The Continuing Series On The Complete Guide To Estate Planning – Part 4 – Wealth Transition

Warning – The following are general comments for educational purposes and not intended as legal advice.  No client attorney relationship is intended and you should consult an attorney about your specific circumstances before taking any action in reliance on the general information presented in this posting.

This is the third part of the life time planning posting.  It describes the types of documents and the role players you will need to be “well planned.”  Next time, I will focus on why planning for wealth transition is important – for large taxable estates and especially for small non-taxable estates where the costs of not planning can have a bigger impact on your loved ones.

You must decide who will act for you in 6 different situations.   Four of those roles will be acted out during your lifetime.

Agent(s) under your Health Care Power of Attorney.  You must decide if you are unable to make informed medical decisions who will make those decisions for you. You should choose at least one contingent choice if your primary choice is not available. I do not recommend choosing multiple agents to act at the same time because there should be a clear chain of authority to whom medical providers can look for a decision. Your decision maker may consult others, but that authority is not usually written into the grant of authority.

You may specify that certain actions be taken or withheld, but the most useful process is to appoint someone who knows you and your intentions. Too many rules may be confusing rather than helpful.

Agent(s) under your Mental Health Power of Attorney.  In addition to a general health care power of attorney, Arizonans use a mental health power of attorney that may be incorporated into your health care power of attorney or be set forth in a separate document. The mental health power of attorney authorizes your agent to admit you to a “level one behavioral health facility” which is a facility where the doors are locked and you may be restrained if necessary. These facilities are for persons with advanced dementia or Alzheimer’s disease and for younger persons with drug, alcohol, or behavioral conditions. The mental health power of attorney is only effective if the person is unable to make an informed decision about an admission. Without the mental health power of attorney, you may still be admitted to such a facility, but the facility must release you unless the responsible person has obtained a temporary or permanent guardianship within 48 hours. The legal process for obtaining such emergency relief is expensive and most client opt to grant mental health authority to their agents.

A Living Will does not require an actor or role player because it is a declaration of your intention. You must decide how you perceive your own end of life. Do you want to let go when the doctors say there is no possibility of continuing meaningful life. The relevant medical legal terms are “persistent vegetative state,” “irreversible coma,” or “terminal illness” and the decision of whether you’ve reached one of those stages will be made by the physicians who are attending you or anyone you specify. The living will is a declaration of your intent that when it is time, you are content to let nature take its course without the application of heroic measures to continue your life in a diminished state because medical science can. Compare the difference between a declaration of your intent, with the directives in the powers of attorneys that appoint someone to make decisions for you.

A Living Will should not be confused with a “DNR” or “do not resuscitate” direction which in Arizona must be printed on an orange background, use specific words, and be countersigned by a consulting physician. If you have the orange form, you may also wear jewelry with the notification. This will give notice to all who read it that you do not desire to be revived if you stop breathing. The DNR is seldom used except in the most dire end of life circumstances.

We can provide living wills that are specific to particular religious beliefs and allow your religious leader to participate in the decision if you desire such participation.

Agent(s) for your Financial Powers of Attorney.  Financial Powers of Attorney can be useless or indispensable depending on your need at a particular time.  A power of attorney will often be a frustratingly useless document because in Arizona there is no law requiring a third party to honor it and as a consequence, most banks will not honor it unless it meets very stringent requirements including being of relatively recent (less than a year, sometimes six months) vintage and often a bank will require that it be on their own approved form.

The problems with banks are usually overcome because your account can be held in joint ownership with your spouse and you can assure access to your accounts if you are unable to write your own checks by having your account card at the bank indicate an agent or POA.  This is different than a co-owner or a POD and often the bank employee must be educated about their own form, but every account card allows such a designation.

However, a power of attorney will be indispensable for appointing an agent to deal with the Internal Revenue Service, to deal with the Social Security Administration, to deal with insurance companies, including health and long term care insurers and issuers of annuity contract, the Post Office, custodians of retirement accounts, and numerous other third parties.

Typically your spouse is your first named agent, but you must give consideration to alternates if your spouse is not able to act.  Without a valid and acceptable power of attorney, your care givers may have to seek a judicial appointment as your conservator in order to act on you behalf.  You should give careful consideration to whom you select to act on your behalf because the agent must be able to exercise good judgment for your benefit without any thought to there own benefit.

If you have a trust, you may have a Disability Panel which are the people you trust to make the decision whether you are incapacitated to the point of needing your successor trustee to assume control of your trust assets.  Our disability panels can act either by majority or unanimous vote depending on the make up of your panel and the panel is usually encouraged to seek the advice of your treating physician.

Often, the same people will act in several roles, but each role is unique.  If you give some thought to who you want to act for you in different situations, the planning of your estate will be easier and more complete.

Next time, I will explain basic estate financial and wealth transition planning while you are alive and well.  Thanks for reading and please call me if you would like a personal consultation about your emergency planning or wealth transition concerns.

2017-12-01T16:26:24+00:00 By |Estate Planning, Uncategorized|Comments Off on The Continuing Series On The Complete Guide To Estate Planning – Part 4 – Wealth Transition

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