Category Archives: Estate Planning

Is Your Power of Attorney Right For You?

Is Your Power of Attorney Right For You?

In my opinion, a power of attorney (POA) is a more important document than a will. While a will may control what happens to my family and my possessions when I die; a POA controls what happens to ME while I’m still alive. Because the POA is needed most when I am incapacitated, it’s good to get things right.

Do I have the right POA?

Ohio has two types of POA. The healthcare POA directs who will make your medical decisions when you are unable. The financial POA gives your agent the authority to handle certain financial matters as described in the document. Both documents are important and one cannot substitute for the other.

Have I named the right agents?

The person you choose as your agent will be making important life decisions for you. Consider a person’s character and abilities to handle the duties assigned rather than their proximity to you or birth order. Remember, too, to name one or more backup agents in case your chosen agent is unable to help you when needed.

Did I give my agent the right amount of power?

Your agent can only do those acts specifically described in the document. Thus, if the POA does not say that your agent can open accounts in your name or establish a trust for you he cannot. Similarly, if the POA says that the agent can change the beneficiaries on your life insurance or transfer your house to himself he can.

Is the POA executed in the right way?

A healthcare POA requires a notary or two witnesses to observe and verify the signature. The witnesses cannot be the signer’s physician, medical caregiver or the named agent. Financial POA’s must be notarized if the agents are to be able to deal with real estate in Ohio.

Do the right people have the document?

A POA does no good unless it is used. Be sure that your agent and backup agents know they have been named and what is expected of them. Be sure that they have or know how to locate the document, itself. Although Ohio laws may recognize a photocopy, many financial institutions will demand to see an original before allowing the agent to act.

Powers of Attorney are important to your overall estate plan and should be carefully drafted to fully meet your needs and goals. Consult with your attorney to be sure that your legal documents are right for you!

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Caring for Pets

 Caring for Pets

For many people, pets are a member of the family. While one hopes children (and spouses) will eventually be able to care for themselves, pets require constant care their entire lives. If your pet should outlive you, who would take care of your beloved four legged friend?

Private Agreement

While many people feel uncomfortable talking about death, it is important to have these tough conversations beforehand. Many times the family can be thrown into crisis upon a hospital admission or a death and pets can be forgotten. Just having the conversation beforehand and having a plan in place can prevent your pets from being forgotten at home for days before someone remembers them.  Make sure someone close to you has a spare key and would know to go check on the pets if you were in the hospital or passed away unexpectedly.

Some may assume they don’t need to do any legal planning, because their family knows what their wishes are regarding their pets. While it is good to have a plan, private agreements alone often fall through. What happens if you agree your niece will take your dog, but at the time of your passing she lives in a no-pets-allowed apartment with a new baby and an allergic husband? What happens if both your sons think they are getting custody of your Siamese cat? A private agreement is not legally enforceable, and can leave your pets futures uncertain.

Wills

A will can have provisions that provide for what happens to your pets. A will can name an individual to inherit the pet, but just because you name that person, does not mean they are under any legal obligation to take the pet if they don’t want to. It may be better to allow the executor to decide who gets the pets and include stipulations that you would like your executor to consider. Do you want your pets to be kept together? Stay in the family? Have a back yard? You can add this all to a will but if terms are uncertain, the court may step in to make decisions.

Many people also include a monetary bequest to help entice a person to care for their pets and to help with costs. Keep in mind that the will only controls the initial distribution and does not monitor the long term care of your animals or the use of the money. If you leave the dog and ten-thousand dollars to your brother, he may take the dog and cash and then have the animal put down while he gambles in Vegas.

Wills can only do so much. In order to come into play, a will has to be probated, which it may not be if the rest of your estate passes outside of probate. There is also typically a waiting period while a will is being filed with the court and probated. Who will look after your pet during this period of time?

Pet Trusts

A pet trust can provide lasting protection for your pet. There are many benefits to a pet trust. First, you can name a trustee to control the money to be spent for your pet. This person does not have to be the same person who is caring for your pet. Appointing a different person to each role creates a system of checks and balances and further protects the pets from financial exploitation. For example if your sister is very bad with money but very good with animals, she can care for your pet and have your brother manage the money and pay her for the dog’s vet bills, food, and other costs.

You can also use the trust to instruct on how you would like your pet to be cared for. These instructions can be as detailed as possible to allow your pet to continue living in the manor they are accustomed. It can also ease the transition for new caregivers by knowing what routines your pet is used to. A trust allows for continued monitoring of the pet and the finances and can be used to shield against abuses. You can include requirements such as yearly vet visits, or backup trustees or guardians if the initial choice is unable to continue to care for your pet. Once your pet passes away you can leave any remaining money in the trust to your heirs or to charities.

Conclusion

Estate planning is the last act of love you can do for your family for when you’re gone. It is important to remember and plan for all members of your family including your four-legged friends. If you would like more information about how to protect your furry loved ones, call Williger Legal Group (330) 686-7777.

Financial Advisor

Financial Advisor’s New Fiduciary Duty

On June 9, 2017, the Department of Labor ruled that financial advisors must now act as a fiduciary for their clients. As always, with changes in the law, you may have questions as to what this means.

A fiduciary is a person (or organization) that owes the principal the highest legal duty of good faith and trust. They are legally and ethically bound to act in the principal’s best interest. Simply put, it means that financial advisors need to act in the best interest of the client. This means:

  • Fiduciaries must charge no more than a “reasonable” fee for his or her services.
  • A fiduciary should disclose all material facts, and must avoid lying to, or misleading, the client about the products they’re recommending.
  • They must act with the skill, due diligence and knowledge expected of someone familiar with the responsibilities of being a financial advisor.
  • Conflicts of interest must be avoided.

The results of this rule are that Financial Advisors may need to restructure fees or how they operate their investments to comply with the new rules. The question of what exactly a reasonable fee is, remains unclear and most companies will set their own internal practices.

While the fiduciary rule currently applies only to retirement accounts (including 401(k)s and IRAs), it may expand in the future. Until then, it is wise to ask if your advisor is a fiduciary regarding your other accounts.

To make sure that Financial Advisors are complying with new rules, it is most important to remember who your client is. In situations where financial advisors are looking at family plans between husband and wife or between parents and children, this can cause conflicts of interest if the advisor does not know who they are advising. While it seems like a simple concept on its face, the implications of having a fiduciary duty can be nuanced and complicated.

The Fiduciary rule may be new to financial advisors, but many people serve in a fiduciary for others.  Attorneys are always held to a fiduciary standard for their client. Powers of Attorney for Financial and Health Care decisions are held to the same standard. Guardians are fiduciaries and are overseen by the court to make sure they are acting in the best interest of their wards.

Like all new rules, it may require a period of adjustment, but it is another example of how we all need to work together in our individual fields to continue to improve upon protecting the best interests of our clients.

Baby Steps

Baby Steps

If you stopped by to see us in 2016, no doubt you met Dominic, our legal assistant Laura’s son and Williger Legal Group’s resident baby. Dominic has been bringing smiles and fun to our office since March when Laura came back to work. It’s been amazing to watch him grow and even more astounding to see Laura hold him in one arm while typing with the other. But Dominic is now on his feet, hands free to explore, and no longer content to sit and watch.

A new child brings many new responsibilities. One of these responsibilities is making sure the child is protected in the event something happens to the parents. Here are a few tips for young families to consider when creating or updating their estate plan:

Who will raise your child if you can’t?

  • Nominate a guardian for your minor children in your will. Also, name a back-up in case that person is unwilling or unable to serve. The guardian will have legal custody of your child. Choose someone who is willing to take on the responsibility and has a similar child rearing philosophy. Also consider the age, health and location of the guardian as well as his or her stability and family situation.

What will the child’s financial needs will be?

  • Young families should consider life insurance to supplement inheritance and social security death benefits. Level term premiums are usually the least expensive option.
  • Consider using a trust to name someone responsible to manage the money while your child is young. The trustee can use the money for the child’s health, education, maintenance and support. You can designate how you would like the money to be used as well as the age at which the child should receive the money. Some families feel that 25 is a more appropriate age to receive a lump sum than 18.

Do you need to change your beneficiary designations?

  • Not all assets pass by your will or trust. Make sure the beneficiaries named on your life insurance policies, retirement accounts, annuities, and other assets match the intent of your will or trust. If properly titled, your beneficiaries may be able to “stretch” IRA’s to continue to enjoy deferred tax benefits.
  • How would you care for your child if you couldn’t care for yourself?
  • Create Health Care and Financial Powers of Attorney. If you become incapacitated your powers of attorney give your agent the ability to help you with medical decisions and make sure your bills get paid. Without these documents, the only alternative may be a court appointed guardian.

How will your family find information?

  • Keep an Inventory of your assets and key documents as well as contact information for your attorney, doctor, insurance agent, broker, and other trusted advisors. Make it easy for your agent, executor or trustee to determine what you have and what you owe. Don’t forget to include digital assets, and those precious digital photos, keep a master list of accounts, insurance policies, important legal documents and passwords.

How can you make sure the plan will work?

  • Review your plan every year to be sure it is kept up to date. Update your plan as your life changes. Are there any new family members? Is anyone named in the document no longer appropriate to serve in the role you have given them? Has your net worth changed?
  • Consult an attorney. Each state has specific requirements as to how a will and other legal documents must be executed. Be sure that yours comply.

Power’s of Attorney – Stepping Up & Stepping In

Powers of Attorney
Stepping Up & Stepping In

            It is a great honor to be named Agent for another person in a Power of Attorney. It means that that person (the Principal) trusts you enough to make decisions for her in the most important areas of her life – her health or her wealth. With great power comes great responsibility. How do you know when to Step Up to the job and when to Step In to make decisions?

Ohio law provides for two types of power of attorney: Power of Attorney for Health Care and Power of Attorney for Finances.

A Health Care Power of Attorney names the person or persons who can make decisions about medical treatment. This includes choice of doctors, placement in a rehab or nursing home, specific procedures and medications, as well as, do not resuscitate orders and other end of life decisions. The Agent under a Power of Attorney for Health Care can only act, however, if the Principal is incapacitated to the point where she is unable to make decisions for herself.

An Agent under a Financial Power of Attorney (sometimes simply called a “Durable Power of Attorney”) may be authorized to handle bank and brokerage accounts, IRA’s, contracts, sale or purchase of cars or real estate, life insurance and other financial matters. The agent is limited to only those matters specified in the document. The Financial Power of Attorney generally allows the Agent to handle these matters even if the Principal is still capable of doing it herself.

An Agent is bound to do what the Principal reasonably expects, to act in good faith and always in the Principal’s best interest. When acting as the Agent, you should disclose your identity as well as the Principal’s signing (“Principal’s Name”) by (“Agent’s Signature”) POA.

Stepping Up

How will you know when the Principal needs you to start acting and what you will need to do?

When you receive your paperwork, talk to the Principal about her health and/or wealth and expectations. Go through documents together, the bills she pays, the medications she takes, the names of her doctors, bankers, stockbrokers, insurance agents, etc. Let family, friends, and neighbors know to call you in an emergency.

If you are named as Health Care Agent, consider visiting doctors with your Principal and have her sign a HIPAA release so that you can ask the doctor questions and look at medical records even if your Principal is still able to make decisions for herself.

If you are named as Financial Agent, you might help your Principal sign up for automatic deposits and automatic payments of utilities and other regular bills. This will reduce the burden on her and allow her to continue managing her own business longer. Meet periodically to review statements and balance the checkbook or consider signing up to monitor her accounts electronically.

Stepping In

          You must keep contact with your Principal regularly to know when her capacity is diminished and it is time to Step In and make decisions. You may notice confusion, physical disability, or changes in mood, housekeeping habits, or hygiene. Missed appointments, unpaid bills, unfilled or untaken medication, weight loss, unexplained damage to the car, and falls are all signs that your Principal may need your help.

Check the refrigerator to be sure there is fresh food. You may need to help with the shopping or arrange for meals to be brought in. If your Principal can no longer use a stove safely, you may need to disable it.

When your Principal can no longer drive safely, you may need to talk with her doctor about having her license revoked or disabling or selling the vehicle. A Principal will often accept these restrictions more easily coming from her doctor rather than a relative or friend. If she continues to drive while impaired it is possible her insurance company will deny claims because of recklessness.

If your Principal is unable to drive, assist in arranging transportation. Isolation may become an issue. Regular phone communication, home health services and adult day care can help your Principal remain at home longer. If health care or other workers are in the home, check frequently to be sure your Principal is getting proper care and no items or money is missing. Be sure the workers are properly screened, bonded and insured.

When care at home is no longer possible, you will need to arrange placement in an Assisted Living Facility or Nursing Home. Visit facilities with your Principal if possible on multiple occasions and at different times of the day. Talk to residents and their families. Stay for a meal and a tour or consider a short respite stay to try it out.

If your Principal is resistant to a move, but unsafe at home, talk to the doctor. It is far easier to move to a facility upon doctor’s orders from a hospital or the doctor’s office than to attempt a direct placement from home by force or deceit. Later, when your Principal asks to go home, you can say with conviction that she can return home when her doctor says she can.

As Financial Agent, you will need to see that your Principal’s bills are paid and that her estate plan is followed if you know what that plan is. You must see that taxes are paid and that required minimum distributions are taken on IRA’s. You may need to make a claim on long term care insurance or Medicaid if necessary. Keep careful records of everything that you do on the Principal’s behalf.

Stepping In as agent can be a difficult and thankless job. If the Principal is unhappy with what you are doing – right or wrong – she can remove you since the power came from her in the first place. If this should happen and you feel your Principal is incapacitated and unsafe, your only resort may be to seek authority from the court in a guardianship proceeding. If you are in doubt as to your responsibilities or need assistance in understanding any of your duties as agent, seek the advice of a qualified elder law attorney.

Life Insurance and You

Life Insurance and You

Life Insurance can be an important part of your estate plan. Pull out your old policies every time you update your plan and ask yourself these important questions:

  1. Do I Need Life Insurance?
    As the breadwinner of a young family, life insurance is tremendously important. If you should die your insurance can pay for the funeral, pay off the mortgage, provide for the children’s education and help your spouse get back on his or her feet. But now that the children are grown, you are divorced or widowed or retired, the premium payments or accumulated cash value might be better spent maintaining your own lifestyle.
  2. Who is the beneficiary?
    When we review life insurance policies, it is not unusual to find that the only named beneficiary is a long dead parent, deceased spouse or worse—an ex-spouse. If the named beneficiary is deceased then the insurance company’s internal policy will determine if it will pay out to the insured’s next of kin or probate estate. Sometimes an estate must be opened just to receive the insurance proceeds.

    Update your beneficiaries regularly and consider naming contingent beneficiaries to receive the claim should the primary beneficiary die before you.

  3. What Type of Insurance Policy Do I Have?
    All life insurance is not created equally. Each type has its own pros and cons.
  • Term Insurance– Term Life Insurance is the most straight forward and most economical type of insurance. You pay your premium for the month, quarter, or year and you are insured for the full amount of the insurance if your die within that period of time. Stop paying the premium and the insurance stops at the end of the term. As you get older, you are more likely to die during the term and the premium goes up. You can elect to make level term payments for a period of years so that you know the price will be fixed for that period.
  • Whole Life Insurance– Whole Life Insurance has a savings component as well as the premium. The cash value accumulates in the early years of the policy. At some point, the cash value approaches the death value payout of the policy and the policy is “paid up”. After that time no more premiums are due. Some whole life policies have an “endowment” at a certain age. If the insured reaches the endowment age, the cash value is paid out to the insured and the insurance ends.
  • Universal Life Insurance – Universal Life Insurance is a combination of Term and Whole Life Policies. The early payments go towards a low premium and a large cash value deposit. As the years go on the premiums increase and the cash value deposits are less and less. When the cost of the premiums for the insurance exceeds the payment due, the funds in the cash value are used to supplement the premium payments. At some point, the cash value will be exhausted by the ever increasing premiums. At that point, the insured can either begin paying the now much higher premiums or allow the policy to lapse.
  • Group Term Insurance – Some employers offer life insurance as a perk to their employees or retirees. Because premiums are paid in bulk, the cost to the employer is far lower than a private term policy would be.
  • Accidental Death and Dismemberment (AD&D) – This insurance is sometimes offered as a bonus by a bank, credit card provider or AAA. This is a group term insurance, but it only pays out if there is an accidental death. If the insured dies of cancer or some other illness or non-covered injury, no payout will be made.
  • Credit Life Insurance – This insurance only pays out to cover the creditor involved. Some credit card providers and mortgage brokers offer this life insurance to insure the loan will be paid off should you pass away. This insurance may or may not be less expensive than a standard term insurance policy, but it will only pay to cover the one debt to the extent that debt is still owed at your death.
  1. Does My Life Insurance Meet My Goals?
    Think of life insurance as a tool used to meet your specific goals. Whether it is to cover the cost of your burial, support your dependent spouse, finance your children’s education, or provide liquidity to your estate choosing the right type and amount of life insurance is critical to your plan’s success.

Who Can I Trust With My Trust

Who Can I Trust with my Trust

       Trusts are extremely versatile and efficient estate planning tools which allow for the effective management of assets both during the Settlor’s lifetime and after his death.  In establishing a trust the Settlor (creator of the trust) names a Trustee to manage the assets for the Beneficiaries.  The Settlor can be as specific or as flexible as he desires in directing how and when the assets are to be used.

Choosing the right Trustees can be the difference between the achievement of all of the Settlor’s goals and a catastrophe of financial mismanagement and family discord.  So whom should you choose?  Let’s look at the options.

You – Most people choose to name themselves as the initial trustee of a revocable trust.  This allows them to have complete control over their assets.  You would then name one or more Successor Trustees to take over management of the Trust assets when you become too ill to manage them for yourself or you pass away.

Your Spouse – Married couples will often name each other as Successor Trustees of their individual trusts.  They also frequently name both spouses as Co-Trustees of their individual or joint trusts.  This way, either spouse may manage assets just as they have always done with their joint accounts.  Of course, in the case of separation, divorce or incapacity, the spouse should be removed and replaced.

You and Another Person – Although spouses are the most common co-trustees, you may want to consider naming someone else, as you age or if you have lost your co-trustee spouse.  While having a Successor Trustee serves as a safety net in case you become ill or pass away, having a Co-Trustee is more like having a parachute.  During periods of intermittent illness or times you are traveling, your Co-Trustee can handle things.  If you develop a progressive illness or infirmity, your Co-Trustee can begin by acquainting himself with the assets and viewing transactions and monthly statements.  Then as you are able to do less and less your Co-Trustee can step up and do more and more. This allows you the advantage of seeing a sample of the Co-Trustee’s management style and avoids the potential conflict and distress of a declaration of incompetency.  It also allows the Co-Trustee time to familiarize himself with the assets and their management while you are still available to advise and explain.  This makes it far more likely that your goals and wishes will be achieved, than if the Successor must take over knowing nothing at a time when he may be grieving your illness or death.

Another Person – In the case of an Irrevocable Trust or if the Settlor doesn’t wish to manage the assets, a friend or family member may be chosen as Trustee.  In choosing a Trustee, look for a person with integrity who manages his own life and assets well; someone with diplomacy, organizational skills and a large dose of common sense.  It’s helpful if your Trustee is geographically available and has plenty of time and energy to commit to the task because, done right, managing a trust is a lot of work.

            Think twice before naming two or more people, other than yourself, to serve as Co-Trustees.  When you name two, you either tie their hands together by making them work in concert or give them separate, but equal powers in which case the right hand may not know what the left hand is doing.

Also consider your own family dynamics in deciding whom you will name as Trustee and what you are expecting that person to do.  For example, your daughter may be the right person to choose to manage assets for you if you become ill, but it may be too much to expect her to manage funds for her seriously disabled nephew for the rest of his life.

Your Agent Under Power of Attorney – In a complete estate plan involving a trust you will name an agent under a Durable Power of Attorney (POA) for Finances to handle assets that cannot go into the trust such as IRA’s, 401K’s and certain annuities.  Many people name the same person who they chose as Successor Trustee.  The POA Agent, can also manage trust assets in the Settlor’s place so long as there are provisions both in the POA and in the Trust allowing him to do so.

A Professional Trustee – Bankers, Attorneys, and Accountants may make it part of their business to act as a Trustee.  Their experience can be beneficial when the terms of the trust are complicated or the investments are complex.  Their expertise is helpful in analyzing tax issues, brokerage statements and choosing appropriate investments.  Choosing a professional trustee can avoid family jealousies and emotionally charged issues.  Although their fees may be more than a friend or family member would charge, it may be worthwhile in certain situations.

In the end it is your plan, your trust and your choice.  Who would be the best Trustee to accomplish your goals?