As you may recall, I have been following the case of Astor Brooke, and her son Anthony who has been on trial for awhile. When the guilty verdict came in, I didn't blog on this since it was found all over the wire services. Russ Wiles, a reporter for the Arizona Republic, had a great column last week on the lessons to be learned from this case. See "Astor Case Has Lessons For All of Us", October 18, 2009. The fact that the jury found Anthony guilty of theft from his incapacitated mother, his use of "her" power of attorney to steal from her entered center stage. Mr. Wiles points out that this is a wake-up call for people that use powers of attorney.
Our office prepares financial and health care powers of attorneys for almost all our clients. Great tools that enable the person you trust to take care of your affairs when you are no longer able to. Companioned with a trust, the power of attorney is an ideal way to avoid conservatorships. In my opinion, these documents are almost always an essential part of the estate plan. But as the article points out, there are pitfalls.
These documents have a lot of power. If it is a general durable power of attorney, there may be multiple pages and provisions authorizing the agent you selected to act in almost any financial transaction. The article goes on to say that the Astor case illustrates that the person selected must be responsible, diligent and reasonably astute.
The article went on to discuss certain changes being considered in the law. Currently in Arizona, there are civil and criminal penalties against those that abuse the power of the documents. Some feel more is needed. It has been my experience that most families or loved ones fail to oversee the actions of the agent and by the time abuse is discovered, the funds are spent with no ability to extract restitution from the wrongdoer.
The Uniform Law Commission, which is a group of scholars that promote exactly what their name implies, wants to make additional changes: 1. Provide third-party reviews when a spouse, heir, or someone else has reason to believe the designated agent isn't acting properly. Currently, our only options are to file with the court, which costs money, or seek help from the agencies, i.e. the attorney generals' office, Adult Protective Services, etc. 2. Unrelated to the abuse issue, the Commission is dealing with another problem. Sometimes we have a problem getting banks and financial institutions to accept a power of attorney, even if valid and well created. Often the institution will say they want their power of attorney form used or they want a more recent power of attorney. If the person is already incapacitated, this is an impossible request. The Commission is trying to get implemented into law the requirement that the power of attorney presented to the bank, brokerage firm or title company must be accepted. There is a right however for these institutions to seek a review if a reason of concern arises. There are other changes being proposed that may be beneficial.
Mr. Wiles then states that as the population ages with issue of incapacity rising, these powers of attorney will become more prevalent. This will be a great help to this segment of the population but as the Astor case shows, consideration and caution will also have to be part of the process.
My best,
Jim
Monday, October 26, 2009
Monday, October 19, 2009
Question and Answer
Q: I executed my trust 15 years ago and haven't looked at it since. Should I ask an attorney to review it to see if any changes need to be made? If not, when should a trust be reviewed by an attorney?
A: Unfortunately there isn't a perfect rule of thumb here but I will try to give a good one. Have an attorney review your trust, or will, if there are any changes in your family situation such as divorce, marriage, death, or a concern over a beneficiary/heir. Otherwise, once every 3-5 years is a good idea. Of course if you hear about any changes in the estate tax code or local trust law, and think the changes may apply to you, call.
This raises the next question, won't the attorney contact me? Good practice says yes they will but they are not legally obligated to notice you. Most estate plans are a one-time only project. You hire an attorney for a specific job, upon completion, your relationship is over. Most firms will even say this in the final letter from their office. This of course protects the law firm but it does place the burden on the clients to stay on top of changes in their family and the laws. If you schedule period reviews of your estate plan every 3-5 years, then your chances of any changes getting incorporated in your plan are much higher.
A: Unfortunately there isn't a perfect rule of thumb here but I will try to give a good one. Have an attorney review your trust, or will, if there are any changes in your family situation such as divorce, marriage, death, or a concern over a beneficiary/heir. Otherwise, once every 3-5 years is a good idea. Of course if you hear about any changes in the estate tax code or local trust law, and think the changes may apply to you, call.
This raises the next question, won't the attorney contact me? Good practice says yes they will but they are not legally obligated to notice you. Most estate plans are a one-time only project. You hire an attorney for a specific job, upon completion, your relationship is over. Most firms will even say this in the final letter from their office. This of course protects the law firm but it does place the burden on the clients to stay on top of changes in their family and the laws. If you schedule period reviews of your estate plan every 3-5 years, then your chances of any changes getting incorporated in your plan are much higher.
Tuesday, October 6, 2009
Managing Finances After Death of a Spouse
From the October 4, 2009, Chicago Tribune.com, Janet Kidd Stewart reports in the Article How to manage finances after death of spouse that one key is "Organization".
She reports while it is hard to discuss while both partners are alive, you need to do so. Firstly, get organized. She mentions gathering legal and financial documents, including any death certificates you may need, select a funeral home, find a marriage certificate, spousal birth certificates, Social Security cards, insurance policies, military discharge papers, wills and trust documents and all retirement and investment account records.
I cannot agree more. Having all these documents handy in order to avoid the search when the emotional disability caused by death is immeasurable. It isn't long before the phone calls need to be made to the funeral home, social security, brokerage houses, retirement funds and life insurance companies. Most, if not all, will require one or more of these documents in order to start the process.
She next reported on something I see in my practice with mostly older clients. Sometimes the the surviving spouse was not the one that originally handled the financial planning. Now the survivor will need to start thinking about managing money. It can be as basic as never having learned to manage the bank account to what investments are suitable for the survivor. One advice she cites in the article I really like. She cites the advice to let a family member or close friend help to screen calls to avoid scams while the survivor is vulnerable. I'm sorry to say but people scan the obituaries to find their next prey. The article next states the sound advice that "you have to recognize you're still in shock. Don't run out and do something you can't reverse," said Alexandra Armstrong, a financial planner and co-author of "On Your Own: A Widow's Passage to Emotional and Financial Well-Being. "I've spoken to widow after widow who couldn't remember any conversations they had the first month after their spouse died." This is absolutely the case. Yet, you need to take action as soon as you are able. Figure out your budget and seek a trusted advisor to assist with your investments. Our office, or a close and trust family member or friend, can give a referral. You will need to make some lifestyle changes, very often this includes financial changes as well.
I could not have agree with this article more. While this seems to be covering financial planning, this almost always dovetails into good estate planning.
Very best,
Jim
She reports while it is hard to discuss while both partners are alive, you need to do so. Firstly, get organized. She mentions gathering legal and financial documents, including any death certificates you may need, select a funeral home, find a marriage certificate, spousal birth certificates, Social Security cards, insurance policies, military discharge papers, wills and trust documents and all retirement and investment account records.
I cannot agree more. Having all these documents handy in order to avoid the search when the emotional disability caused by death is immeasurable. It isn't long before the phone calls need to be made to the funeral home, social security, brokerage houses, retirement funds and life insurance companies. Most, if not all, will require one or more of these documents in order to start the process.
She next reported on something I see in my practice with mostly older clients. Sometimes the the surviving spouse was not the one that originally handled the financial planning. Now the survivor will need to start thinking about managing money. It can be as basic as never having learned to manage the bank account to what investments are suitable for the survivor. One advice she cites in the article I really like. She cites the advice to let a family member or close friend help to screen calls to avoid scams while the survivor is vulnerable. I'm sorry to say but people scan the obituaries to find their next prey. The article next states the sound advice that "you have to recognize you're still in shock. Don't run out and do something you can't reverse," said Alexandra Armstrong, a financial planner and co-author of "On Your Own: A Widow's Passage to Emotional and Financial Well-Being. "I've spoken to widow after widow who couldn't remember any conversations they had the first month after their spouse died." This is absolutely the case. Yet, you need to take action as soon as you are able. Figure out your budget and seek a trusted advisor to assist with your investments. Our office, or a close and trust family member or friend, can give a referral. You will need to make some lifestyle changes, very often this includes financial changes as well.
I could not have agree with this article more. While this seems to be covering financial planning, this almost always dovetails into good estate planning.
Very best,
Jim
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