We’ve written about the importance of updating your beneficiaries, but when you’re going through a divorce, should you update your estate plan while navigating separation or after the divorce is finalized? If you do not have an estate plan, an excellent time to create one is when your marital status changes.Continue Reading...
A recent North Carolina Senate proposal for the ballots in November of 2014 is an amendment to remove the right to vote in North Carolina for individuals who have been determined incompetent by a court of any state. If passed into law, Senate Bill 668 will take the right to vote away from many senior citizens and individuals with disabilities who have been adjudicated incompetent by a court. (An individual’s constitutional right to vote may be granted back if a court restores their competency.)Continue Reading...
2013 seems to be the year of digital afterlife planning. Last month the North Carolina Senate approved Bill 279, a bill for the state’s first-ever laws addressing digital assets. This month Google took their first step forward in post-death account management of their applications. Launching a feature called Inactive Account Manager, Google now offers its users the ability to designate how they wish the data stored on their various Google applications, like Picasa Web Albums, YouTube, Gmail, Blogger, and more, managed after they are gone. Items that do not have inherent financial value, but those that the user chooses to preserve for next of kin.Continue Reading...
A common misconception is that elder law attorneys are used primarily by senior citizens. Although elder law attorneys can assist with crisis Medicaid planning and present eligibility for Veterans’ Benefits, they can also help younger individuals make a plan in advance.Continue Reading...
Recently we reviewed the challenges of digital estate planning—the ways surviving family members’ access to a decedent’s online accounts are affected—and how accessibility is determined by individual account policies. With no North Carolina laws governing digital afterlife yet, many families have struggled to gain access to online banking, investments, frequent flyer miles, and more.Continue Reading...
Parents of special needs children need to carefully plan for their children’s future. Many families turn to special needs trusts to ensure their child will have access to finances after their deaths, without hindering the child’s ability to qualify for public benefits, such as Social Security and Medicaid.Continue Reading...
The “Sandwich Generation”—today’s 10 million baby boomers who care for both their own children or grandchildren and elderly parents or relatives—may need to take a different approach to estate planning. New research shows approximately 15% of baby boomers contribute financially to care and living expenses for their elderly family members. The average life expectancy is only going up and many seniors will outlive their savings. When caring for aging parents, particularly when it includes financial contributions, estate planning should include consideration of the parents’ eligibility for Medicaid long-term care coverage, Veterans benefits, the caregivers’ access to medical records, the caregivers’ authority to make medical and financial decisions for the parents, and possibly guardianship.Continue Reading...
Memory loss comes in many forms. From mild cognitive impairment and dementia, to the severe effects of advancing Alzheimer’s, the number of senior citizens affected by memory impairments is only going up. 1 in 5 Americans over the age of 70 are afflicted by some type of memory loss. Families often recognize the importance of advanced estate planning when thinking of retirement for aging Americans with a growing rate of memory impairment. However, seniors may avoid discussions about retirement planning because they are concerned about losing their independence – both financial and otherwise. By meeting with an estate planning attorney in advance, individuals can take the steps needed to help preserve the independence that most fear will be lost as they age.Continue Reading...
- North Carolina’s statutory form for a living will and health care power of attorney are valid statewide. The documents meet the requirements of North Carolina law; however, individuals are not required to exclusively use them. One can file these documents through the NC Advance Health Care Directive Registry.
- Five Wishes meets the legal requirements for an advance directive in North Carolina. In fact, it is recognized in almost every state. (The only states that do not recognize Five Wishes are Oregon, Utah, Kansas, Texas, Alabama, Indiana, Ohio and New Hampshire.) Five Wishes is a set of forms that allows one to name a person to be their health care agent, and to check boxes and write statements in response to questions about medical treatments that one may or may not want under certain circumstances.
Powers of attorney, which should be part of every estate plan, allow an individual to appoint someone of their choosing to manage their assets and affairs, make medical decisions and handle other matters the individual would have controlled when they were competent. Many powers of attorney (POAs) are effective at the time they are signed, so that no physician certification is required. However, some POAs are designed to be “springing,” meaning that they are effective only when the person who signed the POA is certified by a physician to lack capacity to make decisions.Continue Reading...
I recently met with a loving grandson, who needed some advice regarding his grandmother. His grandmother currently lives in another state. She was recently diagnosed and treated for cancer, but in the process was also diagnosed with dementia. She moved into an assisted living facility after her cancer surgery, and is not likely to move back home. Her only child lives here in North Carolina, and so a move to a North Carolina assisted living facility is likely the next step.
The grandmother does not have much income or assets, so paying for her care is a top concern. Before we could truly discuss options and develop a plan, though, I would need a more accurate picture of her finances. While I would need to meet with the grandmother personally to determine her legal capacity to make decisions and sign documents, I suggested that she have Powers of Attorney in which she designates who can make financial and medical decisions for her. The grandson mentioned his grandmother is hesitant to give up control, and that she’s been expressing fear and distrust lately where there was none before, possibly resulting from the dementia. He asked what happens if she doesn’t sign one, then declines to the point she can’t sign one, and the facility decides she needs someone to make decisions for her. I explained that guardianship – the court process of determining someone incompetent and appointing a decision-maker – might become necessary.
Then the grandson said, “Okay, well, do you have any tips on how to talk to her about this? How to start the conversation?”Continue Reading...
A recent North Carolina Court of Appeals decision affirmed the Superior Court verdict that an agent under a power of attorney did not breach his fiduciary duty to his aunt, Doris King or unjustly enrich himself at her expense. Albert v. Cowart, et al.
Even though the defendants prevailed in this case, proper advance planning by Mr. and Mrs. King would most likely have avoided the lawsuit. The use of powers of attorneys and perhaps trusts executed well in advance of incapacity, with a lawyer's counsel, does not completely avoid the possibility of litigation, but certainly reduces it considerably.
It appears that the lawyer that prepared a power of attorney for Mrs. King did so without first consulting with her. This goes against North Carolina State Bar rules, which require that an attorney must first communicate with a person before preparing legal documents for that person to sign. This helps ensure that the person signing the documents has capacity to sign the documents and is doing so willingly.
To help increase awareness of the importance of having up to date health care legal documents (Health Care Power of Attorney, Living Will and HIPAA Authorization), TrustCounsel is offering all three documents for $50 today and tomorrow (September 29 and 30) to North Carolina residents through OurLocalDeal.
Today is National Health Care Decisions Day. Take charge of your future - talk to family, your doctor and your estate planning attorney about your wishes. Everyone age 18 or over should have a Health Care Power of Attorney, Living Will, and Authorization for Use and Disclosure of Protected Health Care Information (HIPAA Authorization). When my kids turned 18, I made sure they each had a complete estate plan, including these documents.
General ("financial") Durable Powers of Attorney (DPOAs) are very useful documents that every competent adult should have. DPOAs can be used to manage one's property and affairs in the event of incompetency, avoiding the need for a court proceeding to determine incompetency and appoint a guardian. This can save thousands of dollars in attorneys and court fees, not to mention much time and trouble.
However, what many people do not realize is that DPOAs are no longer valid after the person who signed it (the principal) dies. Thus a DPOA cannot be used for any purpose after the death of the principal, including signing checks or accessing a safe deposit box. If the bank doesn't know that the principal has died, the agent under the DPOA may not be prevented from taking these actions, but doing so could result in civil or criminal liability.
So, if you are the agent under a DPOA, DO NOT take any action using the DPOA after the principal dies. If you do, you may very well create a mess that you will have to pay a lawyer to clean up for you. My firm is doing that right now for at least one client.
A Durable Power of Attorney (DPOA) is a part of virtually every estate plan. The DPOA allows the person who signed the document, the principal, to designate an agent, or attorney-in-fact, who will act in his or her stead. The idea is to try to avoid the time, trouble and expense involved in an incompetency and guardianship proceeding.
Some estate plans also include living trusts for probate avoidance, which also can be helpful in avoiding the need for guardianship, since the successor trustee can manage the assets in the trust in the event of the incapacity of the trust grantor.
However, what many people don't realize is that the agent under a power of attorney does not have power to control assets in a trust. It's the trustee that exercises that power. Thus, if mom's checking account is in the name of her trust, and she develops dementia, the DPOA will not be effective to allow the agent to sign checks on the account. That authority belongs to the successor trustee, a separate legal role.
For the successor trustee to gain authority, the original trustee (normally the grantor) must resign, or if that is not possible, the provisions in the trust for trustee succession must be followed. Commonly, the signed statements of two physicians attesting to the incapacity of the grantor are required. These statements, along with a copy of the trust, then become the written authority for the successor trustee to exercise authority regarding the trust.
North Carolina law requires that a DPOA be registered/recorded in the Register of Deeds office in the county in which the principal resides if it is used after the principal has become incapacitated. However, most financial institutions require registration even if the principal has full capacity. Only an original document can be registered. Once registration is completed, certified copies may be obtained from the Register of Deeds.
Giving someone your power of attorney (POA) has been likened to giving a trusted person a spare set of keys to your house or car. If a problem arises -- for example, you lose your keys -- your interests are protected. Otherwise, you're still in control. And just as you can take back your spare set of keys, you can also revoke a power of attorney.
Basically, a power of attorney gives someone the legal ability to act on your behalf in ways you specify. Obviously, you should only give this power to a person you have complete confidence in, such as your spouse, adult child, or trusted attorney. A POA can be as simple as giving your child the legal authority to pay your bills and endorse your checks if you are no longer able to do it. Or it can be more detailed, such as enabling your child to pay the bills and sell a parcel of real estate that you own.
Different Types of POAs
If you're considering granting a power of attorney, here are the basic types available:
General power of attorney - This grants a wide range of powers to act on your behalf -- basically, to do whatever you can do. In the event that you became incompetent or incapacitated or pass away, the POA would automatically be revoked. Because of the sweeping nature of this power, it should be used sparingly.
Health care power of attorney - This authorizes another person to make medical decisions on your behalf and remains in effect even if you have become mentally incapacitated. This type of authorization must be signed in front of witnesses and notarized in order to be valid. The agent (sometimes called the attorney-in-fact) that you appoint must be an adult, and cannot be a person who is paid to provide health care to you. As with other forms of POAs, you can specify the decisions you are authorizing your agent to make, or give them the same authority you have to make decisions for yourself.
Special power of attorney - As its name implies, a special POA gives your agent power to act only in specific situations. For example, let's say you need to travel for a long period of time when certain matters need to be concluded at home, such as selling your car.
Springing power of attorney - A springing POA is an instrument that can be written so that it takes effect only if you become incapacitated. You need to be very clear when defining what circumstances will trigger a springing POA.
Durable power of attorney - A durable power of attorney can remain in force even if you become incompetent or incapacitated. This POA generally requires that a family member or close relative be appointed as your agent. It differs from a general POA in that it conveys limited powers to the agent and can be put in place for longer periods of time. It can be desirable for some individuals to separate the duties granted by durable POAs into two types --
medical and financial responsibilities. For example:
A Durable Financial POA Can Take a Load Off Your MindHere are some of the duties you can authorize your agent to handle with a durable financial POA:
- Pay bills and the bills of your family, using available assets.
- Pay real estate taxes, maintain your home and buy or sell real estate.
- Manage retirement funds.
- Make decisions necessary to operate your business.
- Calculate, file returns and pay your taxes.
- Buy or sell insurance.
- Handle banking and investing money and collecting government benefits, such as Social Security.
1. A durable medical POA (Health Care Power of Attorney) authorizes an agent to make health care decisions. You can give your agent the same authority to make decisions as you have yourself, or you can limit the authority. This POA becomes effective when a doctor states in writing that you're not able to make your own medical decisions. You may want to include an advance directive (living will), which states your wishes concerning life support, if it becomes necessary.
2. A durable financial POA names an agent to carry out your financial responsibilities described in the right-hand box. This type of POA can save your family lots of money and avoid many problems if you become incapacitated.
When Does the Power End? A durable POA ends automatically upon your death. So if you wish to have your agent also wind up your affairs after your death, you need to create a will and name that person as your executor. A durable power of attorney can also end if:
You are mentally competent and choose to revoke the POA.
A court concludes that you signed the authorization while you were incompetent, under undue influence, or a victim of fraud, and therefore renders the POA invalid.
The agent you choose is unavailable, unless an alternate is named.
You get a divorce. This applies if your spouse is your agent and you live in one of several states where a divorce automatically terminates the POA.
If You're Married: Your spouse has some authority over property that you own together. He or she can pay bills from a joint account and manage investments in a jointly owned brokerage account. But in most states, including, North Carolina, spouses are limited in their abilities to buy or sell co-owned property without consent of both parties. And if any property is in your name only, your spouse generally has no legal authority to act without a durable power of attorney.
Getting Your Ducks in a Row
Getting Your Ducks in a Row
Whether young, middle-aged, or approaching the golden years, everyone needs to give some thought to the future. Obviously, the need increases as you get older. An arrangement such as a power of attorney is a simple way to smooth out bumps before they arise. Contact your attorney to learn more.
Source: TrustCounsel's January eNewsletter from BizActions.
Most people who execute living wills, health care powers of attorney and other advance directives express their desire to not have their lives prolonged if terminally ill or in a persistent vegetative state.
However, there are some who believe that all or many measures should be taken to prolong their lives. The North Carolina statutory documents are not really designed for this purpose. Thanks to a client, I recently discovered the "Will to Live" Durable Power of Attorney, which is designed for persons who want to be kept alive by artificial nutrition hydration and nutrition, as well as other life-prolonging measures under most circumstances.
This document does meet the NC statutory requirements. Just as with the standard living will, I would encourage those who are interested in using it to discuss it with both their physician and their estate planning attorney.
In a recent Florida case, Bank of America was held liable for refusing to honor a power of attorney:
Copyright 2009 Stuart News Company All Rights Reserved The Stuart News/Port
St. Lucie News (Stuart, Florida) November 15, 2009 Sunday Martin County
Edition SECTION: LOCAL; Pg. B5 LENGTH: 496 words HEADLINE: Stuart man
takeson Bank of America BYLINE: Melissa E. Holsman staff writer BODY:
-- When Clarence H. Smith Jr. sued Bank of America in 2007 over its
refusal to honor the power of attorney his now-deceased father had enacted years
before, he called it as a case of David against Goliath. And like
David, Smith on Friday walked out of court a winner, armed with a jury award
worth $64,142. "I'm glad we won, but I think it's a victory for more than
just us," said Smith, 67, of Stuart. "It's a victory for anyone who gets a
rough deal from a big bank -- that a little person can prevail against a huge
international bank." After a week-long trial, it took a one-man,
five-women jury 15 minutes to determine Bank of America had not acted
reasonable in September 2007 when it denied Smith Jr.'s request to
transfer $65,000 his father, Clarence H. Smith Sr, then held in a joint account
with a female friend he knew from living at Ocean Palms Retirement Center.
Smith said his ordeal with the bank began when he became suspicious
money may be missing from his father's bank accounts. He presented to
former Stuart branch manager Victoria Carscadden the durable power of attorney
he'd had on behalf of his father with a request to transfer money from the
elder Smith's jointly held accounts into a new account only the father and son
could access. But instead of honoring the request, Carscadden
testified that she consulted bank policies and called the woman on the account
with Clarence Smith Sr., and she accused the son of trying to steal his
father's money. Carscadden said she refused Smith's request because bank
rules governing jointly held accounts require that all signatures on an
account must agree to any transfers or changes. The woman sharing Clarence
Smith Sr.'s account, she said, had refused to allow any money to be moved.
At trial, Smith's Stuart attorney William R. Ponsoldt Jr. showed that
despite Carscadden visiting Clarence Smith Sr. to see he was competent and that
he wanted his son to manage his affairs, she still refused to recognize
Clarence Smith Jr.'s power of attorney. Shortly afterward, Ponsoldt told
jurors, the woman sharing Clarence Smith Sr.'s account moved all the
money into an account only she could access. Clarence Smith Sr. died about
three weeks later, Ponsoldt said. He argued that the bank's refusal to =
honor Smith's power of attorney went against state law. During his closing
argument, Bank of America attorney J. Randolph Liebler of Miami, said
based on bank policies, "it would be absolutely inappropriate to have honored
the power of attorney where there was some allegation of abuse -- rightly or
wrongly." After court, Bank of America spokeswoman Shirley Norton
said they were disappointed in the jury's verdict. "We believe that
neither the facts nor the law support the verdict," she said, "and we plan to
appeal." Smith meanwhile, said he'll use the money to pay bills from
his father's estate. "I feel fortunate we were able to take on Bank of
America," he said. "Think of all the people who can't."
Thanks to Brevard attorney Nicola Melby for bringing this to my attention. North Carolina also has laws to help with enforcement of a valid power of attorney. N.C.GS. Section 32A-40 et sq.