UPDATES TO KEEP YOUR ESTATE PROBLEM-FREE

LEGALLY SPEAKING
by Roger V. McCaffrey-Boss
Copyright by Gay Chicago Magazine and by Roger V. McCaffrey-Boss
October 21-27, 2010
http://gaychicagomagazine.com/advice/legallyspeaking.shtml


UPDATES TO KEEP YOUR ESTATE PROBLEM-FREE
Some common problems that I see with estate plans are:
Old powers of attorney. Powers of attorney are wonderful documents in theory. Working with them can sometimes be a chore, though, especially when trying to convince others (like banks) to accept them on their face. An “old” power of attorney is more difficult to deal with than a fresh one because a question arises as to whether it is still good or whether it has been replaced. I suggest that you “refresh” your powers of attorney every two to three years by restating them.

Outdated beneficiary designations. Always verify who the named beneficiaries are for each asset that does not pass through a will. Individuals will often name someone other than their LGBT partners as beneficiaries on employee benefits such as life insurance or 401(k) plans. It is extremely common for clients simply to forget that a previous unmarried partner or parent is still named on an IRA or life insurance policy. For individuals who wish to leave a portion of their estates to a charity, designation of a charity as a direct beneficiary of some or all or a tax-deferred account is often preferable to making a bequest in the will that will be funded with post-tax dollars.

Not safekeeping documents. You need not always give copies of your trusts, powers of attorney, etc. to other people (agents and fiduciaries) who may need to implement them. However, you should communicate to the interested people their role, what kind of documents exist and where they can find them if the need arises. If these people cannot reach the documents when needed, implementation will not be smooth. Many times clients do not know where their documents are. Keep copies in each person’s car and suitcase when you travel.

Ignoring asset protection and risk management. There are certain kinds of assets that are or can be exempt from the claims of creditors. Some of these exempt assets include qualified retirement benefits; individual retirement accounts (IRAs); personal residence held as tenants by the entirety; and certain kinds of life insurance and endowment policies and annuity contracts that have the insured’s spouse or a child, parent or other dependent named as payee. Make sure you make regular contributions to these kinds of accounts so that you have assets that will always be protected.

Funding your living trust. Many times people will create a living trust but then put nothing in it. The advantage of funding your trust is the avoidance of probate in the event of death or disability and the accompanying probate administration complexities and costs. A partially funded trust will not avoid the necessity of probate because assets not in the trust still need to be probated. Only property owned outright by an individual (and that does not have a beneficiary designation) is subject to probate administration.

Power of attorney for health care. The agent and successor agent(s) under your health care power of attorney should be made aware of its existence and the location where it can be found in the event the agent needs a copy of it for purposes of implementation. The health care power of attorney is only effective if the agent is aware of it and can obtain a copy when it needs to be used. Further, it is your agent’s or your responsibility to communicate the health care agency to your health care providers. You should make certain that you discuss with your health care agent (and successor agent) your general philosophy for health care treatment and confirm your agent’s willingness