Can I Make Decisions for My 18-Year-Old ‘Kid’ If She Becomes Incapacitated? – Annapolis and Towson Estate Planning

The Press-Enterprise’s recent article entitled “Legal documents for young adults” describes some of the important legal and estate planning documents your “kid” (who is now an adult) should have.

HIPAA Waiver. This form allows medical personnel to provide information to the parties you have named in the document. Without it, even mom would be prohibited from accessing her 19-year-old’s health information—even in an emergency. However, know that this form does not authorize anyone to make decisions. For that, see Health Care Directives below.

Health Care Directive. Also known as a health care power of attorney, this authorizes someone else to make health care decisions for you and details the decisions you would like made.

Durable Power of Attorney. Once your child turns 18, you are no longer able to act on their behalf, make decisions for them, or enter into any kind of an agreement binding them. This can be a big concern, if your adult child becomes incapacitated. A springing durable power of attorney is a document that becomes effective only upon the incapacity of the principal (the person signing the document). It is called a “springing” power because it springs into effect upon incapacity, rather than being effective immediately.

A durable power of attorney, whether springing or immediate, states who can make decisions for you upon your incapacity and what powers the agent has. The designated agent will typically be able to access bank accounts, pay bills, file insurance claims, engage attorneys or other professionals, and in general, act on behalf of the incapacitated person.

They will always be your babies, but once your child turns 18, he or she is legally an adult.

Be certain that you have got the legal documents in place to be there for them in case of an emergency.

Remember a spring break, when they are home for summer after their 18th birthday, or a senior road trip are all opportunities when these documents may be needed.

Reference: The Press-Enterprise (April 2, 2022) “Legal documents for young adults”

 

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What Is a Power of Attorney? – Annapolis and Towson Estate Planning

Nj.com’s recent article entitled “What does becoming someone’s ‘power of attorney’ mean?” explains that a power of attorney (POA) is a legal document through which a principal states that his or her trusted agent may act on his or her behalf and for their benefit.

A power of attorney is usually centered on addressing the principal’s financial matters, such as banking, paying taxes and selling or buying property.

A power of attorney can be “springing,” so that it becomes effective only when the principal becomes incapacitated. A springing POA provides that an agent cannot act, until the principal is determined to be incapacitated based on the criteria listed in the POA.

The “springing POA” frequently says the determination of incapacity will be made by the principal’s spouse and a licensed physician, or two licensed physicians.

There is also what is known as a medical power of attorney or living will. This is a legal document through which a principal authorizes an agent to make medical decisions for him or her, when they are incapable of making the decisions for themselves.

In either event, the agent does not become personally responsible for the financial expenses incurred by the principal, unless the agent agrees to take such responsibility in his/her individual capacity.

It is, therefore, important to execute documents as an agent and indicate you are doing so as an agent.

For example, you, Jim Smith, would sign for principal Mary Smith as follows: “Mary Smith, by Jim Smith, attorney-in-fact,” or “Jim Smith, as agent for Mary Smith, under power of attorney.”

When signing a contract with respect to nursing home care, be wary of agreeing to individually be the “responsible party.” That term may be defined to assign additional obligations, meaning being responsible for the bill.

Remember to sign everything as agent under the power of attorney.

Reference: nj.com (April 12, 2022) “What does becoming someone’s ‘power of attorney’ mean?”

 

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Do Single People Need Estate Planning? – Annapolis and Towson Estate Planning

In evaluating your needs for estate planning, look at what might happen if you die intestate – that is, without a last will and testament. Your assets will likely have to go through the probate process, which means they will be distributed by the court according to the state intestate succession laws, says Hood County News’ recent article entitled “Even ‘singles’ need estate plans.”

Even if you do not have children, you may have a few nephews or nieces—or children of cousins or friends— to whom you would like to leave some of your assets. This can include automobiles, collectibles and family memorabilia. However, if everything you own goes through probate, there is no guarantee that these individuals will end up with what you wanted them to have.

If you want to leave something to family members or close friends, you will need to say this in your will. However, you also may want to provide support to one or more charitable organizations. You can just name these charities in your will. However, there may be options that could provide you with more benefits.

One option is a charitable remainder trust. With this option, you would transfer appreciated assets – such as stocks, mutual funds or other securities – into an irrevocable trust. The trustee, whom you have named (note that you could serve as trustee yourself) can then sell the assets at full market value, avoiding the capital gains taxes you would have to pay if you sold them yourself, outside a trust. If you itemize, you may be able to claim a charitable deduction on your taxes. The trust can purchase income-producing assets with the proceeds and provide you with an income stream for the rest of your life. At your death, the remaining trust assets will pass to the charities you have named.

There is also a third entity that is part of your estate plans: you. Everyone should make arrangements to protect their interests. However, without an immediate family, you need to be especially mindful of your financial and health care decisions. That is why, as part of your estate planning, you may want to include these two documents: durable power of attorney and a health care proxy.

A durable power of attorney allows you to name a person to manage your finances, if you become incapacitated. This is especially important for anyone who does not have a spouse. If you become incapacitated, your health care proxy (health care surrogate or medical power of attorney) lets you name another person to legally make health care decisions for you, if you cannot do so yourself.

Reference: Hood County News (Dec. 17, 2021) “Even ‘singles’ need estate plans”

 

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Does an Elder Orphan Need an Estate Plan? – Annapolis and Towson Estate Planning

Estate planning for the future is even more important for elder orphans than for those with a spouse or family members, according to this recent article “Savvy Senior: How to get help as an elder orphan” from The Virginia Gazette. There is no one single solution, but there are steps to take to protect your estate, health and provide for long-term care.

Start with the essential estate planning documents. These documents will protect you and ensure that your wishes are followed, if you become seriously ill or when you die. These documents include:

A durable Power of Attorney to designate someone to handle financial matters in the event of incapacity.

An Advanced Health Care Directive, including a Living Will, to tell your health care provider what kind of care you want if you become incapacitated.

A Health Care Power of Attorney, naming a person of your choice to make medical decisions on your behalf, if you are unable to do so.

A Will to direct how you want your property and assets to be distributed upon your death and to name an Executor who will be in charge of your estate.

Your best option to prepare these documents is an experienced estate planning attorney. Trying to do it yourself is risky. Each state has its own laws for these documents to be valid. If the documents are not accepted, the court could declare your will invalid and your directions will not be followed.

People with families typically name a responsible adult child as their power of attorney for finances, as executor or for health care decisions. If you do not have adult children, you may ask a trusted friend or colleague. Name a person who is younger than you, organized and responsible and who will likely be available and willing to service.

If the person you name as executor lives in another state, you will need to check with your estate planning attorney to see if there are any special requirements.

If you do not have a friend or even a distant relative you feel comfortable assigning this role to, your estate planning attorney may be able to suggest alternatives, such as an aging life care manager. These professionals are trained in geriatric care and often have backgrounds in social work or nursing.

If you are reluctant to complete the legal documents mentioned above or start having them prepared and then fail to complete them, you may face some unpleasant consequences. A judge may appoint a guardian to make decisions on your behalf. This guardian is likely to be a complete stranger to you. They will be legally empowered to make all decisions for you regarding your health care, end-of-life care and even your burial and funeral services.

Unless you are comfortable with a court-appointed person making health care and other decisions for you, call an estate planning attorney and start making plans for the future.

Reference: The Virginia Gazette (April 1, 2022) “Savvy Senior: How to get help as an elder orphan”

 

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Taking Care of Dying Parent’s Financial Affairs Can Be Challenging – Annapolis and Towson Estate Planning

It is not uncommon for adult children to have to face a parent’s decline and a stay in hospice at the end of their life. The children are tasked with trying to prepare for his passing. This includes how to handle his financial matters.

Seniors Matter’s recent article entitled “How do I handle my father’s financial matters now that he’s in hospice?” says that caring for a sick family member is a challenging and emotional time. Because of this major task, it is easy to put financial considerations on the back burner. Nonetheless, it is important to address a few key issues.

If a family member is terminally ill or admitted to hospice – and you are able to do so – it may be a good idea to start by helping to take inventory of your family member’s assets and liabilities. A clear idea of where their assets are and what they have is a great starting point to help you prepare and be in a better position to manage the estate.

An inventory may include any and all of the following:

  • Real estate
  • Bank accounts
  • Cars, boats and other vehicles
  • Stocks and bonds
  • Life insurance
  • Retirement plans (such as a 401(k), a traditional IRA, a Roth IRA and a SEP IRA);
  • Wages and other income
  • Business interests
  • Intellectual property; and
  • Any debts, liabilities and judgments.

Next, find out what, if any, estate planning documents may be in place. This includes a will, powers of attorney, trusts, a healthcare directive and a living will. You will need to find copies.

This is hard to do while a loved on is dying, but it can make the aftermath easier and less stressful.

Reference: Seniors Matter (Feb. 22, 2022) “How do I handle my father’s financial matters now that he’s in hospice?”

 

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Write a Letter of Instruction for Loved Ones – Annapolis and Towson Estate Planning

A letter of intent is frequently recommended for parents of disabled children to share information for when the parent dies. However, letters of intent or a letter of instruction can also be a helpful resource for executors, says the article “Planning Head: For detailed instructions consider a letter of instruction” from The Mercury. This is especially valuable, if the executor does not know the decedent or their family members very well.

For disabled children, legal documents address specific issues and are not necessarily the right place to include personal information about the child or the parent’s desires for the child’s future. Estate plans need more information, especially for a minor child.

The goal is to create a document to make clear what the parents want for the child after they pass, whether that occurs early or late in the child’s life.

For a disabled child, the first questions to be addressed in the estate plan concern who will care for the child if the parent dies or becomes incapacitated, where will the child live and what funds will be available for their care. Once those matters are resolved, however, there are more questions about the child’s wants and needs.

The letter of intent can answer questions about the special information only a parent knows and is helpful in future decisions about their care and living situation.

The letter of intent concerning an estate should also include information about wishes for a funeral or burial and contain everything from directions for the music list for a ceremony to the writing on the headstone.

Once the letter of intent is created, the next question is, where should you put it so it is secure and can be accessed when it is needed?

Do not put it in a bank safe deposit box. This is a common error for estate planning documents as well. The executor may only access the contents of the safe deposit box after letters of administration have been issued. This happens after the funeral, and sometimes long after the funeral. By then, it will be too late for any instructions.

Keeping estate planning documents in a safe deposit box presents other problems. If the bank seals the safe deposit box on notification of the owner’s death, the executor will not be able to proceed. This can sometimes be prevented by having additional owners on the safe deposit box, if permitted by the bank . Any additional owners will also need to know where the key is located and be able get access to it.

The better solution is to keep all important documents including wills, financial power of attorney, health care powers, living wills, or health care directives, insurance forms, cemetery deeds, information for the family’s estate planning attorney, financial advisor, and CPA, etc., in one location known to the trusted person who will need access to the documents. That person will need a set of keys to the house. If they are kept in a fire and waterproof safe in the house; they will also need the keys to the safe.

If the parents move or move the documents, they will need to remember to tell the trusted person where these documents have moved. Otherwise, a lot of work will have been for naught.

Reference: The Mercury (Jan. 19, 2022) “Planning Head: For detailed instructions consider a letter of instruction”

 

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What Is Elder Law? – Annapolis and Towson Estate Planning

WAGM’s recent article entitled “A Closer Look at Elder Law“ takes a look at what goes into estate planning and elder law.

Wills and estate planning may not be the most exciting things to talk about. However, in this day and age, they can be one of the most vital tools to ensure your wishes are carried out after you are gone.

People often do not know what they should do, or what direction they should take.

The earlier you get going and consider your senior years, the better off you are going to be. For many, it seems to be around 55 when it comes to starting to think about long term care issues.

However, you can start your homework long before that.

Elder law attorneys focus their practice on issues that concern older people. However, it is not exclusively for older people, since these lawyers counsel other family members of the elderly about their concerns.

A big concern for many families is how do I get started and how much planning do I have to do ahead of time?

If you are talking about an estate plan, what’s stored just in your head is usually enough preparation to get the ball rolling and speak with an experienced estate planning or elder law attorney.

They can create an estate plan that may consists of a basic will, a financial power of attorney, a medical power of attorney and a living will.

For long term care planning, people will frequently wait too long to start their preparations, and they are faced with a crisis. That can entail finding care for a loved one immediately, either at home or in a facility, such as an assisted living home or nursing home. Waiting until a crisis also makes it harder to find specific information about financial holdings.

Some people also have concerns about the estate or death taxes with which their families may be saddled with after they pass away. For the most part, that is not an issue because the federal estate tax only applies if your estate is worth more than $12.06 million in 2022. However, you should know that a number of states have their own estate tax. This includes Connecticut, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington, plus Washington, D.C.

Iowa, Kentucky, Nebraska, New Jersey, and Pennsylvania have only an inheritance tax, which is a tax on what you receive as the beneficiary of an estate. Maryland has both.

Therefore, the first thing to do is to recognize that we have two stages. The first is where we may need care during life, and the second is to distribute our assets after death. Make certain that you have both in place.

Reference: WAGM (Dec. 8, 2021) “A Closer Look at Elder Law“

 

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Is It Necessary to have a Medical Power of Attorney? – Annapolis and Towson Estate Planning

There is no way around it, this is a difficult conversation to have with aging parents or loved ones. Who will take care of parents when they cannot take care of themselves? Do they have their estate plan in order? According to this article from Health, an important detail is often overlooked: “A Health Care Power of Attorney Is Essential for Aging Parents—Here’s Why.”

Referred to as a health care proxy or a medical power of attorney, a health care power of attorney allows a person to choose someone to make medical decisions on their behalf, if they are unable to do so. This is a different document than a living will, which serves to let a person outline their wishes if they cannot communicate for end-of-life care.

Naming a medical proxy in advance lets the person conduct their wishes, with full and complete knowledge of what those wishes are.

A health care power of attorney is also not the same as a last will and testament, which goes into effect after a person dies. There is nothing in a health care power of attorney concerning wealth distribution. The will and trusts address those matters.

Giving a trusted person the legal power to make medical decisions is a big step, but one that provides a sense of control and peace of mind. There should be a first choice and an alternate, in case the first person, usually a spouse, is unable or unwilling to serve.

Without a medical power of attorney, the family may need to go to court to get legal permission to make decisions. It is the last thing anyone wants to do when their loved one is in a critical medical situation. Imagine having to leave the hospital to go to court, when the minutes are ticking away and your parent is in the midst of medical crisis.

If someone fails to name a medical proxy and becomes incapacitated, the hospital itself will most often step in to make treatment decisions or rely on the rules of the state to pick a family member to make decisions. The person named by the hospital might not be the person the family wants, but it will have no choice.

Like having an estate plan in place, having a medical proxy in place eliminates a lot of unnecessary stress. Most parents name the adult children they feel will make decisions in their best interest. The responsible, dependable child, regardless of their age relative their siblings, is often named. If siblings do not get along and have a history of fighting, it may be best to name a cousin or trusted family friend.

An experienced estate planning attorney will make sure the health care proxy documents comply with the laws in the person’s state of residence. Every state has its own forms, and its own laws.

A discussion needs to take place between the person and the people they name in the health care proxy. Make sure the proxy is willing to take on the role and understands the person’s wishes.  The form should also be submitted to a health care facility or doctor’s office, so it is on file if it is needed. Unexpected events occur every day—being prepared makes it easier for loved ones.

Reference: Health (Dec. 1, 2021) “A Health Care Power of Attorney Is Essential for Aging Parents—Here’s Why”

 

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How to Approach Parents about Estate Planning – Annapolis and Towson Estate Planning

One of the lessons learned from the pandemic is not to wait for the “right time” to prepare for death or incapacity. Aging parents who do not have a plan in place leave their children with a number of obstacles, says this recent article entitled “Why (and How) To Talk To Your Parents About Estate Planning” from NASDAQ.

One is scrambling to unravel the family finances at a time when you are still grief-stricken. Another is managing costs associated with severe illness and death. Incapacity can be even more complicated. It is more so, if the family has to apply for guardianship to make medical and financial decisions for a parent who cannot speak for themselves or manage their financial affairs.

To prevent a host of problems and expenses, start talking with aging parents about estate planning.  They do not have to live in an  “estate” to have an estate. This is simply the term used to describe all assets owned by a couple or individual.

An estate plan is a tool to convey intentions about assets and health. The first step may be to create an inventory of all assets and belongings, from the family home to personal belongings and digital assets. Next, is to have some tough conversations about their wishes for end-of-life care and medical decisions.

A few questions to get started:

  • Who should be the primary caregiver and decision maker?
  • How will health care expenses be paid?
  • Who do you want to make medical decisions?
  • What do you want to happen to your property after you die?
  • Should the family sell the home, or should one of the children inherit it?
  • Do you have any estate planning documents, and where are they kept?

Estate planning is different for everyone, so be wary of downloading basic estate documents from the web and hoping they will be valid. An experienced estate planning attorney will create the necessary documents, as per the laws of your parents’ state of residence, and reflecting their wishes.

If there is no will, or if a will is deemed invalid by the court, the laws of the state will govern how assets are distributed. Making sure a will is properly prepared, along with other estate planning documents, is a more efficient and less costly way to go.

Estate planning includes tax planning, which occurs when property passes from one person to another. Estate and inheritance taxes are the most common concern. While most Americans do not need to worry about the federal estate tax, individual states have their own rules and thresholds. Some states have both state estate taxes and inheritance taxes. There are ways to minimize taxes, from gifting during your parent’s lifetimes, to establishing trusts for beneficiaries.

An estate plan includes a Will, a Power of Attorney for financial matters, a Health Care Proxy so someone can make health care decisions, a Living Will (also known as an Advance Care Directive) and usually some kind of trust. Each serves a different purpose, but all name a designated person to act in a legal manner to handle the affairs of the person, while they are living and after they have passed.

Some families are more comfortable than others about talking about death and money, so you probably already know what to expect from your parents when trying to have this conversation. Be mindful of their feelings, and those of your siblings. These are hard, but necessary conversations.

Reference: NASDAQ (Nov. 10, 2021) “Why (and How) To Talk to Your Parents About Estate Planning”

 

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Do College Kids Need Estate Planning? – Annapolis and Towson Estate Planning

The topic of estate planning is frequently overlooked in the craze to get kids to college.

When your child leaves home, it is important to understand that legally you may not hold the same rights in your relationship that you did for the first 18 years of your child’s life.

Wealth Advisor’s article entitled “Estate Planning Documents Every College Student Should Have in Place” says that it is crucial to have these discussions as soon as possible with your college student about the plans they should put into place before going out on their own or heading to college. An experienced estate planning attorney can give counsel on the issues concerning your child’s physical health and financial well-being.

When your child turns 18, you are no longer your child’s legal guardian. Therefore, issues pertaining to his or her health cannot be disclosed to you without your child’s consent. For instance, if your child is in an accident and becomes temporarily incapacitated, you could not make any medical decisions or even give consent. As a result, you would likely be denied access to his or her medical information. Ask your child to complete a HIPAA release. This is a medical form that names the people allowed to get information about an individual’s medical status, when care is needed. If you are not named on their HIPAA release, it is a major challenge to obtain any medical updates about your adult child, including information like whether they have been admitted to a hospital.

In addition, your child also needs to determine the individual who will manage their healthcare decisions, if they are unable to do so on their own. This is done by designating a healthcare proxy or agent. Without this document, the decision about who makes choices regarding your child’s medical matters may be uncertain.

Your child should ensure his or her financial matters are addressed if he or she cannot see to them, either due to mental incapacity or physical limitations, such as studying abroad. Ask that you or another trusted relative or friend be named agent under your child’s financial power of attorney, so that you can help with managing things like financial aid, banking and tax matters.

Reference: Wealth Advisor (Sep. 24, 2021) “Estate Planning Documents Every College Student Should Have in Place”

 

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