The last couple of weeks we have been preparing tax returns, preparing MaineCare applications, and dealing with client matters when things fall apart generally. Here are some observations from the field at the end of a long day:
Getting financial institutions to recognize powers of attorney can be a real struggle. Is your power of attorney on file with your financial intuitions? Will they respect it? Would a trust just be better? Sometimes collecting on a transfer on death accounts can be a real challenge. Expect the process to take several weeks in some cases. Expect delays. Expect hang-ups. Don’t put all your assets in one basket. If there is an issue with a particular financial institution processing a trust or a power of attorney, money may not be available for an extended period. It is a good idea to give your agent or Trustee an alternative resource for funds to tend to business. Don’t expect financial institutions to be looking out or concerned about you or your agent, they aren’t. Expect difficulty getting mail forwarded in a time of crisis and difficulty in trying to timely collect proper tax statements and bills due for incapacitated or deceased persons. If you are single and don’t have family nearby, consider using a PO Box over a home address for financial mail. Anticipate that in the event of incapacity or death, bills are going to not get paid by traditional check writing. Put critical bills on automatic withdrawal.
Take a hard look at your documents. Who has copies and where are the originals? Don’t assume. Know. Are they up to date? Write down your goals on a piece of paper. If you can’t say for sure that your documents are going to accomplish your goals, call your lawyer or get a second opinion. I don’t care who prepared your documents (myself included). It’s your family and your finances and you need to know the answer.
Ensure proper relationships are established. Does your doctor know who your lawyer is? Should your lawyer have a HIPPA power? How about your financial advisor? How about your children, nieces, nephews, etc.? How about your tax return preparer? Who knows who and who doesn’t but should? You need advisors that are willing to share information and are team players. Allow them to share information so they can better assist you.
Appropriate agents: Does your Will name an older person as your executor/ personal representative? If they are incapacitated (or if they become incapacities (assume they will)), how can they renounce their appointment? Be aware that in Massachusetts, if that person is incapacitated, an agent under a power of attorney can’t decline the appointment, which will mean someone may have to file for guardianship just to have that person decline the appointment. Name at least 2 successors. Are co-agents really a good idea? Don’t name two people that have different financial interests in your affairs as co-personal representatives or agents. Avoid the drama and name an independent third person. Conflicts of interest are real. Unfortunately, in estate planning, it is often easy to assume or ignore potential conflicts. Many lawyers seem to have no qualms about representing individuals in a fiduciary capacity and as a beneficiary even when the interest of one or more beneficiaries are at odds with the fiduciary/beneficiary. This lowering of the bar seems of ethical standards seems to match that of our current political environment. This needs to change.
How much time and effort do you think, realistically, it is going to take the person you have named as your agent under a will or power of attorney or trust to take control of your affairs? Are they prepared? Can you prepare them? I doubt it but maybe. Realize that serving as an agent or personal representative /executor can be a full-time job and that it comes with liability. It is not a position to honor someone with; it is a burden. Your “agent” needs to have the time, inclination, and ability to get the job done or hire someone that can competently advise them. Are you being fair to that person or are you leaving them a mess? Are you going to put them in a position of ethical conflict where they have to choose between their personal interests and a fiduciary obligation? We see it being done all the time. Sometimes using a third party is just a better choice even if it adds some additional cost. Sometimes having a person represented by two different lawyers (one in their individual capacity and one as a fiduciary) is simply a reality that people need to embrace as prudent and ethical.
Even the best of us are going to leave a mess, so don’t feel bad about it just prepare for it and take precautions. Things fall apart, and estate lawyers are around to help clean it up, but many things can be done to avoid messes. Get second opinions. Respect professionals that tell you they need to involve other professionals (they are doing you a service and not just trying to increase your costs). Stress test your estate plan, which includes more than your documents.
Be diligent. Be vigilant. Expect the worst. Expect the potential for conflict. Expect liquidity concerns. Expect “paper” location problems. Expect care needs and how you are going to pay for it long before it happens. Plan for the best but expect things to fall apart. When it does, we will be here.
This article is for informational purposes only and shall not be construed as legal advice. No attorney-client relationship between the reader and Brennan & Rogers, PLLC, or its attorneys is intended. This article should not be used as a substitute for legal advice. Laws may vary from state to state, and the educational materials found in this article may not apply in all jurisdictions.
Brennan & Rogers, PLLC | 279 York Street, York, ME 03909 | 207-361-4680 | email@example.com
Great article. Exactly what I needed.