
Guardianships & Conservatorships and How to Avoid Them
If a person becomes mentally or physically handicapped to a point where they can no longer make rational decisions about their person or their finances, their loved ones may consider a guardianship or a conservatorship whereby a guardian would make decisions concerning the physical person of the disabled individual, and conservators make decisions about the finances.
Typically, a loved one who is seeking a guardianship or a conservatorship will petition the appropriate court to be appointed guardian and/or conservator. The court will most likely require a medical doctor to make an examination of the disabled individual, also referred to as the ward, and appoint an attorney to represent the ward’s interests. The court will then typically hold a hearing to determine whether a guardianship and/or conservatorship should be established. If so, the ward would no longer have the ability to make his or her own medical or financial decisions. The guardian and/or conservator usually must file annual reports on the status of the ward and his finances.
Guardianships and conservatorships can be an expensive legal process, and in many cases they are not necessary or could be avoided with a little advance planning. One way is with a financial power of attorney, and advance directives for healthcare such as living wills and durable powers of attorney for healthcare. With those documents, a mentally competent adult can appoint one or more individuals to handle his or her finances and healthcare decisions in the event that he or she can no longer take care of those things. A living trust is also a good way to allow someone to handle your financial affairs – you can create the trust while you are alive, and if you become incompetent someone else can manage your property on your behalf.
In addition to establishing durable powers of attorney and advanced healthcare directives, it is often beneficial to apply for representative payee status for government benefits. If a person gets VA benefits, Social Security or Supplemental Security Income, the Social Security Administration or the Veterans’ Administration can appoint a representative payee for the benefits without requiring a conservatorship. This can be especially helpful in situations in which the ward owns no assets and the only income is from Social Security or the VA.
When a loved one becomes mentally or physically handicapped to the point of no longer being able to take care of his or her own affairs, it can be tough for loved ones to know what to do. Fortunately, the law provides many options for people in this situation.
Monday, February 06, 2012
How Much of Your Estate Will Be Left Out of Your Will? (It’s Probably More Than You Think)
How Much of Your Estate Will Be Left Out of Your Will? (It’s Probably More Than You Think)
You’ve hired an attorney to draft your will, inventoried all of your assets, and have given copies of important documents to your loved ones. But your estate planning shouldn’t stop there. Regardless of how well your will is drafted, if you do not take certain steps regarding your non-probate assets, you run the risk of unintentionally disinheriting your chosen beneficiaries from a significant portion of your estate.
A will has no effect on the distribution of certain types of property after your death. Such assets, known as “non-probate” assets are typically transferred upon your death either as a beneficiary designation or automatically, by operation of law.
For example, if your 401(k) plan indicates your spouse as a designated beneficiary, he or she automatically inherits the account upon you passing. In fact, by law, your spouse is entitled to inherit the funds in your 401(k) account. If you wish to leave your 401(k) retirement account to someone other than a surviving spouse, you must obtain a signed waiver from your spouse indicating her agreement to waive her rights to the assets in that account.
Other types of retirement accounts also transfer to your beneficiaries outside of a probate proceeding, and therefore are not subject to the provisions of your will. An Individual Retirement Account (IRA) does not automatically transfer to your spouse by operation of law as is the case with 401(k) plans, so you must complete the IRA’s beneficiary designation form, naming the heirs you want to inherit the account upon your death. Your will has no effect on who inherits your IRA; the beneficiary designation on file with the financial institution controls who will receive your property.
Similarly, you must name a beneficiary on your life insurance policy. Upon your death, the insurance proceeds are not subject to the terms of a will and will be paid directly to your named beneficiary.
Probate avoidance is a noble goal, saving your loved ones both time and money as they close your estate. In addition to the assets listed above, which must be handled through beneficiary designations, there are other types of assets that may be disposed of using a similar procedure. These include assets such as bank accounts and brokerage accounts, including stocks and bonds, in which you have named a pay-on-death (POD) or transfer-on-death (TOD) beneficiary; upon your passing, the asset will be transferred directly to the named beneficiary, regardless of what provisions are in your will. Depending on the state, vehicles may also be titled with a TOD beneficiary.
To make these arrangements, submit a beneficiary designation form to the applicable financial institution or motor vehicle department. Be sure to keep the beneficiary designations current, and provide instructions to your executor listing which assets are to be transferred in this manner. Most such designations also allow for listing of alternate beneficiaries in case they predecease you.
Another common non-probate asset is real estate that is co-owned with someone else where the deed has a survivorship provision in it. For example, many deeds to real property owned by married couples are owned jointly by both husband and wife, with right of survivorship. Upon the passing of either spouse, the interest of the passing spouse immediately passes to the surviving spouse by operation of law, irrespective of any conflicting instructions in your will. Keep in mind that you need not be married for such a provision to be in effect; joint ownership of real property with right of survivorship can exist among any group of co-owners. If you want your will to be controlling with regard to disposition of such property, you need to have a new deed prepared (and recorded) that does not have a right of survivorship provision among the co-owners.
You’ve spent a lifetime of hard work to accumulate your assets and it’s important that you take all necessary steps to ensure that your wishes regarding who will get your assets will be honored as you intend. Carve a few hours out of your busy schedule, several times a year, to review all of your deeds and beneficiary designations to make certain that they remain consistent with your objectives.
Friday, December 30, 2011
Important Issues to Consider When Setting Up Your Estate Plan
Important Issues to Consider When Setting Up Your Estate Plan
Often estate planning focuses on the “big picture” issues, such as who gets what, whether a living trust should be created to avoid probate and tax planning to minimize gift and estate taxes. However, there are many smaller issues, which are just as critical to the success of your overall estate plan. Below are some of the issues that are often overlooked by clients and sometimes their attorneys.
Is there sufficient cash? Estates incur operating expenses throughout the administration phase. The estate often has to pay state or federal estate taxes, filing fees, living expenses for a surviving spouse or other dependents, cover regular expenses to maintain assets held in the estate, and various legal expenses associated with settling the estate.
How will taxes be paid? Although the estate may be small enough to avoid federal estate taxes, there are other taxes which must be paid. Depending on jurisdiction, the state may impose an estate tax. If the estate is earning income, it must pay income taxes until the estate is fully settled. Income taxes are paid from the liquid assets held in the estate, however estate taxes could be paid by either the estate or from each beneficiary’s inheritance if the underlying assets are liquid.
What, exactly, is held in the estate? The owner of the estate certainly knows this information, but estate administrators, successor trustees and executors may not have certain information readily available. A notebook or list documenting what major items are owned by the estate should be left for the estate administrator. It should also include locations and identifying information, including serial numbers and account numbers.
Your estate can’t be settled until all creditors have been paid. As with your assets, be sure to leave your estate administrator a document listing all creditors and account numbers. Be sure to also include information regarding where your records are kept, in the event there are disputes regarding the amount the creditor claims is owed.
Some assets are not subject to the terms of a will. Instead, they are transferred directly to a beneficiary according to the instruction made on a beneficiary designation form. Bank accounts, life insurance policies, annuities, retirement plans, IRAs and most motor vehicles departments allow you to designate a beneficiary to inherit the asset upon your death. By doing so, the asset is not included in the probate estate and simply passes to your designated beneficiary by operation of law.
Fund Your Living Trust
Your probate-avoidance living trust will not keep your estate out of the probate court unless you formally transfer your assets into the trust. Only assets which are legally owned by the trust are subject to its terms. Title to your real property, vehicles, investments and other financial accounts should be transferred into the name of your living trust.
Monday, June 06, 2011
What's in a Name, Part 2: Introducing Unique Estate Law
You may have noticed a slight change in my firm name. Unique Family Law is now known as Unique Estate Law.
I have always focused on unique families and continue that passion. My new firm name better explains what I do for your unique family. I focus on estate planning, probate and adoption – building and protecting families.
I am proud to specialize in this important and ever-changing area and my new name reflects that focus.
I want to be sure that you, my clients, know where my expertise lies.
Welcome to Unique Estate Law.
Thursday, May 05, 2011
Understanding the Perils of Adding Another Person to Your Bank Account
I recently met with a client who informed me that her daughter had financial power over her matters. ”You mean she has a power of attorney?” I inquired.
She responded that “No. She has signing authority on my accounts.”
After several more questions I discovered that her daughter was a joint account holder on her mother’s checking and savings accounts. My client explained that she added her daughter to the accounts to ensure that someone could handle her financial matters in the event of incapacitation. She further explained that her desire was the daughter could use these accounts while Mom was alive and then at death the assets would go into her estate and be evenly divided among her 4 children.
Unfortunately, that is not how joint bank accounts work.
Joint bank accounts have become a common way for those caught in the sandwich generation to ensure their ability to handle the financial matters of a loved one. They are also the method of choice for many unmarried couples to attempt to mirror the financial rights of their married counterparts. For instance, when one half of a married couple dies, the surviving spouse will be granted the right to any money remaining in a bank account held only in the name of the deceased spouse. The same happens upon the death of a joint bank account holder.
While joint bank accounts are an answer to problems associated with lack of access to another’s bank account, they may not be the best answer.
Problems with Joint Bank Accounts
The following is a list of problems associated with adding someone to your account.
That person now has all of the same rights to that money as you. They can write checks, withdraw money and use it for any purpose without your permission or ability to get it back.
Upon your death the money in that account will go directly to the joint account holder. You may not change this by using a will as joint title holder with always trump your will. Remember that a will is only used for those assets that are titled only in your name or where the court needs to assist in determining the rightful owner.
Creditors may come after the bank account for any debt owed by anyone on the account. So, if you open an account with your daughter or partner, and she defaults on a loan, the creditor may come after this account regardless of whether you had anything to do with that loan.
A Power of Attorney. Simply adding someone to your bank account may seem the simplest action to take – right now – but it can lead to the above-listed problems. A simple way for my client to grant someone access to her financial matters is to execute a valid Power of Attorney. Mom may then be assured that someone has the ability to handle her bank accounts, bills and government benefits but without the drawbacks listed. As noted in my earlier series on Powers of Attorney, the POA ends at death. So, upon Mom’s death the money in those two bank accounts will be included in her estate and may be evenly spit among her children.
A Trust. I explained that a trust will take care of the majority of these issues with only a bit more hassle. Mom may set it up so that she is the trustee of her trust until incapacity or death at which time her daughter takes over as trustee. This allows for a seemless transition whereby the daughter has the ability to handle Mom’s financial needs and manage any assets within the trust. If Mom recovers, she will again become the trustee over her own trust. If not, the sucessor trustee takes over after death.
Thursday, January 06, 2011
The Power of Attorney, Part 2: How It Works
My prior post explained what a Power of Attorney is and how it works. But you need to know more about this powerful tool. For instance, how do you create one? And what powers does it grant to your agent? Whom should you choose as your agent?
How do you create a power of attorney?
Under Minnesota law a valid POA must be:
Signed by you in front of a notary public
Clear on what powers are being granted.
By following the requirements above, you will create a limited power of attorney. But you also have the ability to grant more or less power to your agent and control the duration and how the POA becomes effective by using a durable or springing POA.
A durable power of attorney remains in effect after you become incapacitated so that your agent may continue to act on your behalf. In order to create a durable power of attorney, the document must include a statement such as: “This power of attorney shall not be affected by incapacity or incompetence of the principal.” In other words, the POA must be clear that the powers granted to your agent continue upon incapacity.
Alternatively, you may create a springing power of attorney, which doesn’t take affect until after you become incapacitated. This is a safe choice if you do not want to give your agent the immediate power to handle your matters but you want to be sure that you have someone to take care of things if you are incapacitated. For instance, single parents may not have someone to whom they want to grant the immediate power to write checks or withdraw money but whom they do trust to handle these matters upon incapacitation. To be a springing POA, the document must state that it is effective only in the event that you are incapacitated.
What powers can you grant to your agent?
In Minnesota there are two primary POA options: 1) the form created by statute, known as the ‘statutory short form power of attorney’; or 2) the common law power of attorney. The difference between the two mainly comes down to the type and amount of power you want to give to your agent over your financial matters.
Minnesota Statutory Short Form POA
Under Minnesota’s statutory short form power of attorney you simply complete the form “as is” and check a box next to the specific power listed to allow your agent to handle any or all of your financial matters related to a limited list of financial matters.
You still have the power to restrict the duration, powers granted and way in which the POA becomes effective. And, of course, you do not need to check all the boxes.
But, Minnesota’s short form has its limits, especially for those who are unmarried and wish to be sure their needs are taken care of in the event of incapacity. For instance, the short form does not give your agent the power to create, amend or terminate a trust. For these expanded powers you need to have your attorney draft a common law POA.
Common Law POA
The term “common law power of attorney” merely refers to any POA that does not conform to the statutory short form. In other words, there is the statutory short form and then there is everything else. Due to the limited flexibility of the statutory short form, I always use a common law form, especially for my nontraditional families who are unable to rely on the law to protect their interests. As explained in prior posts, persons who are unrelated by blood or marriage may find it impossible to obtain court approval to handle matters for their loved ones.
Keep in mind that being married does not give couples the automatic right to handle all of their spouse’s financial affairs. If one of you is incapacitated, the other spouse will need a POA to access information related to your 401k or to sell jointly held real estate. Whether married or not, be sure that if you become incapacitated, your matters will be handled by someone you trust – get a POA now.
Monday, October 04, 2010
Grow Up, Grow Old and Enter the Closet Together.
In concentrating on the ways in which LGBT families may protect themselves, I generally focus on young growing families. But a recent article reminded me of the vulnerability of elderly gay people.
The National Gay and Lesbian Task Force reports that there are approximately 1.4 to 3.8 million LGBT Americans over the age of 65. While it may be true that LGBT persons have a large network of community on which to rely for support, generally this network will be close to the same age so may not offer much assistance.
Elderly LGBT people deserve to live out their twilight safely and openly. Minnesota’s non-discrimination statute does not go far enough to protect its elderly LGBT population. The non-discrimination statute should be amended to provide protections for seniors on the bases of sexual orientation and gender identity or expression in insurance, housing and public accommodations.
Be sure you are protected when you are at your most vulnerable by having a power of attorney, health care directive and HIPAA waiver.
From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.