by Bill Miller | Jun 7, 2021 | Blog, Estate Planning
Less than 50 percent of U.S. adults have any kind of estate plan in place, and this is in large part due to a general misunderstanding of what an estate plan does. Estate planning is not— despite popular misconception—a task you attend to in old age or ill health. On the contrary, it is a set of documents that protect you and your loved ones for the duration of your adult life. Most people think about the Last Will and Testament when they think about estate planning. While that document plays an important role, so too do power of attorney (POA) documents, and because these are less well-known, this article will center on explaining exactly what they are.
The Two Types of Power of Attorney
POA refers to the legal authority one person (the principal) grants another (the agent) to act on their behalf. In general, this authority pertains to either financial or medical matters, and separate legal documents exist for each purpose. A medical POA acts to ensure you receive proper care should you suffer incapacitating injury or become incompetent, while a financial POA serves a range of purposes all of which relate to your financial well-being. Both types of POA are discussed in detail below.
Medical Power of Attorney
As just mentioned, a medical POA—sometimes referred to as a healthcare proxy—acts as an important protection against incapacitating injury or incompetency. In addition, it plays a crucial role should complications arise during surgery, or if you need regular help due to a long-term condition. The authority granted by a medical POA is usually broad, though you can provide as specific of care instructions as you wish when drafting the document. These are usually paired with a Living Will and the two documents together are known as an Advance Directive for Healthcare.
When you sign a medical POA you designate an agent to act on your behalf. Any competent adult may serve in this role, though some states exclude your physician, residential healthcare provider, or any of either’s employees from being eligible. When choosing an agent, it is important that you consider a person whom you both trust and believe is capable of making difficult choices and advocating strongly on your behalf.
Financial Power of Attorney
Just like the above, a financial POA allows you to appoint an agent to handle your affairs in your stead, though in this instance the authority granted pertains to financial rather than medical matters. A financial POA can be limited or general and, further, its powers can be designed to terminate or remain in force should you suffer an incapacitating accident or become incompetent.
1. Limited Power of Attorney
This type of POA is used when, for instance, you are out of town and need someone to sign a real estate purchase or perform some other type of transaction on your behalf. When drafting a limited POA it is critical that its purpose be clear. Once this purpose is complete, the authority granted by the POA ends.
2. General Power of Attorney
A general POA grants broad powers. Your designated agent gains the authority to perform virtually any financial transaction on your behalf, including conducting business deals, buying life insurance, settling claims, paying bills, and so on. A general POA is used if you will be out of the country for an extended period or are physically or mentally incapable of managing your affairs. Should you suffer incapacitating injury, the authority granted by a general POA automatically terminates.
3. Durable Power of Attorney
A durable POA is much like a general POA except that the authority it grants remains valid even if you do become incapacitated or incompetent. Indeed, a durable POA acts to protect you in this precise situation. If you end up hospitalized, your bills will still need to be paid and your finances managed, after all. A General Durable Power of Attorney is on of the most important estate planning documents you can have. It allows a trusted loved one to make financial decisions for you if you are no longer able to do so.
4. Springing Power of Attorney
A springing POA also grants your agent general authority over your finances but, unlike the previous examples, only comes into effect when a triggering event such as incapacitating injury occurs. This feature makes a springing POA a good option for those uncomfortable with granting durable POA that goes into effect immediately, and yet it is not without risk. Unless described in unambiguous, clear language, the triggering event may not be recognized as such, leaving you without the protection of a POA just when you need it most. The most common “triggering event” is that your doctor writes a letter explaining that you no longer have the mental capacity to make decision on your own and you need someone else to do so.
To learn more about the different types of power of attorney or to simply talk about any matter related to estate planning, do not hesitate to call Miller Estate and Elder Law at 256-251-2137 or to reach out using the contact form on our website.
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by Bill Miller | Apr 15, 2021 | Blog, Estate Planning
All too often, people assume estate planning is only for the wealthy when, in fact, it is crucial for any adult concerned about protecting their health and finances. In basic terms, an estate plan shields you from unforeseen tragedy and, as the Covid-19 pandemic has so clearly shown, no one is exempt from risk. As soon as an individual reaches the age of majority, they need to ensure certain protections are in place and as they grow, their small estate plan must grow alongside them, accounting for both increasing responsibilities and assets.
Four Steps to Starting Your Estate Plan
A basic estate plan consists of a healthcare directive, general durable power of attorney, and a will. In an ideal world, you would file your implement the first versions of each of these documents upon turning 19 but rarely does this happen. Life is busy, responsibilities are many, and most folks simply do not recognize the need to attend to estate planning so soon. If you are among the large majority of adults who have not yet organized their estate, do not worry, but do not put the task off any longer. The following five steps will help you get started:
1. Inventory Your Assets and ResponsibilitiesTooltip Text
Successful estate planning begins with first taking stock of all you own (and owe) and all those who depend on you for care. This means listing financial accounts, insurance policies, retirement plans, and business interests as well as assessing the value of your home, vehicle, and valuables. It also means accounting for any debts you may carry and taking note of children or loved ones for whom you are responsible.
2. Talk to Your Loved Ones
If you are married, you naturally want to ensure your spouse is involved in the planning process from the very beginning. Likewise, if you have adult children, it is essential that they understand your estate planning needs and goals. Important topics to address include who should serve as guardian to any dependents, who will make healthcare and financial decisions on your behalf should you become incapacitated, who will serve as administrator or executor of your estate, and how you want your assets distributed when you die.
At this stage, it is also important to weigh the value of life insurance, especially if your family’s well-being depends on both you and your spouse’s income. Likewise, this is also the time to consider establishing a trust and organizing any financial gifts you may wish to make while living.
3. Seek Out an Experienced Estate Planning Attorney
At the same time as you address the essential topics described above, it is important to hire an experienced attorney to guide you through the estate planning process. After all, different estate planning strategies are better- (or worse-) suited to different estate planning goals and each state has its own, nuanced legislation. An experienced attorney not only ensures all of the necessary documents are properly executed, but provides indispensable advice concerning how best to address the different steps of estate planning and when updates may be needed.
4. Plan for Updates
An estate plan is a living document that grows as you do. Any time a major life event occurs, such as the birth of a child, start or end of a marriage, death of a loved one, or significant change in your financial position, you want to consider updating your plan. Likewise, whenever a new administration takes office, legislative changes inevitably follow which, in turn, necessitate changes to your planning. Lastly, it is important to revisit your plan even if no major changes in your circumstances or priorities have occurred just to be sure your plan is always up to date.
If you are ready to begin the estate planning process, Miller Estate and Elder Law can help. To get started or to simply learn more about the subject, call us at 256-251-2137 or reach out via the contact form on our website.
by Bill Miller | Mar 28, 2021 | Blog, Estate Planning
The worst part of being an estate planning attorney is telling those in need that it is too late to address whatever issue they may have. Unfortunately, this happens all too often and worse still, frequently such cases could have been prevented with just a little bit of foresight. Take, for instance, the following situation which recently came through our office.
Mrs. Anderson [name changed for privacy reasons] called to discuss a delicate matter. Her stepfather was on a ventilator and was not expected to live much longer. While not her natural father, Mrs. Anderson’s stepfather had raised her since childhood. He also had another, biological child who had been estranged from the family for a long time. When Mrs. Anderson’s mother died a few years ago, Mrs. Anderson stepped into the role of care-taker for her stepfather, buying him groceries, ensuring he took his medications, and generally looking after his well-being.
Prior to being hospitalized the stepfather had prepared no estate planning documents and, in particular, no HIPAA release and no medical power of attorney naming Mrs. Anderson. For this reason, his medical team would not share any information with Mrs. Anderson and so she came to us for advice. She wanted to know about options that would allow her to ensure her stepfather’s treatment aligned with his wishes and values and, further, she was concerned about what might happen to his assets should he die.
Ever since childhood, Mrs. Anderson’s stepfather had promised she would inherit certain assets. Further, he had expressed that he would like to leave her the majority of his estate and wished to pass certain sentimental items to her children, which he considered his own grandchildren. None of this existed in writing, however, and Mrs. Anderson was worried that upon his passing, her stepfather’s estranged son would reappear and try to get everything. She wanted to know what could be done to avoid this.
Unfortunately, for Mrs. Anderson it was simply too late. In his current condition, her stepfather was unable to sign a medical power of attorney or a will and without these documents, neither of her worries could be resolved. In order to intervene in his treatment, Mrs. Anderson would need to file for a temporary guardianship and then try to get permanent guardianship—an impractical solution. With no will in place, the distribution of her stepfather’s assets would be determined by Alabama’s intestate succession statutes and these dictate that his entire estate, including sentimental items, would pass to his son.
Mrs. Anderson was devastated. Even if she did gain guardianship allowing her to help her stepfather make decisions while still alive, nothing could be done about what would happen to his estate upon his passing.
These are never the kinds of conversations an estate planning attorney wants to have and they need not happen. Putting basic estate planning documents in place, including a will and advance directives, is a painless, expedient process and is worth doing right now. After all, the only thing worse than losing a loved one is losing their legacy in the process.
Call Miller Estate and Elder Law today to get started on your estate plan and save yourself and your loved ones the grief of ending up in a situation like that described above. Our phone number is 256-472-1900 and we can also be reached via the contact form on our website.
by Bill Miller | Feb 19, 2021 | Blog, Estate Planning
Estate plan planning documents are like pieces furniture: everyone needs them and as you age, the pieces you collect tend grow in number and relative importance. An eighteen-year-old college freshman, for instance, might only own an Ikea bed and dresser set because that is all they require; likewise, their estate plan may only consist of a healthcare directive and durable financial power or attorney. A middle-aged adult with kids, on the other hand, will own enough furniture to fill a home and, similarly, a full suite of estate planning documents. A person approaching their twilight years, meanwhile, will have more furniture than they know what to do with and, if they have planned properly, more estate planning documents than they had earlier imagined needing.
The similarity between estate planning and furniture goes further than the fact that your collection of both grows with age, though. Another commonality is that every once in a while, both require an update. After all, furniture wears out or goes out of style and, in a sense, estate planning documents do the same. It could be, for instance, that five years ago you thought your ex-spouse’s name looked good on your will but now you think otherwise. Similarly, it may have been all the rage back in 2008 to make substantial gifts in order to qualify for the federal estate tax exemption but not as popular to do so in 2017 when the limit was raised.
The long and short of this comparison is that an estate plan is no more a one-time investment than a furniture set. Your need for both evolves over the years and with this evolution comes the need to revisit what you have.
When to Update Your Estate Plan
In general, it is wise to revise your plan every three to five years or any time a significant life event occurs. Such events might include the following:
1. A new marriage.
2. A divorce.
3. The death of a person named in your estate.
4. The arrival of a new child or grandchild.
5. Your assets or liabilities change.
6. You move to a new state.
Another time your estate plan requires updating is when a new administration takes office as change in government inevitably means change in federal estate planning law.
Changes Proposed by the Biden Administration
1. Lowering the Federal Estate Tax Exemption
Under President Trump, estates valued under $11.7 million were exempt from paying federal estate tax. The new administration has floated the idea of lowering this bar to $5 million or even $3.5 million. While most middle-income families will not be affected by this change, those with greater assets will and should therefore talk to their attorney about updates to their planning.
2. Eliminating the Step-Up in Cost Basis Rule
“Cost basis” refers to the amount originally paid for an asset and is the basis used to determine how much capital gains tax is owed on the asset should it appreciate in value. Under current legislation, when an asset is passed on through inheritance, its cost basis is stepped up to the current market value such that should a beneficiary sell the asset immediately, no capital gains tax need be paid. President Biden may eliminate this provision, a move which would affect everyone no matter their income bracket.
Detailing how best to respond the changes the new administration may implement or those life may throw your way is an individual matter. Each person’s family and financial situation is unique, after all.
Should you have questions about how you might best respond to changing legislation or changing life circumstances, do not hesitate to give our office a call at (256) 251-2137 or reach out to us via our website.
by Bill Miller | Feb 8, 2021 | Blog, Elder Law, Estate Planning
The holiday season is now officially over, school is back in session, and 2021 is off to the races. As routine sets in, now is a good time to look back on the past year, think about what you may have learned, and set that knowledge in motion to ensure this next year is better. Ask: If this were January 2020 all over again, what would I do? Alongside buying up Tesla, Amazon, and Etsy stock (Etsy? Yes, Etsy), moving to the country, and stockpiling hand sanitizer, finally getting that estate plan in order should be on your list. After all, 2020’s big takeaway was that being prepared is paramount because nobody knows what tomorrow may bring.
Getting Started on a Plan
While your plan’s composition will depend on your personal, family and financial situation, foundational documents always include a Will, Advance Medical Directive, Living Will, and Financial Power of Attorney. Whether you go the Trust-Based or Will-Based route will determine whether you sign a Last Will and Testament or a Pour Over Will together with a Revocable Living Trust. If that all sounds like a lot to absorb, it is. But don’t worry; you don’t need to worry about any of it.
An experienced estate planning attorney will do the work of determining the composition best-suited to your needs and goals. They will explain each element and its purpose and will work with your input to ensure your plan is the best possible fit. Instead of thinking about documents, then, you need to think about the following:
1. Your Net Worth
The first step to launching a plan is figuring out what it will include. This means totalling the value of bank and investment accounts, personal property, retirement plans (401ks, IRAs), life insurance benefits, business interests, and real estate and then subtracting the total of your liabilities. As you do so, you should also list any items of sentimental value and make note of passwords to your online accounts.
2. Your Family’s Needs
Step two in the estate planning process is sitting down with loved ones and chatting about needs and goals. This is the time to address such delicate issues as unequal inheritances (and why fair doesn’t always mean equal), sentimental items, retirement goals, and long-term care wishes. It is also the time to determine the people best-suited to serve as executor, medical power of attorney, and financial power of attorney. In having this chat, nothing need be finalized; instead, the goal is simply to get everyone on the same page.
Once you have taken care of these two preliminary steps, the hard work is done. From here, you pass the ball to a qualified, trusted attorney. In conversation with you, they will assess all of the information you have gathered and get to work designing a plan which will you ensure you peace of mind not only for this coming year, but for many years to come.
If finally getting your estate plan in order is on your 2021 to-do list, do not hesitate to give us a call at 256-472-1900, register for one of our workshops, or send us a note through our website.
by Bill Miller | Feb 1, 2021 | Blog, Elder Law, Estate Planning
On Friday, December 11 the Food and Drug Administration (FDA) approved Pfizer’s Covid-19 vaccine for emergency use. Over the next week, an initial shipment of 2.9 million doses will be sent around the US and highly vulnerable people will begin to breathe easy for the first time in almost a year. This wonderful news brings nation-wide relief and yet it comes with the lurking danger that we forget the lessons Covid-19 has so rudely taught.
Everyone has heard the age-old adage that you never know what tomorrow may bring and that prevention is the best medicine and yet for many, it took a pandemic to grasp the profound truth of these statements. Covid-19 ravaged (and continues to ravage) communities, provoking unexpected deaths and causing thriving businesses to shutter. Individuals have been able to do little beyond wear a mask, maintain social distance, and plan for the worst while hoping for the best.
If it is true that most Americans will be vaccinated by June, masks and social distancing will soon be a thing of the past but the importance of planning will remain—especially for the aging and the vulnerable. After all, even in a post-Covid world, you still never know what tomorrow holds. Having an estate plan in place means that while you cannot control the future, you can ensure your life’s work is protected and your family is secure.
Four Estate Planning Tips for Seniors (And Any Other Mortal Adult)
1. Start Now
As obvious as this one may sound, its importance cannot be overstated. Not only has the future not yet been written but many of the most powerful estate planning legal instruments work best if employed with foresight. Ensuring you qualify for Medicaid is a prime example. Some 70% of folks over 65 will need long-term care services in their remaining years and yet most will neither be able to shoulder the cost nor qualify for Medicaid. Advance planning provides a solution but because Medicaid employs a five-year look-back period when assessing candidates, time is of the essence.
2. Talk to Family and Loved Ones
Estate planning begins with a conversation between you and your loved ones. Should tension and fallings out be avoided down the road, it is crucial that you talk about goals and plans now. List your assets and seek input on how they might be divided, explain any sensitive decisions you might make, and determine who is best suited to serve in the roles of executor, medical, and legal power of attorney.
3. Seek Out an Experienced Attorney
Fancy Pinterest cookies are a DIY project; estate planning is not. While the internet is rife with websites that offer low-cost will, power of attorney, and other legal documents, these services do not keep up to date with constantly changing legislation and are rarely state-specific. While failed cookies might mean a ruined evening, a failed estate plan can mean years of ruinous consequences for your life’s work and your loved ones.
4. Think Long-Term
A DIY kit may seem like the obvious choice at a time when in-person meetings are limited and the need for a plan is urgent, but such short-term thinking often creates problems down the road. A poorly-drafted plan can result in unintended tax consequences, the bank refusing to accept your power of attorney, failure to properly exclude family members you wish to disinherit, and a host of other issues. If cognitive decline sets in and your medical power of attorney is improperly drafted, loved ones may have difficulty advocating for you when you need it most. And should you die before rectifying these issues, the financial and emotional cost of doing so can be enormous. While there is no denying that working with an experienced estate planning attorney is an expense, in the long term it is often cheaper than not doing so.
At Miller Estate and Elder Law we are only interested in working with clients to whom we can bring value. That means that if we chat and we determine we cannot be of assistance in your case, you will not see a bill. If we can help you secure a brighter, more peaceful future, however, it would be our pleasure to work together.
Should you like to learn more or gain greater insight into our practice, check out our free workshops, which are currently available both live and in pre-recorded format so that you can enjoy them from the safety and comfort of your own home. You can also contact us to set up your consultation.
