Probate, Will, and Trusts Attorney Myrtle Beach SC

Estate Planning

Grand Strand Law Group can help you avoid costly mistakes when planning your estate.  Need a Will?  Our law firm will organize all legal documentation to protect you and your heirs.

The Article below by Bob Carlson, writing for Forbes, addresses two mistakes that are often made by families when estate planning.  I have edited the articles for ease of use but not for content.  Please note that each state has differing laws relating to Wills and Powers of Attorney and you should draft your estate documents in the State and County in which you live.  

Here are two mistakes to avoid:

Mistake #1: Relying Only On A Will

Of course, a written Will is essential to every estate plan. People often are criticized for not having Wills. But a Will isn’t enough.

A complete estate plan includes key documents that might be needed before your passing, such as a Power of Attorney or advanced medical directive. These documents empower one or more people to make decisions and take actions regarding your assets or medical care when you aren’t able to do so yourself.

Without these documents, many actions are taken only after a costly Guardianship and Conservatorship case is held in the Probate Court wherein the court appoints someone to act for you, possibly someone you wouldn’t have selected. Or in some instances, doctors simply take the actions they deem best, even if it’s not what you would have decided.

I’ve often heard people say there’s no rush to execute these documents. They say they’re in fine shape and “aren’t there yet.” What I’ve seen over the years is the need for the documents most often arises in two scenarios. One scenario is the occurrence of a sudden event, perhaps in an accident or a health crisis, such as a stroke. Once that occurs, it’s too late to have the documents executed. The other scenario is a steady decline that isn’t apparent to the person or the person is in denial. By the time others are ready to intervene, either a lot of damage has been done to the person’s estate or the legal capacity to execute the documents no longer is there. The bottom line is you need to execute the documents well before there’s a need for them.

Another reason a Will isn’t enough is that ownership of many assets transfer outside the Will and probate process. These assets include annuities, life insurance, retirement accounts (such as 401(k)s and IRAs), jointly-owned property with rights of survivorship, and more. The beneficiary designations of these assets decide who inherits them, often without reference to your will.

You need to review periodically the beneficiary designation forms for these assets. Numerous court cases and IRS rulings have concluded that the owner’s intent and statements in the Will rarely matter. The only thing that matters is what was written in the latest beneficiary designation form.

Trusts, with their many uses and flexibility, are another reason a Will isn’t always enough.

Trusts can accomplish many goals that a Will cannot. With a Living Revocable Trust, your assets can avoid probate. Your privacy can be maintained. A Trust can protect assets from the creditors of you and your heirs. The right Trust can provide security for your heirs while protecting the wealth from your heirs’ bad spending habits.

Once the province of only the very wealthy, Trusts provide so many benefits that they now surpass Wills as the key documents in many estate plans. We’ll discuss some of these uses of Trusts in more detail going forward.

Author: Bob Carlson

Mistake #2: Expecting too much from a power of attorney.

A power of attorney (POA) is an essential estate planning document. But you (and especially your agents) need to know its limits and how to maximize its benefits.

In a POA, the principal (you) names one or more agents (often an adult child) to act on your behalf. The POA can be general, empowering the agent to take any action on your behalf, or limited, restricting the areas in which the agent can act.

You need a POA, because someone needs to manage your assets, pay bills, and make decisions if you become incapacitated. The alternative is for your loved ones to ask a court to declare you incompetent and appoint someone to act on your behalf, known as guardianship or conservatorship in most states.

Ideally, the agent named in your POA smoothly takes over and seamlessly manages your affairs when you aren’t able and continues doing so as long as needed.

I can tell you things often don’t work that way.

Once your agent is ready to act under the POA, the agent has to convince others, usually financial institutions, to recognize and accept the POA.

A financial institution isn’t required to accept a POA. Each institution adopts its own standards for accepting POAs.

Many institutions now won’t accept a POA that was executed more than six months earlier. Others want the POA on their own forms. Some require you to reaffirm it in writing from time to time if it hasn’t been used. Some institutions require specific language in the POA.

At many institutions, the “front line” people won’t be able to act on the POA once they receive it. It will be referred to in-house attorneys or POA specialists who will review it and decide whether it will be accepted.

Once a firm accepts the POA, the agent still has to prove he’s the person named in the POA. Most firms will accept a photocopy of a driver’s license, but some require additional verification before letting someone act.

Not many years ago, a telephone call or letter from the estate planning attorney verifying the POA would be enough to move things along. But financial institutions these days don’t want to take any risk of being involved in identity theft and elder financial abuse. Your agent always can ask a court to require a financial institution to accept the POA. But that takes time and money, and the institution is likely to win if it has any argument that it acted reasonably. To make matters worse, if you lose the court action you could be required to pay the institution’s attorneys’ fees.

The bottom line is your work isn’t done when you leave the estate planner’s office with a signed and executed POA. A little more work is needed to ensure your affairs are handled smoothly and your loved ones don’t have to climb multiple obstacles to pay your bills.

Consider these Actions:

Be sure your agent has a copy of the POA or knows where to find one. The same goes for details about your financial accounts. Ask each financial institution you deal with what its requirements are for accepting a POA. Then, try to comply with them. I’ve recommended that people switch financial institutions when their POA requirements had too many hurdles.

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