Your Resolution: Keep Fake Children Out of It
Recently a post went out from our office across a few social media outlets that pretty much sums it up when it comes to reasons why most folks, especially parents and smallbiz owners need a will. The post went something like: “Got kids? Get a will. Got more than one heir? Get a will. Got a high risk job? Get a will. Got the picture? If it\’s a Renoir, get a will.” The Issue: Children While we’ve written here repeatedly about how important it is for parents to have a will because of the guardianship provision, it bears repeating. Only by having a valid will can you nominate a potential guardian or potential guardians for your children. If you’re a single parent, having a valid will is all the more important. You don’t want an irresponsible parent having control over your child’s estate, which he or she will have, if you’ve followed this series and bought life insurance, or daily care if the other biological parent believes that chips and fruit punch make for a good breakfast. An alternative issue about children can be found in the converse: If you’re single and have been responsible intimately, you want to ensure that “fake children” cannot inherit from you. The issue: Multiple heirs. Wills or the potential for inheritance often results in less than happy-go-lucky family dynamics, especially if someone dies without a will and with a couple of children or a few nieces and nephews. So a will allows one to head the family feud off at the pass. You can state who will get what and when and the best part is you don’t have to say why. Frankly, that should be communicated long before the ink on the will is dry. If you’re unsure about the allocation, you can leave it to the discretion of the executor and have a “no-contest clause” inserted and then talk about it at Thanksgiving. That might provide the impetus needed for having that “conversation.” The Issue: High Risk Profession. Do you work as a carrier of jet fuel? Are you a criminal defense attorney or a divorce lawyer with walk-in offices? High-wire artist? Human rights attorney working in the hotspots, such as Afghanistan? The Issue: Art and other collectibles. People tend to put a value on everything from brown crock-pots to President Jefferson’s cravat. If you own anything that is similar to Jefferson’s cravat, the pen Clinton used when he signed DOMA, Reagan’s cowboy boots, Liberace’s cape, you need to get that or those items first appraised by a qualified appraiser. Next, you should have a will prepared that will determine how that valuable piece or collection is going to be managed, i.e., sold, handed down, donated. More than 70% of Americans don’t have a will and that percentage surely includes people who have children or who don’t plan to have children, folks with more than a few heirs who might argue over a collection of antique doohickeys. Children should be taught how to plan; one should plan appropriately for not having children; and doohickeys should also be in the plan – the estate plan that includes a will.
1 Easy Best Practice to Execute before the New Year
As we continue reviewing estate planning fundamentals, let’s consider last week’s Best Practices Estate Planning tip posted on Facebook: “Every adult, regardless of age and income level, needs a healthcare power of attorney.” Young adults, and even their parents, may think this is going overboard, especially if they live at home. Yet, an adult with capacity has the right to make healthcare decisions on his or her own and also has a right of privacy regarding those healthcare decisions and his or her medical information. Recently, the Health Insurance Portability and Accountability Act (HIPAA) was revised, increasing the privacy guards around the release of medical records and, thus, making it much more difficult for parents or next of kin to obtain this information and, especially to make medical decisions for adult children, without the requisite authority. Human beings experience a myriad of conditions and ailments, some of which we do not want our parents to know about, some of which we only want our parents to know about. Conversely, parents should share important medical history with children, so that children are well-informed about potential conditions that they or their children could experience as a result of inherited genes. Sometimes we don’t know about an inherited medical condition until an accident occurs. If, however, Mom is in an accident and hasn’t designated an adult child a Personal Representative on the HIPAA form, her adult child may not learn this important information. Like the property power of attorney, the healthcare power of attorney is a critical document for single parents with minor children. A minor child cannot be a healthcare power of attorney agent or a HIPAA personal representative and, if a minor is one’s only next of kin, then the document is even more important. Also similar to the property power of attorney, the agent’s authority for a healthcare power of attorney does not have to be effective immediately. However, language should consider emergency situations. Finally, if you’re considering separation or divorce, you should seriously consider executing powers of attorney that designate someone other than your spouse as the agent and personal representative. Do you really want someone who is going to be an ex-spouse to have the authority to “pull the plug”? So to round out the knowledge and authority needed for minimum estate planning protection, be sure to start the New Year with your property and healthcare power of attorney signed and tucked away.
The IRS Takes a Bite Out of DOMA, Pt 3
Before beginning today’s article in earnest, a brief recognition and review of the legislative process is relevant. Yesterday, Tuesday, November 5, 2013, was a historic day for Illinois. The state’s legislature voted affirmatively on the question of marriage equality, i.e., allowing Illinois same-sex couples to marry. Thus, Illinois LGBT couples, as of June 1, 2014, may enter into a legal state of loving matrimony. Listening to members on the floor of the House deliver the reasons why they favored the bill, SB10, one theme rang loud and clear: We should not be a society where the law treats individuals or groups in our population differently because other individuals or groups disagree with their lifestyles, don’t like them, or may not understand what makes them “different.” Sidebar: I’m saving arguments that address the reductio ad absurdum issue for later. Being one of those “different” kinda folks myself, I have always been a proponent of marriage equality and LGBT equal rights. Yet, when I saw and heard Catholics and African American men steadfastly and eloquently place their support behind the law, a sense of pride in our legislature, in our democratic system of governance, in our state, washed over me. While Illinois, most assuredly, has its fiscal woes, our money problems aren’t, or at least shouldn’t be, the ultimate issue. The ultimate issue is whether those of us with immutable differences, such as sexual orientation and identification, skin color, or ethnicity, should be afforded the same rights as those whose immutable characteristics are more commonplace. Surely, if we look deep enough, we will recognize that, in some way, we are all different, and our differences should not be the sole basis for refusing, abrogating, eliminating, or enlarging our rights individually and collectively. The fundamental rights of all should be equal. Therefore, if a state gives the right to marry or literally speaking, license to marry, to one group, it is an abomination to our system of democracy if we do not provide the same license to another. So it stands that Illinois citizens should applaud our legislators who lifted the rights of all Illinoisans yesterday when they provided marriage equality to our LGBT community. Now back to the business at hand, which is even more poignant for Illinois couples given the last 24 hours. Because of Windsor and the flurry of guidance that followed, disparate treatment of lawfully married same-sex couples under federal tax laws has been virtually eliminated. Therefore, estate and tax planning for same-sex married couples is more aligned with traditional estate planning methods for opposite-sex married couples. In the post Illinois Civil Union – make that the Illinois Religious Freedom and Marriage Fairness – Act and post Windsor plus guidance world, a same-sex married couple in Illinois should receive equal federal and Illinois treatment for purposes of income tax, estate tax, qualified retirement plans under ERISA, and FICA. However, practitioners must be mindful of the nuances between Illinois and federal law, such as, statute of limitations for amending returns, date of marriage recognition, portability*, and the fact that Illinois estate tax exemption is lower than the federal exemption. *Portability is the “check the box rule” that allows a surviving spouse to use the unused portion of the deceased spouse’s lifetime gift exemption. EXAMPLE: Michael dies on June 30, 2014 and used $1M of his $5.34M federal exemption. David, Michael’s surviving spouse can add the remaining $4.34M of Michael’s exemption. This means if David hasn’t used his, he now has $9.68M to give away tax free during his lifetime. NOTE: Before the Rev. Rule 2013-17, this wasn’t available to lawfully married same-sex couples anywhere in the U.S. So what does this mean for filing purposes? Because lawfully married same-sex couples are now equal in the eyes of the state and federal tax regimes for Illinois, they don’t have to complete “dummy” federal returns for income or estate tax purposes. WARNING: Illinois couples who are currently only in Civil Unions are not in federally recognized relationship; so, they must still complete the “dummy” forms. IRS Notice 2013-61 followed Rev. Rule 2013-17 and is at the center of the tax return amending issue for most married same-sex couples. The Notice requires employers to amend their 941 returns with respect to over withholding, FICA overpayment, and benefits counted as wages. Why is this relevant to estate tax returns? To file an accurate estate tax return, Form 706, an accountant or attorney should have an accurate income tax return record. Therefore, for these purposes especially, before amending a 706, a decedent spouse’s 1040 should probably be amended to account for Notice 2013-61 issues. Debates wage among colleagues about whether to file an amended return for an estate that is not taxable and, given the level of the federal exemption for a married couple, only very few estates are taxable at the federal level and even at Illinois’ level. Yet, if the income tax return is being amended, then filing a 706 might be advisable for consistency’s sake. Also, a surviving spouse should file a 706 if he or she wants to or should elect portability. All of this ultimately suggests that surviving spouses of same-sex marriages should request a filing extension on original returns to ensure that all tax records are thoroughly reviewed before filing amendments. The same premises apply for Illinois estate taxes because federal numbers drive state numbers. Of course, just because tax returns that fall within the statute of limitations should be reviewed, doesn’t mean they should be amended. Like a surviving spouse of an opposite sex marriage, a surviving spouse of a same-sex marriage might have to pay more taxes. Nevertheless, couples should review the amendment issue. As discussed last week, Rev Rule 2013-17 stipulates that “affected taxpayers may rely on this revenue ruling for the purpose of filing original returns, amended returns, adjusted returns or claims for credit or refund for any overpayment of tax resulting from these holdings providing the applicable limitations period for filing such claim
Talk Tips You Need for Aging Loved Ones Who Need Planning
Well, it starts like this… About a month ago, a friend’s husband came home from his evening workout at the gym with a look that wasn’t his usual “victory!” or “whipped puppy” face. She told me he looked deeply distraught, so she patted the area next to her on the sofa, turned off the TV, and asked, “What’s wrong?” He then told her about how one of our nicest neighbors, who was only 48 years old and in outwardly good health, bicycled to the gym that morning for his usual work out and minutes later collapsed from a heart attack and died right there. Our neighbor had a lovely wife and son who was a high school senior. At 48, he was assuredly looking forward to more graduations and maybe grandchildren. But for him it wasn’t to be and 48 is not old. I have more tragic stories but will stop this one here and say that this is a good place to start “the conversation” with parents or loved ones who you know need planning. Also, you should plan to have more than one of these conversations if you really want to see the most positive results – a plan prepared that brings peace of mind to your loved ones now and later. So that’s how you start the conversation – with a scary story. Mom has the velvet hammer. The next question is who do you start the conversation with? Let’s say both parents are living and still together; well, you start with the parent or family member who is most persuasive in obtaining results that affect the entire family. Dad, can you pass me the embalming fluid? You must also decide when the conversation should take place. I wouldn’t suggest having a discussion about death at the dinner table. Nor would I suggest entering into it like an intervention. This is a difficult topic already, so don’t make it more difficult. Start the sharing when you usually share stories about your day or your friends’ days but away from the dinner table. What if you never really shared before? Write a letter then start sharing. Planting the seed. When you do share a scary story, one of 2 things will happen: Either your loved one will want to know more or he or she will express sympathy and change the subject. If Mom or Dad wants to know more, then pick the tone up with whatever positive note you know, such as, “Yes it’s sad, but at least he had life insurance and a will.” Then stop. Of course, the logical progression is, “So Dad, do you have a will?” But by stopping and changing the subject yourself, you’ve done what my mother calls, “planted the seed.” Now Mom or Dad may want to continue the conversation, which is what we really want. But if he or she doesn’t, we must let it be. The seed has been planted. Next, it simply needs nurturing. Mom, meet The Joneses. We nurture the seed by watering the soil and waiting about a week or 2. After that time has passed, we bring up a related topic about one of their close friends or relatives who is in a comparable financial situation. This presumes that we know something about the friend’s or relative’s financial situation. It could be something similar to, “I ran into Ms. Jones the other day and she told me about the vacation home she and Mr. Jones just bought.” Then continue talking about how their children really enjoy being able to have a nice place to stay when they want to enjoy their “down time.” If the Joneses don’t nudge them into further conversation, somebody will – maybe you. Parents are proud when their children achieve more than they, but parents also want to be recognized for “knowing” or “experiencing” more along the lines of wisdom. So if you, his or her “child” has enough about herself to have a solid power of attorney, then surely “the tree will ensure that this document is in place so as to affirm the apple’s lineage.” Thus, as I said, having the conversation actually means having a series of conversations. This allows you to gently uncover any uneasiness and fears in a comfortable and safe environment. However, what if time is of the essence? Mom or Dad’s health is declining and action is needed sooner rather than later. We must then step out of ourselves and, as is often said by professional caregivers, “meet them where they are.” You can do this by imagining yourself at 75 or 85 years of age. You’re not as strong; you’re not as fast; and your income potential is 1/10th of what it once was. Friends and family members are dying and it is becoming more and more difficult to hide all the silver strands on your body. By earnestly stepping into the shoes of our aging loved ones, we realize the competing interests that come into play for them. On one hand there is the rational acknowledgment and desire to plan and on the other hand is denial based on fears caused by the ultimate lack of control over their mortality and that they will run out of money. Losing control is fundamentally a trust issue. And if loved ones don’t trust you, establishing that trust when they are vulnerable is going to be very difficult. This is where we must “meet them where they are.” Control isn’t just about money, either; also, it’s about dignity. This encompasses bodily integrity, mobility, and ownership and usability of their “stuff.” Here every person is different and respecting what our aging loved ones need to retain a feeling of dignity will, yes, lead to getting them to plan and sign papers. But first thing’s first. Address the issue of their need to control – to feel independent, to maintain their human dignity. Explain why you’re suggesting a caregiver once weekly, or a cane, or a
7 Deadly Estate Planning Don\’ts
Experience and observation often has me shaking my head as I assist families in correcting mishaps by well-intended loved ones. This article is about some of what those families have learned. Don’t designate minors as primary beneficiaries on anything. Imagine being a divorcee with Peter Pan as an ex-spouse and play-date dad. The unthinkable happens but you’ve left a life insurance policy naming your 12 year-old son as primary beneficiary. Guess who may control the proceeds of that policy? Don’t designate adult children who cannot manage personal finances well (aka “spendthrifts”) as primary beneficiaries on anything either. Imagine leaving $250,000.00 to your daughter who blows it in one year on my favorites – Ralph Lauren, Rancho Mirage, Peach Champagne, Anne Fontaine, Jimmy Choo, and Paris. Note: I’m working my way up to Anne Fontaine. Don’t assume a will does the trick if you’re cohabiting. The potential of inheriting even modest sums of money does strange things to the affinity family members have for each other, let alone what family members may have felt for non-blood-related members. Family members will try to kick a cohabiting partner to the curb so fast, the engraving on the headstone won’t be finished yet. Don’t depend on a will if you and your spouse or partner have children from previous relationships. What do you think will happen if the step-children who you adored and treated so generously during the 15 years of your marriage to their father realize that you’re leaving everything to your children? More importantly, what do you think your kids will do if they realize that you’ve left a substantial portion to the step-kids? Ahhh…the privacy of trusts. Don’t ignore documents with beneficiary designations if you’re recently divorced. Imagine winning a handsome settlement because Peter Pan was also Mr. Gigolo and then, the unthinkable happens, and you didn’t change the designations on your will and life insurance? Antacids don’t work for the dearly departed. Don’t ignore planning if you’re recently married, especially if a prenuptial agreement is involved. And for goodness sake, ensure that your attorney takes care to explicitly define certain items, such as the marital residence, but is not so explicit as in providing the exact address. What if years later, you divorce and the prenupt states you get the house on Rosemary Lane no matter what but your spouse convinced you to sell the house on Rosemary Lane but your will states that in the event of a divorce, the terms of the prenupt govern the property that shall be considered your estate? Don’t ignore planning if you’ve more than one intended beneficiary. Beneficiaries will fight over pennies, over tattered recliners, over cats, over who gets to be administrator. Maybe you’ll enjoy the bickering in the karmic impish sense, but do you really want your estate to pay lawyers’ fees to straighten this out because that’s who will pay, if at all possible, not the beneficiaries, but you and you’ll be dead!
Essential Estate Administration Steps When You\’re Responsible for Saying Farewell
Some of my readers may know that I recently lost my father. As an estate planner, yes, I made sure a number of items were in order. However, as a daughter to a fiercely independent and private individual, I was compelled to respect certain boundaries. Another good colleague and fellow author, Lisa Lilly, who also lost her father, recently reminded me in her blog that it’s never too early to share important knowledge. So below are several tips on the very beginning activities of “estate administration.” And while I intended to write this article before my father made his transition and a little later in the year when the sky was less blue and Lake Michigan waters were much cooler, there really is no time like the present… Much of this can be applied irrespective of your relationship but for precision, this article makes the following assumptions: “The conversation” took place and there were no unresolved issues; consequently, there’s no family feud. Your loved one had a primary care physician, nurse, or hospice caregiver. You will be the one to say the final farewell. The Steps Make sure you have a couple of very close family members or friends on call for “that day,” so you will have support around you. Phone the doctor or the hospice; DO NOT phone 911 or the police. Prepare to spend a few hours waiting for the doctor or nurse to arrive to make the final pronouncement. While waiting, do what you feel you need to do. DO NOT listen to directions from other friends and family unless you want to. Be prepared to answer lots of questions about: your relationship to the departed; who found the departed, when, and how; what funeral home should be notified, even if cremation or anatomical donation are the instructions; your complete contact information. And don\’t take it personally. Be prepared to have your loved one physically removed from you permanently; this is why it’s good to have someone else with you, the emotional effect on you cannot be predicted. Be prepared to emote or manifest emotion somehow. DO NOT access any financial accounts; your loved one wouldn’t want you arrested for fraud. Contact everyone who knew the dearly departed, including church, community, and social groups. Get a couple of family members or close friends to help. Depending on the global reach of your loved one and his or her final wishes, start to think about a memorial service date that is soon or later, to allow for friends and family to make reasonable travel arrangements. Visit the funeral home asap to order several death certificates. You don’t have to start on the arrangements then. DO NOT BE PRESSURED into making decisions like date and time until you’re ready. Make sure you have all keys to everything – the house, apartment, car, safe deposit box, storage, and anything else. And LOCK UP. Complete address forwarding cards and forward the mail to you. If needed to pay for services, contact the insurance company. If not needed, then wait until the services are concluded to handle all financial matters. Write an obituary and send it to the appropriate publications: neighborhood or city newspaper and alumni magazines. Delegate. Delegate. Delegate. Carve out time for yourself. Move forward, genuinely, gently, one day at a time.
Women & Obamacare: It Hurts Not to Know
Recently, I attended a great program on women’s healthcare. The discussion included how the Affordable Care Act would affect our healthcare and the decisions we made. So please read this article and share it with all the women you know. Thank you, Affinity Community Services for hosting, Kathy Waligora of the Illinois Maternal and Child Health Coalition, the Chicago Women’s Health Center (CWHC), and Dr. Theresa Jones for sharing such valuable information. Resources to the topics are at the end of this article. Because estate planning and financial planning are closely related, health insurance is a key component to successful estate planning. Without appropriate health insurance, everything you own is at risk of loss … to a hospital bill or to long-term care. So no estate planning involving asset distribution will matter because the hospital bill or caregiving expenses will have created a gaping doughnut of an estate for you. The exponential increase of healthcare costs over the last couple of decades is one reason why fewer and fewer individuals and families considered estate planning: with little or no insurance, planning for the transfer of assets would be an exercise in futility. However, that risk for millions has been and is being mitigated by the Affordable Care Act (“ACA” or “Obamacare”). Before the ACA, 40 million Americans had no health insurance and millions of children would never be able to obtain it because of pre-existing conditions. In 2010, when the ACA passed, the number of uninsured Americans were reduced by 10%. And though the ACA has come under intense fire, by 2014, millions more of Americans and small businesses will receive 50% of credits to help offset the cost of coverage. Additionally, the cost of coverage for women will be fair. Until the ACA was passed, women were made to pay more for healthcare insurance than men and, unlike what most individuals thought, it was not because most women could become pregnant. So why were women paying more for health insurance? That’s a good question that insurance companies have yet to provide an answer for. But they won’t have to because on January 1, 2014, gender will be eliminated as a criteria for determining health insurance costs. Moreover, preventive and wellness services, especially for women, that were not available in many insurance plans will be available to women at no cost through the ACA. The critical need for these services is highlighted by the recent news about celebrity Angelina Jolie’s healthcare decisions. Included in the free preventive and wellness services mandated by the ACA are: BRCA counseling about genetic testing for women who at high risk, Anemia screening for pregnant women, Cervical cancer screening, Domestic and interpersonal violence screening and counselling, Folic acid supplements for women who could become pregnant, Osteoporosis screening for women over 60, and Well-woman visits. The ACA mandates these services included in 22 preventive services because legislators and the current administration recognizes that preventive maintenance and reformed and regulated healthcare for all Americans ultimately reduces healthcare costs across the board for our country, community, and loved ones. Another important feature of the ACA is Medicaid reform. However, states must agree to take advantage of the new Medicaid rules. If Illinois agreed to embrace the rules, it could man billions of dollars and thousands of jobs. However, the 3.8% surtax on families with household incomes of $200,000 or more has fueled the uproar mentioned earlier. This could result in these households being taxed at a marginal rate of near 45-50% and nobody likes to pay taxes. Still, Illinois Senate Bill 26 (SB 26) is pending with regard to this question. As of 5/21 the bill was passed, after several notes, to the House Committee. As I said at the top, information about our healthcare and how to use that information is too important – not just to us but also to our families – not to share, so please pay this forward and let women (and men) know that \”affordable healthcare is available to you.\” Helpful Resources Illinois Congressional Representatives, http://www.ilga.gov/house/ Health Insurance 101, http://101.communitycatalyst.org/aca_provisions/ Illinois Maternal and Child Health Coalition, http://www.ilmaternal.org/
3 Lessons about Grapes and Taxes
As Baby Boomers start retiring, thoughts of mortality and legacy planning begin to dance in their heads. While most boomers don’t have taxable estates…for now…the future is still a question mark for many. While enjoying retirement – golf course, cruises, mountain climbing, museum walks, wine tasting, and theatre galas – plans should be made for a time when the retirement funds must be transferred to someone else. It is critical to know how to transfer retirement proceeds properly so the distributions won\’t be literally and figuratively taxing: Claire and Cliff are in their mid 60’s. They’ve a modest estate – home valued at about $250K with most of its equity remaining, life insurance, and retirement benefits at about $2 million. Half of the retirement proceeds is in a 401(k), 25% is in an IRA, and 25% is in an annuity. They also have 2 kids: Lenny and Lisa. Lisa’s a starving artist, who is barely in the 15% tax bracket but who also has a vivacious and smart teenager. Lenny is 10 years older than Lisa and a savvy professional about to move into the highest tax bracket and has no intention of marrying or ever having children. Claire and Cliff want to distribute their estate to Lisa and Lenny equally and have been told to give the retirement proceeds to Lenny and Lisa outright. Before doing that, however, I would ask them to consider the following in a simultaneous death situation, where Claire and Cliff went down with the Titanic III: An outright gift from a 401(k) or a traditional IRA will be taxed and if the beneficiary is over 59 ½, the 10% penalty may also apply. For Lenny, who’s Mr. Money Bags, that doesn’t present too much of a problem, though no one wants to pay taxes. For Lisa, that would be a boon indeed. But an outright distribution to Lisa would yield less than what she would receive were the proceeds titled to a trust because of income tax consequences. Pick the fruit too young and the wine will be bitter; too old and you may taste too much oak. Claire and Cliff could have the proceeds placed in a trust for Lenny and Lisa. Here, part of Lisa’s benefit would be driven by Lenny’s life expectancy because he is the oldest, which would provide her with fewer years of income. Additionally, Lenny and Lisa must be sure to withdraw at least as much as the minimum required distribution annually or face a hefty penalty. Different varietals require different soils. In a qualified (retirement) annuity, the entire amount of the contract must be withdrawn over the 5-year period following Claire and Cliff’s death. Again, okay for Lenny, but not so okay for Lisa. Tax consequences also apply to this issue. Cabernets are as good as zinfandels; it\’s the consumer\’s tolerance that is key. Just like no 2 families are alike, no 2 children are alike. So make sure that your children know how to make decisions about the different types of distributions they can choose, after you enjoy your fruits. That way, the remaining fruit will, in fact, go to your children and not the community jelly jar.
1 Question to Ask Before Saying You Will
A cardinal rule of estate planning is that the “intent of the testator” governs terms of the will or trust. The testator is the person who initially “writes” the will; the name for the person who writes the trust is a “grantor” or “settlor.” Lawyers draw the documents up but testators or grantors are the original writer – our clients. The terms of a will or trust are carried out by a fiduciary – an executor or a trustee. Fiduciaries are held to a higher legal standard of integrity because their roles are considered so important. So they can be sued if they do not follow the “intent of the writer,” so to speak. Yet, though I try to remind them, folks tend to forget about the other fiduciary roles that also carry a kind of “intent of the writer” rule. Let’s consider a brother-best friend story. Carrie was a single 35 year-old woman who, as a young teenager, witnessed her father die an agonizing death when he was stricken with a slowly debilitating and malignant brain tumor. So when Carrie got the bad news about her condition, she got her affairs in order and instead of designating her brother Don as the agent under her healthcare power of attorney, she named her best buddy, Tim. Carrie and Tim were just as close as Carrie and Don but they talked more openly about end-of-life issues ever since Carrie’s father passed. Carrie told Tim that she would never want to die in a hospital like her father and said she knew that she could count on him to fulfill her wishes. Well, Carrie’s days started dwindling and Don pleaded with Carrie to go into the hospital or into a hospice facility. Carrie refused. From her spacious apartment, she could hear birds chirp and children laugh outside. The pain was tolerable and she could move around a little with a cane. Daily care was difficult and speaking was getting even more difficult, but she was staying put. Then one day, Carrie couldn’t talk. Don pleaded with Tim now. Tim looked at his dear friend who had no appetite, occasionally winced at the pain, but smiled at the children\’s laughter underneath her bedroom window. Don wanted Carrie in a facility to be watched 24/7 because he couldn’t do it and Tim could only be with her a few hours a day. Tim agonized because he understood Don’s concerns and really wanted the same thing. But Tim saw Carrie’s smile at the sound of the birds, recalled her horrific struggles with her father’s death, and when Carrie passed on, in her home wearing a slight grin, Tim was also at peace. Healthcare decisions under a power of attorney include end-of-life decisions, and it\’s not just about medicine. But the agent’s role, as a fiduciary, is to step inside the shoes of the principal and make the decisions the principal would make. Doing anything less, even if it means what we would perceive as more and a better quality at the end of life is going against one’s fiduciary duty, ignoring the cardinal rule. So when you’re asked to be a fiduciary, think long and hard and then think again. How well do you know the principal’s shoes and can you stand to completely take yours off to walk in someone else’s?
5 Mentoring Tips from the Grave
As a wills and trusts attorney, frequently, clients or friends ask me how they or their parents can prevent young, adult beneficiaries from wasting their “hard-earned” inheritance. I explain that this can be managed in at least 5 ways: Use hard cold facts and an iron club. Tell them that the money was hard-earned by you and don’t leave them anything but a videotape of the family history. Leave all the money and possessions to charity. Bribe the youngsters and hope for the best. Of course, these are 2 actions that make most lawyers’ skin crawl. Educate the little people from the time they get their first piggy bank from Grandpa. Use conditional provisions that don’t “offend public policy.” This means that, while you can’t disinherit your child from marrying outside his ethnicity and can’t tell him he won’t get a dime unless he divorces his current spouse, you can cut the cord if he becomes a lifetime criminal. You can shorten the cord if she becomes a lifetime substance abuser. And you can make the cord’s length dependent on grades and gainful employment. “Staggered mentoring,” which I’ve mentioned before, is another tool. With a “staggered mentoring” provision, Grandpa leaves Hermoine 30% of her pot of gold when she turns 25, another 30% when she turns 30, and the balance at the age of 35. My favorite is a combination of 3 through 5, but as my favorite contracts professor said, “If it walks like a duck and squawks like a duck, it ain’t a beagle.” So, if Hermoine’s been in and out of jail since the age of 16 and she’s 25 now, education, at least of the financial planning kind, isn’t probably going to work.