“Living Documents” & Guardianship Proceedings: Power of Attorney, Health Care Proxy, Living Will, Advanced Guardianship Directive, Disposition of Remains

Posted April 17, 2010 by westchester.ny.law
Categories: Living Documents

I get a lot of questions about why estate planning is important during life. Most Westchester County residents think that once they have a Will their estate plan is “good to go” (to see why even this assumption is wrong see some of my previous blogging). For people with more “means” (I.e. larger wallets, such as in Scarsdale, Rye, Chappaqua, etc.), there is an understanding that coordinating gift taxes with an estate plan is important during life. But there is a more important reason that applies to EVERY individual: If you are unable to make your own health care and financial decisions because you don’t have “living documents” you may eventually be in a boatload of trouble.

In New York the living documents an estate planning attorney should draft for you should ALWAYS include a Power of Attorney and Health Care Proxy, and should often (perhaps not always) include a Living Will, Advanced Guardianship Directive, and a Disposition of Remains

In the coming weeks we will be addressing these documents individually, and how they affect the lives of people in Westchester County, Putnam County, Orange County and Rockland County. In the interim, let’s keep it simple:

Power of Attorney: A form allowing you, the “Principal,” to give your chosen “Agent” the power to make financial decisions for you. This power may sound a bit scary if you don’t have a trusted spouse / friend / child to help you with these decisions and financial “errands,” and perhaps more scary if you think your spouse is going to run off to Aruba with his/her paramour using your retirement savings! But if you don’t have a Power of Attorney and have some age related mental illness (such as dementia) or an injury that makes it difficult for you access your funds (such as being in a wheelchair or bed-bound in a hospital and not being able to get to your bank) I promise you that you will be in a very tough spot…and a family member may have to go to court and hold a “Guardianship Proceeding.”

Health Care Proxy: A form allowing someone else to make health care decisions for you. The best example of this situation is if you are under general sedation during surgery, unconscious, or have some mental or age-related illness that affects your ability to make your own health care decisions. Of course, if you are mentally alert your Agent can’t make these decisions, such as your son “pulling the plug” so he can go on a vacation to Bora Bora with his girlfriend using his newly acquired inheritance…from your estate. I’ve actually heard of a person asking if she can do something akin to this to her infirmed mother-in-law…while her mother-in-law was still conscious and alert! (There’s more of a story there, of course, but it sure sounds crazy at face value).

 If you are incapable of making health care or financial decisions on your own and do not have a Power of Attorney and Health Care Proxy your family, friends or the State of New York will have to petition the court for what is known as a “Guardianship Proceeding.” This will be discussed in further depth in the coming weeks, but suffice to say that these proceedings are expensive, time consuming, and often gut wrenching. The truth is that having a Power of Attorney and Health Care Proxy can avoid these proceedings, meaning that your health care and financial needs can be managed rapidly and outside of the public’s eye.

Living Will: The legal document that allows you to, in less nuanced terms, “pull the plug.” The Living Will does not name an agent – it allows you to state something to the extent of “If I’m in a brain dead state or persistent vegetative state please cease hydration / tube feeding / cardio-pulmonary machinery, etc.” I know, this somewhat of a “dark” area of discussion, but without a Living Will you may lead a prolonged existence similar to Terri Schiavo. 

Advanced Guardianship Directive: The Advanced Guardianship Directive allows a parent / guardian to note his or her decision of a preferred Guardian of their child if they are no longer able to serve in this roll. If a parent has passed away this decision will often be found in his or her Will, but if the parent is still alive the AGD is the relevant document. Keep in mind that (1) one parent cannot typically confound the other parent’s ability to serve as a child’s Guardian, and (2) a court will also as the question “What is in the best interest of the child” when naming a Guardian. That being said, the AGD does place the parent’s desire in writing.

Disposition of Remains: The Disposition of Remains is a relatively new document in New York. It allows a person to state his or her decisions as to their bodily remains. An example may be a person whose parent / child / spouse wants to perform a religious burial, but the individual wanted to have their remains cremated in non-religious ceremony. Again, the topic is somewhat dark, but it does ensure your wishes are adhered to.


The Worst Will I’ve Ever Seen (P.S. It Was Not Drafted by an Attorney)

Posted April 2, 2010 by westchester.ny.law
Categories: Wills

Here is a story about how NOT to draft a Will, and it starts with the simple axiom of: “What you don’t know CAN hurt you (and your loved ones).”

A Chappaqua client of mine came to me with a problem: His father had recently passed away and left behind a somewhat ambiguous Last Will and Testament that the father had drafted (NOT an attorney). In addition, he left behind a lot of animosity between some of the recipients of his estate. First, the father (also known as the “Testator” or “Decedent”) had been married and divorced twice in New York, and at the time of his death was cohabitating with a third woman he had never married (apparently some people do finally learn their lesson). Issues relating to multiple marriages and multi-family animosity are standard fare in the estate planning world. What is not standard are some of the following issues with the Decedent’s Will:

  1. The Will named one of the Ex-wives as a recipient…but both of the wives had the same first name, so someone (who?) added a hand written initial on the Will.
  2. There was no “Self Proving Affidavit” at the end of the Will (an omission that NO attorney should ever make).
  3. Several gifts of dollar amounts were left to several recipients…but there wasn’t enough cash to fulfill all of these bequests.
  4. The “girlfriend” claimed to be married to the Decedent (which would automatically entitle her to more of the Decedent’s estate under New York’s “Right of Election”); perhaps after realizing she could never prove the marriage, she relented (I.e. she lied about it and got caught – us lawyers make our share of mistakes and are far from immune from doing our share of poor decisions, but as a profession we are generally not completely inept).
  5. There was a Separation Agreement from the first marriage requiring the Decedent to leave my client and his brother 2/3rds of his estate…however, there was also a Divorce Decree with somewhat different terms (and the Will did not take either into account).
  6. My client was left with the father’s house in Westchester, and his brother was left with the house in the Hamptons…but the house in the Hamptons had been sold, thereby “Adeeming” (meaning that the brother was not going to receive anything under the Will).
  7. The witnesses to the Will were all quite aged at the time of the execution of the Will.
  8. Did I mention that THE DECEDENT WAS LEGALLY BLIND!?!? Who can say if he knew what he was even signing?

And there are even more problems than these! But for the sake of leaving a simple lesson, I will not include the other issues.

Lest you think I don’t understand why Dad (supposedly) wrote his own Will, allow me to submit to you that Estate Planning Attorneys expect to get paid for their advice. Dad was an extremely intelligent and accomplished man, and figured that he would save a few bucks by doing his own Will his own way. Thus, instead of spending perhaps $1,500 on a Will and Estate Plan, his legacy was to leave all of these competing parties with what will amount to at least $10,000 of legal fees (if they are lucky), and leaving a heck of a lot of animosity and rancor between his children, grandchildren, ex-spouses and girlfriend.

The painful though obvious lesson is: DON’T DRAFT YOUR OWN WILL! If your job was easy everyone would do it, or it would be outsourced to a processing and call center in India. Dad had no idea that past court agreements are binding on an estate, certain property is not recompensated to the recipient if it is sold prior to death, there are estate taxes that New York assesses on estates over $1,000,000, witnesses can be called in front of a court if there is no Affidavit at the end of the Will (and, in fact, can be calling in for what is known as an SCPA 1404 Examination anyway), etc., etc., etc. Estate Planning and Will drafting is NOT easy: The field of estate planning is constantly changing, rife with subtle pitfalls unfamiliar to general practitioners, prone to prolonged litigation, and as a general rule brings out the worst in friends and family (if you thought you hated the bully who gave you a wedgie in grade school, you have no idea how much you can despise your siblings). Mistakes that can be fixed after death cost 5-10 times the legal fees as doing it right the first time – during LIFE. What you don’t know CAN hurt you.

Don’t let turmoil and acrimony be the last thing your family remembers about your life be the

Protect yourself, preserve your wealth.

What is Missing from Your Estate Plan if You Only Have a Will?

Posted March 25, 2010 by westchester.ny.law
Categories: Operation of Law Transfers

We have all heard of a “Last Will and Testament.” People assume that upon their passing away their estate will pass by the terms of their Will. This is far from true in towns like Scarsdale, White Plains, Chappaqua, Bronxville, Fairfield, Greenwich, etc., where many people own their houses jointly with their spouse, steadily invested in their retirement plans, and have one or two life insurance policies a friend of theirs sold them a few decades ago.

The only assets that pass via a Will are what are known as “Testamentary Assets” (get it: Last Will and “Testament”). This is personally owned property (your clothing, your jewelry or old baseball card collection, and the like), a bank or investment account in your own name, and…well, that’s usually most of it unless you own a business – and even then the business may not be a Testamentary Asset.

For a family living in a place like Westchester or New York County, New York or Fairfield County, Connecticut, real estate prices are beyond oppressive (therefore, a lot of the family’s wealth is in a jointly owned home), and high state income tax rates incent most people to invest heavily in their retirement plans. Upon death , the majority of this person’s estate may be transferred by a process Estate Planning Lawyers call “Operation of Law.” This includes life insurance, retirement accounts (IRAs, 401k’s, 403b’s) and jointly owned property (a house, car and joint bank and investment accounts).

Think about it: If you are married and have children and you were to pass away, how much of your estate would pass by your Last Will and Testament, and how much by Operation of Law? Maybe a lot of the latter, and not so much of the former.

Assets transferred via Operation of Law can be claimed by the beneficiary by merely showing up with a death certificate and proving they are the person named on that asset’s “Beneficiary Designation Form” (that form a financial institution or life insurance company makes you sign and name beneficiaries when you open an account). And receiving joint property after death is even easier: The surviving owner just needs to show up with a Death Certificate.

And make sure to be VERY CAREFUL if you have ever been divorced, have a disabled child, or are leaving funds to a family member with creditor and spending issues or drug problems: Unless they are held in Trust, Operation of Law assets transfer to the named beneficiary outright, in full, after they reach the age of majority.

A good estate planning attorney will (1) ask you to identify ALL of your assets and ask detailed information about your desires and family’s health and financial responsibility, (2) draft your “living documents” (more on that in a future post), (3) draft your Last Will and Testament, (4) review your current beneficiary designations for your life insurance, retirement plans and joint property, and (5) actually fill in your beneficiary designation forms and minimize your joint property for estate tax purposes (and lastly, sometimes will create a few trusts for added flexibility to your estate plan).  Only then will you have a comprehensive estate plan that achieves your goals, minimized income and estate taxes, and creates the legacy you desire while giving you control over your assets even after you pass away.

So the next time you go to a general practitioner attorney who says he or she wants to do your estate plan by merely drafting your Will, and doesn’t ask you about your Operation of Law Assets or fill in your beneficiary designation forms with you, do yourself a favor and WALK AWAY!

And remember: After you pass away an estate planning attorney may be able to fix the mistakes you made during life, but it will cost you and your family 3 to 5 times the cost as it would have to do it right the first time.

Protect yourself, preserve your wealth, do it right, and do it now.