Estate Planning

It is important for the elder to execute durable powers of attorney. There are two kinds of Powers of Attorney: Healthcare and Financial.

A. Health Care Power of Attorney (Advanced Health Care Directive)
I am surprised how many people have a healthcare power of attorney (also called an advanced healthcare directive) for their parent, but believe this will help them with issues pertaining to their parent’s finances. It will NOT! An advanced healthcare directive was the legal instrument lacking in the Terri Schiavo case. Terri was in a long-term persistent coma and her husband thought that Terri would want life support ended. Her parents, however, believed that Terri would want to be kept alive in the hopes that someday she would come out of the coma, or that medical science would find a cure. Since Teri never executed a legal document describing her wishes regarding life support in this kind of a matter, and nominating an individual to make this decision if the time came, there was no way to settle the dispute between Teri and her parents without going to court.The court battle between Teri and her parents took years, but finally the court decided that her husband was the proper individual to decide Teri’s wishes. Of course, this was a heart-rending case and it does teach us that EVERONE should have an advanced health care directive.I also recommend that folks execute HIPAA powers (the Health Insurance Privacy and Accountability Act). This allows your agent to have access to your medical records if you are incapacitated.

B. Durable Financial Power of Attorney
If the elder wants to give their adult children (or any trusted friend or family member) the right to make decisions regarding their investments, bank accounts, and real estate, they should execute a durable financial power of attorney. It can give the agent the power to make transactions in order to make the principal eligible for government benefits (which they have paid taxes for all of their lives). What if the elder has advanced Alzheimer’s and is unable to make financial decisions of any kind? But if an agent had the legal authority to take the correct actions, the agent could help the elder receive veterans’ benefits to help pay for the elder’s assisted living care or in-home care. Or receive Medi-Cal benefits to help pay for the elders nursing home care.

Many times the elder will hear that he needs a financial power of attorney and visit an office supply store and buy, off the shelf, a “financial power of attorney.” I call them “dimestore durables.” The problem is that an off the shelf power of attorney will often NOT grant the legal authority that is required in these cases.

In a power of attorney, the principal (the signer…the elder) gives the agent (the adult child) authority to deal with his real and personal property. If a power of attorney allows the agent to make gifts of the elder’s property, it can be a license to steal! So you will probably not find an off the shelf power of attorney form that allows this. I honestly think that the worst thing a family can do, regarding their parents’ estate plan, is to be a “do it yourselfer” and buy a financial power of attorney at the corner office supply store.

A common mistake that “do it yourselfers” make is to buy a power of attorney that does not contain the required “durable” language. If the power of attorney does not specifically state that the power of attorney’s authority survives, even if the principal becomes incapacitated, then the authority of the power of attorney ENDS when the principal becomes incapacitated. And if the authority of the power of attorney ends when the agent needs the power most…this is a real problem.
It is a very worthwhile investment to hire an estate planning attorney with elder law training to complete your parents’ estate planning documents.

Additional info: If you would like more information about your specific needs, please fill out the form and mail back to Gilbert Fleming. Questionnaire Rev. 8-10-12

Estate Planning:

Planning for the smooth transfer of family assets after death, using living trusts, and other probate avoidance techniques.In California, 7 out of 10 people have no estate plan…not even a simple will. Does your relative have a living trust that will make sure there will be no probate at his or her death? Probate is time consuming and very expensive in many states (It’s taking even longer here in California because the judges have been furloughed due to budget problems). If the elder owns any real estate, it is usually a very good idea to have a living trust. A living trust can also be helpful in managing the elder’s care and finances if he becomes incapacitated (by Alzheimer’s, a stroke, etc.). It would allow a trusted family member or friend to manage his care if he can no longer make decisions for himself. It can help the family avoid a conservatorship or a guardianship, which is an expensive and labor-intensive court proceeding.


John and Judy are in their mid-40s and have a substantial estate worth $3 million, including John’s accountancy practice. They are healthy and desire to provide (when they die) for the needs of the survivor and for the smooth transition of their wealth to their children. Our firm may be able to help them with Estate Planning, including the creation of a Living Trust which provides special features to provide for the orderly management of John’s CPA practice if he predeceased Judy, for the education of their children, and for the avoidance of federal estate taxes.

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