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Estate Planning for your Graduate/Adult Child

If you have a recent high school graduate, likely they recently turned 18 and are now legally an adult.  Unfortunately, due to the pandemic the end of high school may not have turned out as planned as many proms, graduations, and other end of school year events were cancelled.  Pandemic reminded us all just how unexpected life can be.  Many people began thinking about estate planning.  Did you know that once your child turns 18, parents can’t access medical and financial information for their child?  As you spend the summer helping your now adult child prepare for the transition to college and help them with shopping for school supplies, furniture, and clothes for this next chapter in their life, you should add to the to do list, estate planning.

Due to the privacy rules of HIPAA, parents have no legal right to their adult child’s medical records or other health care related information.  If your child is involved in an emergency you don’t want delays in getting information or assisting in making medical decisions.  Your recent graduate  should execute a medical power of attorney and health care directive.  This will allow your child to determine who should make medical decisions if they are unable to make them for themselves.  It would also be good to execute a HIPPA authorization that would allow the child’s health information to be disclosed.  It is also a good idea for your now adult child to execute a financial power of attorney as well giving someone the authority to deal with financial decisions and sign legal documents on their behalf.  You may also have them execute a FERPA release.  The Family Education Rights and Privacy Act can protect your child’s educational records.  Having your child sign a FERPA release could allow for a parent to access information and educational records if needed.

As you begin making summer plans, don’t forget to add a consultation with an estate planning attorney to your agenda for your recent graduate!

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Medical Decisions – the Medical Power of Attorney and Healthcare Directive

It is a good idea to have a Medical Power of Attorney and Healthcare Directive in place for when the time comes that you are unable to make your own medical decisions.
A Medical Power of Attorney allows you to select a person of your choosing to make medical decisions on your behalf when you are not capable. You may hear this person referred to as an agent. You may even select back up agents in case the person you choose in unable or unwilling to act as your agent when the time comes. In addition to other powers, your agent can be given power to consent to, prohibit or withdraw medical treatment. It is important to choose someone that you trust to follow your instructions even if they would not make the same decisions themselves. This document goes hand in hand with a Healthcare Directive where you can make your wishes clear to the person you have chosen to make decisions for you.
In a Healthcare Directive you can make the job of your agent easier because they will know what your wishes are. It may even help reduce conflict between family members when they can see that the other family member was acting on your wishes and not on their own. If there was no reasonable expectation of recovery from a serious illness or condition would you want life-prolonging procedures to be withdrawn? If so, you can make those wishes known through your Healthcare Directive. If a doctor believes that life-prolonging procedure may lead to a significant recovery would you want your doctor to try the treatment for a period of time but withdraw it if does not improve your condition? Again, these wishes can be placed in the Healthcare Directive so that your agent will know how to proceed in such circumstances. Would you want to be given treatment for pain? Do you wish to donate your organs upon your death? These wishes can also be written into your Healthcare Directive.

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But Chances Are So Small – Estate Planning – Burkhardt Law Firm

The number one reason I hear for why people they don’t think they need an estate plan is: “Well, my spouse is named as a co-owner on everything I own or is a beneficiary on everything I own and the chances of us dying at the same time is small.”  Well, even if you are right and you and your spouse don’t pass at the same time and your beneficiary designations avoid probate, there are reasons why you still need an estate plan.

Things can fall through the cracks, and you may forget to put a beneficiary designation on a new asset, or there may be other unforeseeable assets that don’t have a beneficiary designation and will therefore go through Probate.  A will is a good way in those circumstances to be able to tell the Probate court what to do with those assets.  A will can waive bond and ask for independent administration which can reduce the cost and time if assets have to go through Probate.

A good estate plan does not only plan for death, it is also a plan for when you are living but incapacitated.  An estate plan may include both a medical power of attorney/heath care directive and a financial power of attorney.  These documents are utilized while you are still alive.

If you have retirement accounts, your spouse cannot be an owner of your account.  They can be a beneficiary, but that beneficiary designation does not give them any rights to access your account or funds from the account until you have passed away. If you to need to access money from your retirement account and are not capable of making financial decisions the only way to do that is through a financial power of attorney.  A financial power of attorney will allow someone of your choosing to make financial decisions and access funds when you are not capable.  If you do no not have a financial power of attorney, there may be a delay and added cost if someone has to go through the court system for conservatorship in order to access the funds. This is just one of many reasons a financial power of attorney is an important document to make part of your estate plan.

The other document utilized as part of an estate plan during your life is the medical power of attorney/heath care directive.  If you are not capable of making medical decisions for yourself a medical power of attorney will allow a person of your choosing to make medical decisions on your behalf.  Do you have specific wishes for end of life? Would you want treatments like feeding tubes to be removed if the doctor did not believe you would have significant recovery?  It is important to make your wishes known and this can be done through a medical power of attorney/heath care directive.

Even if you are not concerned about assets passing through Probate, I strongly suggest considering an estate plan so that you can have access to funds when needed through a financial power of attorney and to make your end of life wishes known through a medical power of attorney/heath care directive.

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What Do You Want? Medical Powers of Attorney and Health Care Directives

I talk about estate plans on a daily basis, which natural involves talk of loss and dying, but there’s still one conversation I find hard: medical wishes. The end of life medical decisions have to be the most emotional and difficult to make. However, because of that I believe it’s one of the most important conversations to have and an important document to execute.

In Missouri, most legal practitioners offer an advance medical directive with a medical power of attorney in one document (the Missouri Bar even offers a free version here). The medical directive, similar to the living will, states what a person’s wishes are if they cannot make medical decisions for themselves. While there is a standard form most people choose, please realize there are options out there. In St. Louis, I see a lot of Catholic clients and there are different medical decisions people make based on faith. If that or another aspect of medical choices are important to you, then this is a document you should put serious consideration into.

The power of attorney portion, gives another person the ability to make these medical decisions. Most times, the power of attorney will have the ability to over-ride or to choose to follow the instructions in the medical directive. Because of this, it’s so important to choose someone who would make decisions in a way you would respect or ask. I often refer to this person as your medical advocate, because they will be the person making sure your medical wishes are followed.

Another very important part of these documents is the HIPAA authorization. If you’ve regularly visited the doctor before, you’ve probably heard of this, but the HIPAA authorization is what allows the person of your choice to access your medical information. Obviously, this is vital for whomever is making medical decisions for you. However, you can also specific certain people, which is so important if you do not have a traditional family structure and you want partners, step-children, friends, etc., to know what is happening medically.

Now, all of these documents are extremely important to make sure the right people have access. However, these documents only give access and don’t guarantee the decisions you want. Conversations with loved ones are the best way to make sure people understand the choices and can walk away from the experience feeling like they helped, rather than feeling guilty.

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Take Control Through Estate Planning

I recently had the pleasure of sitting down with Chris Finny from the Finney Law Office. As Chris was explaining how he helps individuals through difficult events in their lives (car accidents, getting hurt on the job, medical procedures gone wrong) I noticed a common theme. Yes, Chris’s clients have been injured in some form, but the bigger more lasting effect is that they have had control taken away from them. Maybe that’s control of their body, their ability to earn a living, or just the management of their finances. Unfortunately, as I learned from Chris, those who have gone through a personal injury case know how quickly they can lose the ability to make decisions. But through effective legal planning, some of that lose is preventable.

I want to suggest some basic documents everyone should think about, so that if you do experience an injury of that type, your wishes are still the ones that are being considered.

First is a medial power of attorney and health care directive. This allows you to set out your medical wishes if you aren’t able later to communicate or enforce them. It also gives you the power to choose who will help enforce those wishes.

There’s also another power of attorney to cover your financial and legal decisions. I truly consider this one of the most important documents of an estate plan and would highly recommend everyone of any age to have one. Again, in this document, you get to choose who handles your finances and makes decisions for you or your family if you’re not capable of making your own.

And of course, don’t forget about the will. While this is the document where you get to override state law and say where your possessions go, for parents it’s a lot more. This is the ONLY legal way to have a say in who will take care of your minor children.

But if you really want control, a trust really is the most effective and detailed way to do so. A trust gives you the ability to make detailed decisions over your finances and beneficiaries, even allowing you to make sure your beneficiaries cannot touch their inheritance until an age or event you decide.

Without these documents, those left to take care of you will have to go to court to earn those rights, and the court has the final say on who will be making decisions for you. So whether you’ve been involved in a personal injury case or just know it can happen to anyone, take some control now and consider your estate plan today.

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Who Has the Power?

First of all, happy Fourth of July!  In honor of the holidays and those who have made it possible, especially our troops, I want to focus on power of attorneys.  Now I understand the connection between the armed forces and a power of attorney may not be completely obvious, but let me explain.  When out of the country for any reason, most people want to have their estate planning documents for understandable reasons.  But when you’re going overseas unsure of when you’re going to return and without easy communication, it’s a different story.  You need someone with authority over your bank accounts, insurance, maybe even your house.  This is where the power of attorney comes in.

The person making those decisions is called the agent or attorney and fact and the person actually making the document is sometimes referred to as the principal.   Now, power of attorneys come in many different forms and for many different decisions.

There are two types of power of attorneys that are important for most families’ estate plans: a springing power of attorney and a durable power of attorney.  A springing power of attorney only grants the agent the power to act for the person when a certain event occurs.  Hence the springing.  Generally, this occurs when two doctors certify that the person is unable to make decisions for themselves.  This is how I write the majority of the power of attorneys because most families do not need another person able to make decisions over their money and assets.  It also avoids problems when there are conflicting instructions between a person completely capable of making decisions and their agent.  Now, if you are going out of the country and someone needs to be able to access and make decisions for your account, you do NOT want a springing power of attorney.  However, that’s a more detail analysis an attorney can help you make on an individual basis.

The durable power of attorney allows the agent to act for a person if they are incapacitated or if it is unsure whether they are dead or alive.  Because many people execute these forms to plan in case of incapacitation, it’s extremely important to make sure the document has the “magic” language of a durable power of attorney.  As I said before, I generally help my clients with a springing power of attorney.  But I also include the magic durable power of attorney language.

Most people need a financial/legal power of attorney AND a medical power of attorney.  They do not need to be separate documents, but normally are because some people want different friends/family making financial decisions and medical decisions.  Whether it’s one document or two, it’s important they are reviewed to cover most situations, ranging from banking to insurance to health care choices.  A power of attorney may be drafted for almost any specific decision to give another the power to make that decision.  I’ve reviewed documents to allow one sibling to sell a car for the other 6 siblings (much easier than 7 signatures).

What every power of attorney has in common though it’s no longer effective after death.  Therefore the other estate planning documents (wills, trusts, etc) are extremely important.  Also, without a power of attorney designating someone to make decisions, a person must go through the probate court to have someone appointed to make those decisions.  A power of attorney is much easier and cheaper.

On a final note, people ask me when an estate plan is needed, and while many young people do not have enough assets to truly NEED a will, they certainly have the potential for medical issues and absolutely need a power of attorney no matter the age.  Many clients even choose to execute a power of attorney for their minor children’s health care decisions so a grandmother or other trusted caretaker can act in the event of an emergency where the parent is not available.  A great idea if the parents are extremely inaccessible (out of the country, etc).

So if you don’t have a power of attorney or have any questions, give me a call.  Or at a minimum, take the time to execute a free medical power of attorney from the Missouri Bar (found here).

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How Much Do You Know

When I sit down with clients, there’s a varying level of knowledge about estate planning, the different documents, and just what everything means. As such, my job is often to make sure people know how the law works and what happens in different situations so my clients can make the best decisions themselves with advice from me where they want it. So, for this month, I thought I’d start with the basics:

  • pic_06What is probate?
  • What is a will?
  • What is a trust?
  • What is a power of attorney?
  • What is an advance health care directive?

Probate is the court process a person’s property goes through when they die to transfer the property out of the deceased’s name. Wills must go through probate (though it took Esq. behind my name for my mother to believe me on that). You can avoid through non-probate transfers, such as transfer-on-death (“TOD”s), payable-on-death (“POD”s), trusts, joint titling, and other methods. Probate is time consuming and can be very expensive. Because of this many people specifically form an estate plan to avoid probate. If you’re worried about your beneficiaries being unable to access quickly or wasting resources on court, talk to an attorney. There are many methods to avoid probate and not all are appropriate for everyone.

Trusts, however, are the main way to avoid probate. A properly funded trust effectively re-titles property from a person’s name to the trust. The person then decides who benefits from the trust assets and who controls those assets until they pass or are no longer competent to make decisions. Generally, the person setting up the trust may benefit and control the assets. This allows a person who becomes incapacitated to continue to benefit from their property, but gives a different, competent person the ability to make decisions regarding that property.

It’s very important to note the “properly funded” part. If property is not actually transferred to a trust (normally by renaming the asset in the name of the trust), then the property cannot be transferred through the trust documents and must still go through probate and a will or state inheritance law.

So, every estate plan (whether a trust is involved or not) should include a will. Wills set out a person’s wishes upon their death for guardianship of minor children and any property not transferred through non-probate transfers. This means that anything with a beneficiary (i.e. life insurance, retirement plans), TOD, POD, jointly titled, etc. are not given away according to the will.

Along the same lines, every estate plan needs a Power of Attorney. Powers of Attorneys come in many different types, but generally should cover legal, financial, and medical decisions. The document gives another person the power to make decisions for the person. The types of decisions can be limited and the document can be drafted so it only goes into effect when a person becomes incompetent.

Finally, a Health Care Directive establishes a person’s desires regarding specific medical situations. It covers circumstances where a person is unable to make decisions regarding their wishes, but can be used outside of terminal conditions (unlike a Living Will).

A full estate plan covers all of these areas and uses each document to make sure you are completely protected. Hopefully, this has explained the basics for you, but please if you have any questions email me or contact me here.

Burkhardt Law Firm

Phone: (314) 518-1581
Email: mburkhardt@burkhardtlaw.com
Address:
2333 Grissom Dr., Suite 107
St. Louis, MO 63146