power of attorney | Olivia K. Smith, Attorney at Law

Estate Planning: What You Need to Know

October 31, 2022Filed Under: Estate Planning

Despite its reputation as a rite of passage for the very wealthy, estate planning is simply the accumulation of real estate an individual owns, and most people own some or all of their own property. Property ownership includes individual as well as jointly owned bank accounts, stocks and bonds, retirement accounts, real estate, jewelry, vehicles, your online digital footprint, and even pets. Short of being utterly destitute, you have an estate, and planning for it helps to protect yourself, your family, and your loved ones.

According to Caring.com, fewer Americans than ever are engaging in estate planning. The number of adults who have a will or other types of estate planning documents has fallen nearly 25 percent since 2017. Astonishingly, the demographic of older and middle-aged adults are less likely to have wills and estate plan documents at roughly the same 25 percent rate. Additionally, a growing number of Americans lack the resources and knowledge as to how to get a will. Overall, the prevalence of estate planning documents since 2017 has shown a decrease of almost 25 percent.

In their annual survey, Caring.com posed the question to its participants as to why they have put off having estate planning documents, and increasingly people cite a lack of education or the perceived cost of estate planning as the most significant reason. Yet 60 percent of the same respondents think planning their estate is either somewhat or very important. Data shows that as a person’s income increases, their likelihood of having estate planning documents like a will, living trust, or advanced health care directives also increases. Still, the number of people with said documents continues to decrease, even in higher-income groups.

In 2020, study participants in the highest income group show a decrease of 26 percent regarding estate planning documents. Even those Americans with the resources to create a will feel it is something they can put off until later in life, which has disastrous consequences for their loved ones in the case of unexpected death.

caring.com

Estate planning is the process of outlining specific instructions as to how you want your money, and other property dispersed upon your death. It includes decisions about your medical care and final arrangements as well. Wills, trusts, and advanced medical directives are the three primary estate planning documents you need to understand and put into place as soon as possible.

A will instructs how to divide up assets, debt, personal property, and more. A will can cover all of your estate planning needs however, it does come with a few limitations. First, a court process called probate must be started upon death. During this sometimes lengthy process, a judge oversees the transfer of ownership of your property according to your will. Once a probate is opened, the will becomes public knowledge, as well as the property that the deceased owns. For those who wish to avoid court or who wish to keep their affairs private, a living trust may be the best option.

A living trust takes effect at the moment it is enacted while your will only becomes effective upon your death. Planning with a living trust can be more expensive, but it provides the advantage of avoiding probate court and keeps all of your information (and your beneficiaries’ information) private. Further, a living trust can provide for the management of your assets should you become disabled.

An advanced health care directive, like a living trust, is designed to take effect during your lifetime. This directive stipulates your end-of-life wishes as well as what should happen if you become incapacitated and unable to make decisions about your medical care.

A durable power of attorney covers who will make financial decisions for you if you are unable to. You can specify more than one agent, and you can be very specific about what that agent can do on your behalf, including the management of online accounts.

If you are ready to discuss your planning needs, we would be honored to help. If you have an existing plan, we would be happy to review that plan to make sure it still works for you given your current health and financial circumstances. Please don’t hesitate to contact us at 513-771-2444 If you have questions or would like to discuss your personal situation.

What It Means to Be a “Fiduciary”

February 14, 2022Filed Under: Elder Law, Estate Planning

A family member or friend may need you to be their power of attorney. Your person may be planning for when they might become unable to take care of their affairs. For example, they might become disabled or incapacitated, and they would need a trusted person to step in and manage for them. This is also necessary if the person is writing a will, and his or her estate must go through the probate process.

If you are named as a guardian, executor of a person’s will, trustee, or power of attorney, the law calls you a “fiduciary.” You must act in the best interests of the person who has named you – “selflessly,” in other words. You must act loyally and in good faith.

You are not allowed to use the person’s property for your own profit. You cannot give gifts to yourself or others if the person has not authorized you to do that. You cannot mingle your person’s property with your own. If you spend the person’s money, you must carefully document the amount you spend and for what purpose.

What is a Fiduciary Relationship?

The “fiduciary” relationship imposes the highest duty in law. If you violate that duty, you may become personally liable.

Or, if you are the one who is thinking about whom you would like to name as your power of attorney (or the like), you must be sure you trust that person absolutely.

A recent New Jersey probate case shows what can go wrong. Mother Christine named Patricia, one of her daughters, to be the executor of Christine’s will. On Christine’s death, her other daughter, Diane, received a check from Christine’s estate for $10,000.00 – yet Christine’s house had sold for nearly $230,000.00.

The judge ordered Patricia to produce an “accounting” of where all that money had gone. An accounting is an inventory of estate assets and a record of all income and expenses. Patricia would not do so. Examination of the estate’s inheritance tax return revealed that despite a gross estate value of $319,368.00, the estate bank account contained only $6,886.00.

Patricia had spent $40,000.00 on what she claimed were home repair expenses, but she could produce no building permits. She had also given herself $110,000.00 as “fees” for her executor duties, plus a “gift” to herself of $27,000.00. No wonder she pled the Fifth Amendment.

The judge entered a judgment against her of $200,422.00. The judgment was affirmed on appeal, but with the requirement that the trial judge calculates the damages more specifically.

The case is In re Cenaffra, and can be found here:

https://law.justia.com/cases/new-jersey/appellate-division-unpublished/2020/a5731-17.html

Most people are not like Patricia. If you are named as guardian, power of attorney, or executor, follow a few simple principles. Make sure you don’t personally benefit from what you do with the other person’s property. You might be compensated fairly for your work, but refrain from doing anything that might look like a conflict of interest. If there are other beneficiaries waiting to receive their inheritances, be transparent. Keep the beneficiaries informed. Write down why you acted as you did, at the time you acted. Document everything. Keep receipts.

If you have questions or would like to discuss your particular situation, please don’t hesitate to reach out. We help people determine who should act in their best interests, and we can help those who are already named. If you’d like to discuss your particular situation, please contact our Cincinnati office by calling us at 513-771-2444. We welcome the opportunity to speak to you.

Why Estate Planning Is Important to Younger Adults

January 31, 2022Filed Under: Estate Planning

Most young adults don’t consider estate planning a priority. Young adults in their twenties and thirties often think they don’t own enough to constitute an estate. However, an estate is the total of all you own – money, investments, real estate, vehicles, business interests, digital assets (including cryptocurrency), and other personal belongings. No matter how much or minor, you own your possessions need to go somewhere after you die. You may not think you will die young, but if the coronavirus pandemic has taught us anything, it is that life is uncertain. It is a myth that estate planning is just for the rich and the old.

What legal documents constitute an estate plan?

Some documents may vary depending on your wealth or financial structure; however, everyone should have a will. At the time of your death, everything you own becomes your estate. Your estate will go through a probate process where the court will determine what happens to you everything you own that doesn’t have a co-owner or beneficiary. Because the probate court will inventory your assets and notify and pay creditors, your will is a public record. If you have a will, the probate court will use it as a guide. In the absence of a will (dying intestate), the court will use state intestacy laws to determine who inherits your assets.

What does a will establish in an estate plan?

A will designates two critical things. The first is the naming of your executor. An executor is responsible for carrying out the instructions in your will, making payments on any outstanding debts, distributing assets to named heirs, and filing your final taxes. Second, if you have dependents, your will names the guardian and backup guardian to provide care for them. The naming of an executor and guardian for a dependent can only happen in a will.

The value of establishing an advance healthcare directive for young adults

All young adults should have an advance healthcare directive, also known as a medical directive or living will, which includes a durable healthcare power of attorney. These legal documents specify your healthcare wishes if you are permanently incapacitated or for end-of-life healthcare and designate who will make those decisions on your behalf according to your instructions. In addition, it is imperative to include a HIPAA privacy authorization form for your durable healthcare power of attorney or trustee. The form permits medical and healthcare professionals to disclose pertinent health information and medical records to your healthcare proxy.

While it may be uncomfortable to contemplate being unable to make decisions for yourself as a young adult, accidental injuries, heart disease, cancer, and strokes, to name a few, are becoming all too prevalent in young American adults. Making plans while you are competent and able is a prudent course of action and can bring you a sense of calm, knowing you have confronted the possibility and have a plan in place.

The value of a revocable living trust for young adults

Some young adults will have enough assets, real estate, or business interests to make a revocable living trust worthwhile. This trust type avoids the probate process, ensuring privacy. There is no limit to the number of times you can amend a living trust. You may change asset distribution or add assets as you acquire more throughout your life. An estate planning attorney can help you determine if your financial situation and age warrant the setting up of this type of trust.

You probably have more assets than you realize. To assess your situation, inventory all of your belongings which typically includes but is not limited to:

All bank accounts in your name and their approximate balances
All investments you own
Any property or real estate you own
Any retirement plans you have, including pensions
Any insurance policies you carry
Any retirement plans, including pensions, you own
Businesses you own, whether in part or whole
Valuable personal property such as your grandmother’s wedding ring, a collection of trading cards, or a grandfather clock
Digital assets such as cryptocurrency, income-generating online storefronts, influencer accounts, or income-producing subscription accounts like TwitchTV
Include all email accounts, login URL’s including user names and passwords where you receive critical communications
All outstanding debts

Once you realize the scope of your belongings and assets, you can begin formulating your estate plan. First, consider who you want to receive your possessions and think about secondary beneficiaries, especially over time, as early estate planning requires frequent reviews and updates in the event of deaths, marriage, divorce, or the birth of a child.

Once you have an inventory and have begun thinking about who should handle things upon your passing and who you want as beneficiaries, it’s time to sit down with an estate planning attorney. Working with an estate planning attorney is easier than ever now, as COVID-19 increases the use of video and smartphone conferencing that streamlines legal planning. Estate planning attorneys like us can create a plan that best suits your situation, even if you aren’t sure what to do. Proper legal documents can save your loved ones from an expensive probate trial should someone contest your will. Even as a young adult, it is best to start planning now, even if it is just with some primary documents.

We would be happy to discuss your needs in a confidential setting that you are comfortable with – by video, over the phone, or in person. If you’d like to discuss your particular situation, please don’t hesitate to reach out. Please contact our Cincinnati office by calling us at 513-771-2444 with any questions.

Always Plan for the Unexpected

August 9, 2021Filed Under: Estate Planning

Many of us have been left unprepared and confused by the sudden rise of the coronavirus. While we can’t predict when something like COVID-19 might strike, we can take steps to prepare for an unexpected crisis to help reduce the stress on ourselves and family members.

Designate a family member who will check on elderly relatives. Make sure everyone knows who will responsible for checking in with an elderly loved one each day. Also set up a process for notifying other family members of an elderly loved one’s condition – this may including sending an email, text messaging, or phone calls. The method is not as important as agreeing to a process and sticking to it so all family members stay informed.

Seek medical advice in the event of a health care crisis. There has been a great deal of reporting about COVID-19, and some of it has been inconsistent. Reach out to your trusted medical team to understand what you and your loved ones should be doing in this, or any, health care crisis.

Make sure someone knows how to get your bills paid if you are unable to. This type of power can be provided to an agent under a financial power of attorney. Powers of attorney can include numerous powers so it is critical to talk with legal counsel before signing any type of legal document that gives someone else authority over your finances.

Be sure there is an accurate list of medical prescriptions readily available in your home. If you become ill, it is important that someone knows the medicines you take and the dosage. Keep this in your home where others can find it, and make sure the list is dated, noting any time it is updated. Many of us assume that our doctor has an updated prescription list, but if you are seeing multiple specialists, that may not be true.

Designate someone you trust to make medical decisions for you if you are unable to. This should not be a form that is downloaded from the internet. Deciding what type of treatment you want, where you want to live, and what should happen if you have a terminal illness are serious topics that should be considered carefully, then translated into a proper legal document.

Planning for an unexpected health care or financial crisis can help relieve a great deal of stress for you and your family. We would welcome the opportunity to help you come up with a plan that works for you. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us at 513-771-2444.