Estate Planning for Lunch, anyone?

 

Do Your Parents Have an Estate Plan?

 

If you are part of the sandwich generation—caring for both your children and your parents at the same
time—it is crucial that you know whether or not your parents have an existing estate plan. While the final decisions within their estate plan rest with them, you can help them take this sometimes uncomfortable step to ensure everything is in place if it's needed. For all of us, creating a comprehensive estate plan is an absolute necessity, regardless of when it is done.

In some families the thought of speaking with your parents about important and often sensitive topics like their finances and estate planning will kill your appetite and can make you want to run as fast as you can in the opposite direction. But sometimes we have to parent ourselves into having this conversation since it is the key to ensuring that your parents' wishes are carried out after their death or if they ever become incapacitated.

 

Estate Planning for Your Parents

Initiating conversations about your parents’ future, especially concerning their finances, medical care, and memorial wishes, can be challenging, but it is undeniably one of the most important discussions you can have with them. Addressing these topics sooner rather than later benefits everyone involved and ensures greater peace of mind and preparedness for the future. This conversation can cover plans for when one or both parents pass away as well as scenarios where they become incapacitated and unable to manage their own affairs. 

The following key areas are important to discuss with your parents:

 

●     A team effort. Encourage your parents to compile a list of their advisors, starting with legal and financial professionals, including their contact information. This list should also include the contact information for your parents’ doctors so that whoever they nominate as their health care agent can reach them if necessary. Remember that even if they prefer not to share the list immediately, they can create it and let you know where to find the information if the need arises.

●     Last will and testament or a trust. If you discover that your parents do not currently have a last will and testament (also known as a will) or revocable living trust (also known as a trust), it is probable that they do not have other essential estate planning tools, since they are often created as part of a comprehensive estate plan. If they do have a will in place, confirm when it was created, who the personal representative or executor is, and where the original wills are stored. Similarly, if you discover that they have a trust, you will want to confirm who the trustee is, whether or not they have funded property and financial accounts into their trust, and where the original trust documents are stored. Remember that you do not need to read their will or trust , but knowing where to find the original documents is important to ensuring that their wishes are carried out when the time comes.

●     Medical directives. While discussing your parents’ estate plan, confirm whether they have created a living will and a medical power of attorney (also known as an advance health care directive). These important tools allow someone to make medical decisions on their behalf if they are unable to make or communicate their own medical decisions. If you discover that they have these tools in place, encourage them to have a conversation with their chosen agent under their medical power of attorney to ensure that the decision-maker understands your parents’ feelings and wishes about both their medical care preferences as well as their end-of-life care, such as how their medical affairs should be handled should they become incapacitated and whether or not they want to be on life support.

●     Insurance policies. It is important for you or your parents’ trusted decision-makers to know what insurance policies they have and where documentation is located, especially if one or both parents become incapacitated. This includes health insurance (private or Medicare), life insurance, homeowner’s insurance, auto insurance, disability insurance, and long-term care policies.

●     Financial, Investment, and Retirement Accounts. Normally as part of an estate plan a list of your assets will be prepared, but if you don't have a plan in place yet, you can take care of this independently. Creating a comprehensive list of their checking, savings, brokerage, mutual fund, pension, and retirement accounts that includes where each account is held, account numbers, and the names of any key contacts at the institution. Just as important, your parents should have a financial power of attorney in place so that a trusted individual can step in and manage these accounts if your parents are traveling, ill, injured, or otherwise unable to manage their affairs. An experienced estate planning attorney can draft this document, but it is also wise to ask whether the financial institutions involved require their own power of attorney forms, since these are often more readily accepted. Having a valid power of attorney ensures that someone can access and manage your parents’ accounts, whether checking, investment, or retirement, so that day-to-day expenses are covered and long-term financial needs are met during incapacity and beyond.

Why Estate Planning Matters

Communication is key - whether it is your parents talking to an attorney or to each of their beneficiaries, making sure everyone is on the same page can prevent a lot of unnecessary pain. Failing to put together an estate plan often leads to chaos, excessive costs and taxes, unnecessary court involvement, inadequate incapacity planning, potential hurt feelings, delays in distributing inheritances, and even unexpected outcomes after death.

Fear and discomfort can keep you from having this important estate planning conversation with your parents. As an estate planning attorney, I can provide your parents with guidance and advice on what options are available to them so that their wishes are followed when their time comes.

 

Why Do I Want to Work with an Estate Planning Attorney?

Did you know that in some circles an attorney is referred to as a "counselor at law"? A person who can listen to what you say, and what you don't say, and help you determine what you need, and how to get you where you want to go within a specific legal framework.  

This perspective, and this ability, comes strongly into focus when preparing an estate plan. Having the opportunity to talk through all of your "what if...?", to have them raised for you and explored with you is an invaluable opportunity. This opportunity is not presented with an online form where we answer preset questions, or if we talk to someone who has their own experiences with estate planning, even with tangential professional experience such as financial planning or paralegal work. 

Most of us do not have experience with an "estate plan" when we decide that we want to put something together for when we pass away.  Maybe we knew someone with a trust, maybe our parents or grandparents have one, but we don't really know what exactly an estate plan is. We see the scene in the movie of the attorney reading the will and wonder if that is what we need to do. We talk to our friends and hear that what we really want is "a trust". Even still, when we hear the words "estate plan" we think of the rich and famous - or at least someone that we...aren't. 

Once we learn what an estate plan actually is (you can take a look at this blog post I wrote on that question here) we start wondering how we can go about putting something together that is actually appropriate for our own lives. 

I think the question of whether someone needs to work with an attorney to prepare their estate plan might be one of the most common questions that people think about and ask themselves once they have realized that they need an estate plan. There are lots of different options out there, and it can feel hard to know what is right for each of us. Sometimes we might think that preparing our estate plan is just a fill in the blank process where we just need to enter our names onto the right forms, or we might think that we need to find someone who can fill in our names to these forms for us. Or maybe we think that working with a legal diy service is the right way to go. 

The thing to remember is that we don't know what we don't know, and often times we don't even know that we don't know. This is true for estate planning as much as any other area.

Estate planning is an area where we can have lots of questions: 

• Who will help me? 
• Who will get my things?
• How do I make sure that the right person gets what they are supposed to?
• What happens if I am unable to handle things myself?

These are some of the easier questions. The harder ones come next - and when you work with an estate planning attorney after we answer the easy questions we can move on to asking and answering the hard questions. Preparing a comprehensive estate plan that will contain the answers to the questions that suddenly arise when our first answers no longer work, by working with an attorney who is experienced in preparing documents, interpreting the law, and will be able to help ask and help you to answer the questions that apply to your family and your own special set of life circumstances.

An experienced estate planning attorney will help you answer those questions, and they can even help you remember to ask the questions in the first place. Reach out to the Law Office of Michelle D. Smith today to learn more and get started.

Disclaimer: Michelle D. Smith is a California Licensed attorney, SBN 233515.  The materials contained on this page is for general informational purposes, it should not be considered formal legal advice and does not create a formal lawyer/client relationship.

Do I Need a Power of Attorney if I am Married?

In California, being married does not automatically grant a spouse power of attorney over the other. Power of attorney is a legal document that allows one person (the "agent" or "attorney-in-fact") to act on behalf of another (the "principal") in various legal and financial matters.

If you want your spouse to have power of attorney, you would need to specifically designate them as your agent through a power of attorney document. This document should outline the specific powers you are granting to your spouse, as well as any limitations or conditions.

It's important to note that there are different types of powers of attorney, including:

1. **General Power of Attorney**: This grants broad powers to the agent and allows them to handle a wide range of financial and legal matters on your behalf.

2. **Limited (or Special) Power of Attorney**: This grants specific, limited powers to the agent for a particular purpose or within a specific time frame.

3. **Durable Power of Attorney**: This remains in effect even if the principal becomes incapacitated or unable to make decisions.

4. **Springing Power of Attorney**: This "springs" into effect only under specific circumstances outlined in the document, such as when the principal becomes incapacitated.

Regardless of your marital status, it's crucial to carefully consider who you appoint as your power of attorney, ensuring that they are trustworthy, responsible, and capable of making decisions in your best interest. 

If you have questions about whether a durable power of attorney is something you need, please reach out and schedule a consultation, I can help you decide what type of power of attorney is right for you.  

Understanding the Different Types of Powers of Attorney

Different Types of Powers of Attorney

There are different types of powers of attorney. They are similar, yet different enough, that it is important to understand the difference.

These powers can be used in different situations - for the management of health care decisions, for the management of financial decisions, or for the management of real property. Though they allow you to take different actions, they share some common characteristics. The powers granted by these documents are often very broad, allowing the person the ability to make decisions on your behalf as if they were you.

What are General Powers of Attorney?

A General Power of Attorney is a formal document that allows you to appoint someone to act on your behalf, no matter the circumstances. It gives this person the power to handle your finances, property, and business affairs. If it is not durable it will not be effective if you become incapacitated.

What are Durable Powers of Attorney?

A durable power of attorney allows an individual to give someone else the authority to make personal decisions for them. It is called a "durable" power of attorney because it continues to function even if you have become incapacitated. This is in contrast to a non-durable general durable power of attorney which stops being effective if you are incapacitated.

What are Springing Powers of Attorney?

A power of attorney (for any type of action or decision) is said to be a "springing" power of attorney if it is the type of power of attorney that grants the person the ability to act on your behalf only if you become incapacitated. The person that is identified in the power of attorney cannot make any decision on your behalf unless you are unable to make those decisions for yourself. 

Springing Powers of Attorney are also known as "springing" powers because they “spring” into effect (become operational) when a triggering event occurs, such as a mental disability diagnosis. In this case, the document identifies what the triggering event will be before the person can make decisions for you.

What Does an Immediately Effective Power of Attorney do Differently? 

If a Power of Attorney is said to be "immediately effective" that means that the person being granted the power can take actions under that document without you being incapacitated, or without you meeting any pre-condition. Many Powers of Attorney have the ability to start as a springing power but then be activated with the signing of an authorization, allowing the protective nature of the springing power to be combined with the ability to plan for its use with a power that is immediately effective.

Who Can Benefit From a Durable Power of Attorney?

People often think that a power of attorney is only beneficial for the elderly -  their parents or grandparents, for example. In fact powers of attorney are beneficial for most of us. We never know when something may change and we may need the help of a trusted companion. Since these documents can only be prepared when we don't need them, it is something to take care of early. Without a power of attorney in place the only option left for our loved ones is to utilize the power of the courts to grant the ability to make decisions on our behalf. This is true for anyone - our children once they are 18, our partners, our parents. 

I can help you understand the different types of powers of attorney and help you to be prepared for the unexpected situations in life.  

What is Estate Planning?

What is Estate Planning?

Estate planning is the process of making decisions about
what happens to your property, including real estate, personal possessions and money, after you die. It is the process of thinking things through and sharing your decisions with the people who matter to you.

Estate planning helps you determine who will manage your assets, provide financial support for your dependents and how they (and you!) will be cared for. It also explains how a person's final wishes are followed in the event of incapacity and death.

The best estate planning is done after careful consideration, thinking through who matters to you, what you have, and how things are best handled. You can reach out for a complimentary consultation with me and we can explore how estate planning can help you meet your goals for your self and those you care about.

Can I Inherit Mom's Mortgage When She Dies?

In many families our home is our most valuable possession. We invest a lot in order to have our homes - time, money, work, love, and often tears. It is the place where we gather with those we love. We have dreams of the future, share memories of the past, and plan for tomorrow. as they say "Home is where the heart is."

When we think about losing a loved one we can also be faced with losing the place that holds those memories - the family home. 

 The family politics surrounding the family home can be interesting. Just like with the stuff that is inside of it some might not want it for themselves, but hate the idea of seeing it gone to strangers. Sometimes someone does not want the home to be sold, they do not want it themselves, and they do not want a sibling to have the home either. As with all things related to losing a family member, the internal politics can be... complicated.

Though figuring out the answers related to the family politics is not a legal analysis, the question of how to keep the family home can be made easier knowing that the mortgage company cannot call the loan due when it transfers to a beneficiary through an estate plan, and it also cannot apply the mortgage company's ability to pay rule.

Most mortgages contain an acceleration clause that will allow a mortgage company to call a note due "if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender's prior written consent." But Federal law prohibits a lender from implementing an acceleration clause where the property is transferred to a relative upon the death of the borrower. This provision allows an heir to retain a property after inheritance without worrying that the mortgage holder will call the note due when it transfers into their name.

So now that you have discovered that you can in fact keep the mortgage on the family home without worrying that the lander is gong to call the note due when you inherit it, do you need to worry about being able to qualify for the mortgage? The answer to this related question is also a solid no. As long as you can continue to pay the mortgage the mortgage holder cannot make you reapply for a loan on the property. You can instead start paying on the same terms as were available to the person you inherited the property from, and can even apply for a modification of those loan terms.

Losing someone you love is a difficult enough time to also be worried about being able to qualify for an obtain a mortgage in order to keep the family home. Luckily we are protected from these difficult challenges and can instead focus on the more pressing concerns of learning to live in a whole new world without someone we love. 

Do not allow the fear of how your things will be taken care of when you are not able to take care of them keep you from putting your plan in place. Reach out today and start planning for what will happen to the family home so those you love will not have to do so  once you are gone.

The Options are Limitless

"I chose not to have children, so I do not need an estate plan." 

This statement is generally true, but it is generally true for all of us, not just those of us who choose not to have children. The state has designed an estate plan that any of us can follow if we do not put one together ourselves.
The problem is that the estate plan designed by the state is probably not going to be the one we would choose for ourselves. Everything we worked for in life will end up going to the niece we never knew, or the brother who never came to visit. Or it could all just end up going to the state. The process is called probate, and how probate works is a discussion for another day.

While an estate plan is not necessary for anyone, it is certainly something that is desirable for all of us. We work hard in our lives, when we are no longer here we have the ability to share with the things that matter to us. This is especially true if we have anything that we care about in life.
We have the option of sharing our assets any way we choose.

• Have pets? Make sure they are taken care of.
• Love animals? Donate to your favorite animal welfare organization.
• Love books? Set up a scholarship fund for writers.

Making the choice to not have children does not mean that you do not want a say in how your things are treated when you are gone. For some, this act of not having children was a conscious choice and we can make another conscious choice to distribute our accomplishments in the way that we chose to live our lives - with deliberation. We can choose to give to the things we care about.

The options are as limitless as your imaginations.