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2020

Merry Christmas and Happy New Year!

We wish all of our clients and partners a very merry Christmas and happy new year. This year, our firm has felt especially blessed by our rich relationships with you, our clients and partners. We are grateful for you! Note: We are taking a break from the regular blog series during the first few months of 2021 and will see you back here again later in the year.

Protecting & Storing Your Documents

Having a thorough, lawfully crafted estate plan is critical for your care and legacy. So, once you have your estate planning documents, you need to keep them safe and accessible. First, pick a safe place to store your estate planning documents in your home. This should be in a fire-proof box or well-organized file in your records. Keeping your original estate planning documents in your home makes them relatively easy to locate. If you do not want to store your documents at home, your attorney may keep the originals stored safely for you at his or her law firm. However, this is not recommended, because your attorney may pass away, his or her law firm may change locations, or the firm may go out of business before you need to access your documents. You could store your documents with a trusted relative, but this option also invites risk and could limit accessibility. Do not use a bank safety deposit box to store your documents. Bank safety deposit boxes are extremely difficult for your executor or agents to access, due to stringent state regulations and extra precaution banks take to prevent fraud. It could take months and incur extra expense for your executor or agent to retrieve documents from a bank safety deposit box. This is valuable time that will delay fulfilling your goals and objectives. After securing your documents, inform your fiduciaries about the location of your documents. Your Will appoints an executor to manage your estate, and your health care and financial powers of attorney appoint agents to act on your behalf in those areas. These people should know where to locate the original copies of each document, if needed. [Note: Your executor will need your original Will to process your estate after you pass away but copied documents […]

Supplementary Needs Planning – Part 2

Now that you know what a Special Needs Trust (SNT) is, it’s important to understand its specific advantages. First, a SNT allows you to transfer unlimited assets for the benefit of your beneficiary. These assets will supplement beneficiary expenses covered by public benefits, not supplant them. That means the SNT assets will fund additional needs on top of what public benefits provide. The SNT’s language will clearly state that the funds do not replace public assistance. The SNT assets will be managed by a trustee of your choice. In some cases, it may be advisable to hire a corporate trustee who has financial expertise and competence in managing the complex requirements for public benefits programs, as well as the ability to navigate changes in government regulations that happen down the road. In the case of a smaller SNT, on the other hand, appointing a non-profit or trusted family member might make more sense. Your SNT will manage the types of assets that would otherwise disqualify your beneficiary from receiving public assistance. Generally, besides assets in an SNT, public assistance benefits exempt a beneficiary’s home, home furnishings, one vehicle, burial plot, limited amounts of burial funds, and small life insurance policies from asset limits. But cash, investments, larger life insurance policies, and additional real estate beyond the beneficiary’s home will trigger the asset limits. If properly transferred to an SNT, these assets won’t disqualify your beneficiary from receiving public benefits. But there are also limits to how trustees use SNT resources for beneficiaries. Distributions to a beneficiary can risk public benefits. When planning for public assistance, it is recommendable to work with a trusted advisor who can guide you through the best practices to make sure your beneficiaries are cared for in the way you intend.

Supplementary Needs Planning – Part 1

A crucial consideration for your comprehensive estate plan involves care for family members or loved ones with special needs. Leaving gifts to loved ones with special needs might cause unintended consequences without proper planning. Your estate plan can include a Supplementary, or Special Needs Trust (SNT) that will ensure both funding and resource management that best serve the beneficiary. “Special needs” can include conditions such as cerebral palsy, Down syndrome or quadriplegia that require lifelong assistance from trusted caretakers. This type of assistance is expensive, especially if your loved one’s special needs require daily assistance for routine activities. Because of the sheer cost, persons with special needs often pursue public benefits programs for disability care. Many public benefits programs have “asset limits,” which terminate or phase out benefits for a beneficiary with a specific amount of available resources such as cash or investments. For example, Medical Assistance, the most-sought public benefits program for special needs care, has an asset limit of $8,000 in Pennsylvania for some recipients. And giving away money won’t help a person avoid asset limits. Benefits programs like Medical Assistance impose “ineligibility periods” on applicants who gift their preexisting resources to meet asset limits. Thankfully, SNTs allow you to leave resources for your loved ones with special needs while preserving their access to public benefits. Generally, if you leave more than the $8,000 asset limit to a loved one on Medical Assistance in your will, the recipient may lose their coverage. But the law excludes SNT resources from counting towards the asset limit. Resources in your SNT can fund your loved one’s needs in supplement to public benefits coverage. For example, a SNT could make mortgage or rent payments on behalf of the beneficiary. It could also purchase medical devices or household items that aren’t covered by […]

Irrevocable Trusts

An irrevocable trust is generally a trust that cannot be amended or revoked once it is created, with rare exceptions. It avoids probate and has the added benefit of allowing the trust creator to transfer assets to beneficiaries weeks, months or even years after the trust creator, or settlor, dies. Irrevocable trusts can be living trusts, irrevocable life insurance trusts that hold life insurance policies, charitable trusts, and others. One advantage of an irrevocable trust is privacy. The trust and its various provisions never become a matter of public record, because the irrevocable trust is not subject to probate. In contrast, if you use a Will only, it must be filed with the Orphans Court in Pennsylvania to open probate. At that point, it becomes a document that anyone can have access to and read. A key difference between a revocable and an irrevocable trust is that with a revocable trust the settlor remains the owner and can modify or revoke the trust at any time. The settlor has full access to the assets in the trust up to the time of death. With an irrevocable trust, the settlor cannot get the property back that was put into the irrevocable trust. Using an irrevocable trust may make sense for someone who is in a profession that puts you at risk for lawsuits. You give up control of those assets that you put in the irrevocable trust. You cannot get that property back, and the assets in the trust are protected from creditors and judgment holders. One caveat, however, is that you cannot create an irrevocable trust to protect assets if you are currently being sued, or if an event occurred in which you may be sued. The protection that the irrevocable trust affords can be overturned if it can be […]

Revocable Trusts

A revocable trust is a part of many individuals’ estate plans. The document is a legacy-driven tool that determines how your assets will be handled after you die. The assets in the trust can include real estate, investments, vehicles, bank accounts and other items. A revocable trust is created, and revocable, during your lifetime. Assets placed in the trust are distributed according to the trust provisions upon your passing. During your life, however, you serve as the trustee, and are responsible for maintaining the assets as you would if they were not in the trust. You can even alter or completely get rid of your revocable trust if needed. Along with creating the revocable trust, you will want to execute a “pour-over” Will, so that assets that are not allocated or funded will be transferred to your revocable trust after death. Another important aspect of the revocable trust pertains to taxation. The assets in your revocable trust are still considered yours, and you pay the taxes on those assets accordingly. The trust itself has the same Social Security number as you do. So, for example, a brokerage account that earns income that is titled in the name of your revocable trust will have that income reported on your individual federal and state income tax returns. As part of creating the revocable trust, you name a successor trustee, who will assume management of the trust if you are unwilling or unable to do so. Thus, a revocable trust can be an important planning tool at three different times in your life: 1) when you are alive and managing the trust as trustee; 2) when you choose not to manage, or are unable to manage the trust, and your successor trustee takes over; and 3) after your death. Two key benefits of […]

When might I need a trust?

Wills are the cornerstone for estate planning, but they are not necessarily the best option for every estate. A trust can help in certain situations. A trust is a fiduciary arrangement that contains in its provisions how your assets will be distributed at the time of your passing, often without the involvement of a probate court. A trust has flexibility and can be crafted to accomplish a variety of goals. Some of those goals include preserving assets for minors until they are adults, helping to minimize estate taxes or benefitting a charity. One of the key benefits to a trust is the ability to control your assets both during and after your lifetime. This is especially important for people with special circumstances, like those passing on a closely held business or those with a family member with special needs. In the trust, you can also specify that certain conditions must be met before the asset transfer is complete. Revocable living trusts provide a great deal of flexibility. With a revocable trust, you can transfer ownership of some or all of your property into the name of the trust, but you maintain the same level of control over the assets that you did before. You gain the assurance that your wishes are carried out if something happens to you. Another reason to have a trust as part of your estate plan is to preserve those assets for any beneficiaries who may end up inheriting as minors. Whether it be a minor child, grandchild or other individual, if you don’t have a trust set up, then the probate court will get involved and a guardianship will likely have to be established to protect the inherited assets until the minor reaches the age of majority. With a trust in your will, you can […]

Digital Wills

Times may change, but “standards” must remain. Even as much of our lives become digitized, some things remain in traditional form. In almost every state, including Pennsylvania, Delaware, Maryland, New Jersey, and New York, Wills cannot be fully digitized. The writing (provisions) of your Will can be typed, but signatures by you and your witnesses must be done by hand on an original, physical document. The primary reason your original Will must be signed by hand is for your protection. It is much harder to fake or replicate your written signature than it is to merely type your name in a cursive electronic font as a “signature.” It is also more difficult to change provisions of a hard copy, hand-signed Will after you sign. For example, if you sign a hard copy Will, nobody can alter its content against your wishes, since doing so would deface it with pen scribbles, hand-written additions, or whiteout. This type of alteration, known as “interlineation,” is obvious and also invalid, without overwhelming proof and two witnesses that you made the alterations. But with a digital Will, someone might gain unauthorized access to your computer and change the terms of your Will by mere typing. So, if you live in Pennsylvania or nearby states, your Will must still be crafted as a traditional hard copy, signed by hand. This requirement ensures your wishes for your estate are truly yours. There is a handful of states, including Florida, that do recognize fully digital Wills, however. In Florida, a fully digital Will is valid as long as it meets the basic requirements for any Will. There is a growing movement to recognize digital Wills, despite the risks. The COVID-19 pandemic may spark new interest in legalizing digital Wills, given the current health benefits of social distancing. But […]

Special Considerations: I Don’t Have Anyone to Appoint

Leaving a lasting legacy is a goal for most of us. For many of us, our focus is providing for our family, most often our spouse, children and grandchildren. These individuals are also the ones who we most often appoint to important positions in our estate planning documents. For a variety of reasons, however, not everyone has close family members in their lives who are well-suited to serve in these roles. For those who don’t, it can be a challenge to find someone to fill these important positions. If you find yourself in this situation, there are options for you to consider. Professional fiduciaries, such as banks or trust companies, can act as executors or trustees in a will. The professional fiduciaries employ individuals who specialize in administering estates and trusts. Banks and trust companies are also regulated, depending on how they are chartered, by the federal or the state government. The regulators audit accounts to make sure that the institutions and their employees are fulfilling their fiduciary duties to their clients. One thing to keep in mind, however, is that the institutions charge for their services. Another option available is certain non-profit corporations that provide community support services through fee-for-service contractual arrangements. They are fully insured and bonded, with professional staffs to serve the needs of their clients. These corporations can provide power-of-attorney services that may cover financial or fiduciary matters, personal decision-making or medical decision-making. For someone who is interested in utilizing these services, you submit an application for the corporation’s review, and depending on your situation, the corporation agrees to serve as your agent. With these non-profit corporations being fully insured and bonded, and registered with the Commonwealth of Pennsylvania, those who use these community support services can have some reassurance that their best interests are being […]

Special Considerations: Leaving My Pet to Someone I Trust

According to a national pet owners survey, two thirds of American families own pets. Unbeknownst to many, estate planning law recognizes our love for our furry friends. We can provide for pets with our estate plans in case they survive us. Your estate plan can include a “pet trust,” which will help ensure your pets continue comfortable lives if they survive you. Most importantly, a pet trust lets you designate someone as “trustee” who you want to take care of your pets in the event of your passing. This could be a close family member or friend that knows you and your love for your pets well. Pet trusts also allow you to set aside funding that maintains quality life for your pet. Your pet trust will terminate upon the passing of your last surviving pet. Pennsylvania law limits use of funding in pet trusts “only to its intended use.” Your trustee will use the funding as you direct in your Pet Trust, which usually covers expenses such as food, veterinary care, and accessories. It is best to fund your pet trust based on your pet’s life expectancy. Any pet trust funds exceeding the amount needed for providing for your pet distributes to beneficiaries of your Will or Trust. So, if you establish a Pet Trust during life, and no pets survive you, your heirs will receive these funds. But because we never know when God will call us home, it’s wise to plan for your pet with a Pet Trust.

Testamentary Trusts/ Retention Trusts

One difficulty you may experience the during estate planning process is concern about how heirs might use the money and resources you left to them. People spend their entire lives investing in and growing their estate, and many folks want to make sure their heirs pay the same respect to these funds. Although we can’t oversee these assets after death, we do have an estate planning tool that can help guide our heirs beyond our time: Testamentary Trusts (also called Retention Trusts). A Testamentary Trust is a trust activated by the terms of your Will. To make a Testamentary Trust, your Will must include such a trust in its language and designate it as the beneficiary of some or all of your estate’s property. Your Will’s executor will distribute your estate to the trust during probate. You must select a trustee to manage your Testamentary Trust. Then, the terms of your Testamentary Trust will distribute your assets according to the terms you set. The terms of your Testamentary Trust reflect your wishes for controlling your gifts to heirs. For example, if you’re worried that a beneficiary might go on a blowout shopping spree upon receiving a lump sum of cash, you might set the terms of your Testamentary Trust to distribute to beneficiaries in small increments over multiple years. Or, if you want to provide lump sums for certain beneficial activities, but not Las Vegas getaways, you can provide discretion to your trustee to distribute resources to fund, for example, college education or missions trips. These terms help ensure – to the extent possible – that your heirs use their gifts according to your wishes. Testamentary Trusts help extend your wishes for your heirs long beyond your lifetime.

Special Considerations: Real Estate in the Will

A common question for those beginning the estate planning process is, “What happens to my real estate when I pass away?” The answer to this question is largely your choice. You can distribute your real estate however you wish in your Will or Trust. Holding a property until death can also provide tax benefits for your heirs. It is also important to note that in Pennsylvania, if you own real estate as a joint tenant with right of survivorship, the other joint tenants will automatically assume your interest. If you are leaving your real estate as a specific gift in your Will, this may sound something like, “I leave my house at 555 Lancaster Ave, Anyplace, PA, 17600 to my daughter, Beverly.” This scenario is simple and gives you full control over who takes your real estate, however it may require strategic planning to create equal inheritance opportunity for other beneficiaries. Or, you might transfer real estate to beneficiaries through your residuary estate. Your residuary estate is everything left in your estate after specific bequests are filled. If you have one residuary beneficiary, it’s easy – this beneficiary gets your real estate. If you have multiple residuary beneficiaries, your real estate could either be sold and the sale proceeds would be distributed to your beneficiaries, or beneficiaries could negotiate amongst each other to decide who takes the house. To illustrate, if your Will distributes your real estate by residue to your children, Fred and Ginger, in equal shares, then Fred and Ginger might each receive 50% of the sales price. Or, Fred and Ginger could agree that Ginger gets your real estate, while Fred gets other things of agreed upon equal value, like your monetary assets. But who takes your real estate after your death isn’t the only important consideration. […]

Special Considerations: Charitable Beneficiaries

Every estate and legacy plan is unique, and, quite frequently, there are special considerations that must be addressed and accounted for in one’s legal documents. Perhaps the most commonly mismanaged consideration in a legacy plan is how to bless charities at death. It warms the heart to see so many faithful stewards including church, charity and ministry as beneficiaries of a percentage of their residuary estate. But what too many fail to examine is that carefully selecting the right assets for the right beneficiaries substantially boosts a legacy’s overall impact on family and charities. When the rubber meets the road, there are three groups that await your assets at death: Family, Charity, and Uncle Sam. For those that want to leave a lasting, meaningful legacy to family, it is important to realize that, in most states and in most situations, you must choose at least two of the three groups to bless. Leaving your overall estate to family, alone, is a near impossibility. This conundrum centers on taxation at death. Even in states that do not impose an inheritance or estate tax, residents lose sizable sums of their wealth in the form of ordinary income tax at death. “How could this be,” you may ask, “when I’ve been paying income tax my whole life?” The answer lies in what has become the biggest asset for most working Americans: pre-tax retirement plans. These retirement nest eggs have yet to be taxed and, as such, are fully taxable at the ordinary income tax rates of your beneficiaries when you die. Recent changes to the tax laws have eliminated the ability for beneficiaries to “stretch” the tax burden over their lifetime, so the tax impact is greater than ever. Enter church and charity. They, of course, pay no income tax. Unfortunately, the vast […]

Pennsylvania Intestacy

According to a 2015 Rocket Lawyer estate planning survey by Harris Poll, 64% of Americans do not have a Will. That follows several Gallup polls with similar results. According to Gallup, 48% of Americans had Wills in place in 1990, declining to 44% in 2014. When someone dies without a Will in place, the person is characterized as dying “intestate.” The question becomes, what happens to a person’s assets when there is no Will? In effect, unless the person was able to somehow designate how those assets would pass after death, without executing a Will, that person has left it up to the government to direct how a large part of the legacy passes. Each of the states settles this issue by having an intestacy statute as part of its statutory code. Pennsylvania is no different. In enacting the statute, the legislature and governor attempted to, as best they could, step into the shoes of the person who died without a Will, and disperse the person’s estate as he or she would have probably wanted. Pennsylvania’s statute concerns all or any part of the estate of a decedent not effectively disposed of by Will or otherwise. The statute then looks to the surviving spouse. If there is one, with the decedent having no surviving descendants of parents, the surviving spouse gets the entire intestate share. If the decedent had a surviving spouse and children with the surviving spouse only, the surviving spouse would receive the first $30,000 of the estate, plus one-half of the balance of the intestate estate; the children would receive the rest. The statute goes through various family permutations, moving further outward from the decedent to any descendants, parents, siblings and their descendants, grandparents, and finally to uncles, aunts and their children and grandchildren. If the decedent […]

Tangible Personal Property

The physical items we own, called “tangible personal property” (or TPP) is part of the legacy that we leave to those who we wish to bless. Tangible personal property, may have significant or minimal monetary value. Regardless of monetary value, however, TPP may hold a lot of sentimental value to us and to those who are a natural part of our legacy. Whatever its value, and however the value is measured, TPP sometimes requires additional thought and planning when devising an estate plan. One way to define TPP is that it is our “stuff;” anything that we can put into our vehicles and drive off with, including the vehicle itself, is our TPP. This may prompt some people to wish that they had bought a bigger vehicle with more hauling capacity! Our TPP is not limited by that, but includes everything from household furniture, jewelry, books, clothes and tools, to our collections of anything and everything from dolls to classic cars. In many Wills, TPP is dealt with in a separate section of the document. And, if there is a specific bequest of certain TPP items to a beneficiary, this property may be found in two sections of a Will. Most often, TPP is left to a surviving spouse, and if none, to descendants to decide among themselves who gets what as part of the estate administration process. In Pennsylvania, there is some added flexibility in how we can leave our TPP to beneficiaries. If we choose, we may create a list to keep with our Will on which we can specify who will receive a particular item of TPP. The list must be signed and dated, and can be changed at any time. The list does not have to be notarized or witnessed.

Last Will & Testament

While this may be the last thing that you want to think about, your Last Will and Testament is the cornerstone of your estate plan. Through it, you can exercise your will with regard to your possessions, and, most importantly, who will become guardians of your minor children if both you and your spouse are called home. Through this document, you give a testament to how you have lived your life and how you have been a steward of what you have been given charge over during this life.   Anyone who is of legal age and who has testamentary capacity may execute a Will. Testamentary capacity is a relatively low standard, and the individual executing a Will need only have testamentary capacity at the time of execution. Testamentary capacity exists when the individual executing his Will understands the nature of making a Will, has a general idea of his possessions, and knows who are the members of his immediate family or other “natural objects of his bounty.” Wills often deal with the individual’s Tangible Personal Property (which will be covered in more detail in a future blogpost), and any specific gifts or bequests the individual wants to set forth in his Will, such as giving $2,000 to that nice young neighbor who mowed your lawn when it just got to be a bit too much for you to handle in later years. The Will also deals with the residue, which are your possessions that do not include tangible personal property or assets that pass by beneficiary designation, like a 401K. Checking and savings accounts, and an individual’s residence are often part of the residue. Sometimes younger couples say that they don’t need a Will, because they don’t have much in assets. They may be telling you this while rocking […]

Fiduciary Relay Race: From Agent to Executor

When discussing the role of fiduciaries in your legal documents, it is important for you and those you appoint to understand how responsibilities begin and end within each of the documents you create. Similar to a relay race, the baton (your physical estate and intangible legacy) is passed between fiduciaries who are appointed for various roles prior to ending in the hand of your eventual beneficiaries. While you are alive and well, you hold the baton, making decisions as a good and faithful steward. In the event of incapacity, however, you hand your baton to your agent/attorney-in-fact via the Power of Attorney (POA). The hope is that the agent will be handing the baton back, sooner rather than later, but during his/her time with the baton, he/she is “you” in the eyes of the law. The more power and flexibility you provide your agent, the better he/she can serve your interests. In the event that your condition never improves (or you die without using the POA), your baton is passed to the Executor of your Last Will and Testament. The Executor “runs” with your estate for about a year, garnering assets, arranging for the payment of any final expenses and taxes, and helping ensure that everything gets where you want it to go. Thereafter, the baton will pass to one of two runners: your beneficiaries or a trustee for your beneficiaries. In the case of a Trustee, because you have set restrictions on the access to funds, the Trustee runs with the baton for as long as you set forth in your trust. In this role, depending on the age of your beneficiaries, the Trustee might be working hand-in-hand with another fiduciary, the Guardian of your minor beneficiaries. Here, the hope is that the two fiduciaries work in tandem, to […]

My Power of Attorney Lives Out-of-State

As discussed in prior blogposts, Power of Attorney documents are some of the most important documents you need to have in your estate planning arsenal. The Power of Attorney can provide peace of mind to you, the Principal, in knowing that your finances—and most importantly, yourself—will be taken care of regardless of what life throws your way. Part of the struggle that many people find when setting up their Power of Attorney is determining who their Agent will be. Many people will choose a spouse or family member to be their primary Agent. But what happens if that family member or trusted individual lives out-of-state? Years ago, having an Agent who lived out-of-state may have posed significant challenges, since often the original document was required to be produced in order to gain access to the Principal’s accounts or personal information. But thanks to recent technology and updated statutes, many out-of-state Agents can gain access with minimal trouble. For instance, according to Pennsylvania’s Power of Attorney Statute 20 PA C.S. 5602 (d) “a photocopy or electronically transmitted copy of an originally executed power of attorney has the same effect as the original.” Although it is still important to consider proximity when selecting your fiduciary, modern technology makes it easier for someone to appoint a trusted agent and fiduciary regardless of where they live.

Health Care Declaration & Power of Attorney

The Health Care Declaration and Powers of Attorney, often called a Health Care Power of Attorney, is another key document that is part of one’s estate planning “suite” of documents, along with a Financial Power of Attorney and a Will. The need for a Health Care Power of Attorney has increased in recent years. Doctors and other medical professionals regularly request that their patients provide a signed Health Care Power of Attorney for their files. Upon admission to a hospital or nursing home, it is now common practice to either produce your own executed Health Care Power of Attorney, or sign a form required by and produced by the attorneys of that particular institution. A standard Health Care Power of Attorney document generally includes the following: a section specifying the specific powers granted to the fiduciary, a section where the signer may elaborate on what sort of care they wish to have provided to them in an end-of-life situation, and whether the signer wishes to donate any organs or tissue following death. Because it allows an individual to specify what end-of-life care regimen should be followed when that time comes, the Health Care Power of Attorney is an effective document that gives the fiduciary named in the document some peace of mind when having to make these health care decisions under stressful times.

COVID-19 Update

Aevitas Law is committed to serving you in the wake of COVID-19. In the interest of global and community health, our office is utilizing remote capabilities to continue providing prompt and quality service. We are staying up to date on the latest developments regarding how court deadlines and filings are affected, as well as creative opportunities for business owners during this time. In addition, this is an opportune time to review those personal documents and communication tools that might be needed if you are unable to make decisions yourself (either due to illness or just the inability to leave your residence). Two important estate planning documents, your Financial and Healthcare Powers of Attorney, help ensure that you don’t miss a beat. If your Financial Power of Attorney (FPOA) was signed prior to 2015, it is likely missing new PA statutory language that is required by many financial institutions. Making sure your Healthcare document has adequate HIPAA language is also important. You can learn more about these documents and the process at aevitas.law/blog/. If you’d like to get started, contact us at [email protected] We are honored to serve you and walk with you during this time and always.

Durable Vs. Springing Powers of Attorney

Most Financial Powers of Attorney are known as Durable Powers of Attorney. That means that upon signing the document (and the document is notarized), your appointed Agent will be able to act on your behalf right away, as well as after such a time as you may be unable to act for yourself. This ability to appoint someone else to step in and act for you is one of the primary reasons someone chooses to execute a Power of Attorney, so it is important to ensure the financial document you are signing does indeed include the language to make it “durable.” A “Springing” Financial Power of Attorney, in contrast, only goes into effect when you cannot act for yourself. Until you are deemed incapacitated, your Agent may not step in on your behalf. This allows you to maintain sole control of your financial affairs until such a time as you are unable. However, if an emergency arises while you are unavailable, such as a resolving an insurance claim while you are traveling abroad, your Agent would not be able to step in for you. Generally, as long as you are appointing someone you trust as your Agent, you should be confident to sign a Durable Power of Attorney document to cover any unexpected situation that may arise.

Financial Power of Attorney

One type of fiduciary role is contained within the Financial Power of Attorney document. Proper preparation of these documents is key in order to allow whoever is named in the document to handle any financial matters that we cannot handle ourselves, whether that be due to illness, incapacity, or even for such reasons as being away due to travel. Whoever we name in the document is our Agent, and our Agent acts in a fiduciary capacity in fulfilling his role. (Please see previous blogpost What is a Fiduciary.) One important note regarding Financial Power of Attorney documents is that many states have developed uniform provisions that require precise notices and acknowledgements in order to be valid. These states often require the document to be notarized and signed by two witnesses, modified wording to the official Notice on the first page, and revised wording to the Acknowledgement form at the end. Accordingly, if you have not updated an official Power of Attorney document that meets these requirements in the past four years, it would be wise to review your current document to ensure its validity.

How to Appoint a Fiduciary

Fiduciaries can be appointed to serve you in a variety of ways. Three of the most common roles of a fiduciary include acting as an Agent or Attorney-in-Fact in financial or health-related matters during your lifetime, as the executor of your estate once you pass, or as a trustee. When preparing your estate plan, you may find that there is one person best suited and willing to serve as your fiduciary in all of these roles, or, more commonly, you may choose to appoint different individuals for your various fiduciary needs, according to their giftings and the dynamics of your family. When appointing a fiduciary, it is often wise to consider a “successor,” or back-up person, in case, for whatever reason, your first choice is unable to act when the time comes. The names and structure by which you choose to appoint your fiduciary can be identified in the corresponding formal document drawn up for this purpose.

What is a Fiduciary?

What happens in the event of your death or incapacity? Or, perhaps more importantly, who is carrying out your plan? What should this person do? What if the doctors are saying that all hope is lost and you should be taken off of life support? Have you effectively communicated your wishes? What type of person is well suited to balance your care with your goals and objectives? A person designated to “step into your shoes” and act when you can’t is known as a fiduciary. Essentially, a fiduciary is a person (or organization) acting on behalf of another person, putting his/her own interests behind that of the person being served, and being bound by the duties of good faith and trust. When choosing a fiduciary, there are three key characteristics to consider. In order of importance, the first key is values. It is essential that your fiduciary share your values. When the rubber meets the road, you want to know that the person you select will land on a decision the same way you would. Next to values, it is important to have a fiduciary that possess some degree of knowledge. Although the vast majority of fiduciary functions can be outsourced to other professionals, having a fiduciary that shares your values and has a sound head on his/her shoulders is ideal. Lastly is proximity. In today’s day and age, being “there” is not nearly as important as it once was. That said, having a fiduciary that embodies all three of these key characteristics makes for a great pick!

What is a Legacy Plan?

Estate planning is commonly defined as the preparation of structures that serve to manage an individual’s asset base in the event of incapacitation or death. Having an estate plan is essential and as you consider crafting your own, you would be wise to consider how your estate fits into your overall legacy. As previously discussed, your legacy (and your legacy plan) represents more than just your “stuff.” How will you be remembered, when you no longer have a pulse? What will that fingerprint that you leave behind look like? You will, undoubtedly, need to ensure clear communication of those things important to you, but you must also guard against two other challenges to leaving a lasting legacy: taxes and long-term illness. Planning for the challenges that each of us faces in today’s world is the best way to give you, your family and the charities you support a “leg up” on the multitude of factors that can ravage your estate and your entire legacy.

Everything Starts with Communication: Why Have a Legacy Plan?

“The single biggest problem in communication is the illusion that it has taken place.” -George Bernard Shaw. Perhaps more truer words have never been spoken when it comes to intrafamily discussion surrounding financial and estate planning.  In fact, a lack of communication is regarded by most as the single biggest challenge to leaving a lasting legacy.  Your legacy is much more than just your “stuff,” of course.  In large part, your legacy is the fingerprint you leave behind for future generations: your values, your time-honored traditions, as well as words of wisdom, perhaps, that you have yet to say in person, just to name a few.  Part of your legacy does, however, involve the way in which you set your loved ones up for success after you are gone. In order to leave a lasting legacy, you have to start with adequate communication.  Adequate communication, for most, begins with the completion of your estate planning documents: Powers of Attorney, Wills and, perhaps, Trusts.  If you don’t take the time to communicate your wishes with regard to your “stuff,” the likelihood of your fingerprint surviving you after death is slim.  In this blog series, we will explore several of the key communication devices in estate and legacy planning, as well as how to navigate the pitfalls that exist in each.