No one plans to become disabled or die. But as Benjamin Franklin wrote in a 1789 letter about the permanence of the new American Constitution, “…nothing in this world can be said to be certain except death and taxes.”
Consider the following actual cases:
- Terri Schiavo never expected at age 27 to have cardiac failure that would leave her in a persistent vegetative state. She became the subject of 15 years of nasty litigation and national publicity pitting her husband against her parents in a right to die case that reached the highest levels of our government.
- A young Atlanta couple did not expect to be killed in a hotel fire while attending a college football game in Florida. They were quite wealthy but left no will and named no guardian for their three children. Relatives fought for the kids and the young parents’ money. The court decided. The children, who should be with loving grandparents, are miserable with an aunt and uncle whose own children do not accept the young orphans intruding in the family’s life.
- A 64-year- old woman with no family in a large condo community is slowly succumbing to dementia. Her neighbors fear she could be a danger to herself and to them. She is wealthy but her unpaid bills are piling up. Eventually, a creditor, a bank teller or someone else will report her to senior services that in turn would petition the local probate court to have a guardian and possibly a conservator appointed. Her fortune will disappear to pay not only the court conservator who takes expenses and commissions, but if the conservator is an attorney, they can also bill hourly for what they deem legal work. To further shrink the value of assets, absent special permission by the court, state law restricts investments by the conservator to federal and state securities yielding as little as one or two percent. They’ll get rich; who knows where she will end up living.
Whether you are 27 or 67, an accident or health issue can happen at any time. Once a court takes charge of you or your estate, there is no controlling your care or your money. That’s why it is critical to create airtight legal instructions in medical and financial powers of attorney, a living revocable trust and a will.
Once the court appoints a conservator and/or guardian for you, it’s too late. Your estate quickly may end up with a zero balance as your hard-earned dollars are spent on legal and guardian fees and brokerage commissions to shift or sell your investments. Then you likely will be shuffled off for care to a cheap Medicaid facility of minimal quality. And if you die without a will, state law will decide where your holdings go while long-lost cousins fight for whatever remains of your estate.
Here are five steps you can take right now to protect yourself and those you care about most from the nightmare of a court taking charge of your life if you’re disabled, or your assets after your life ends.
1. Choose an attorney who specializes in estate planning. This includes expertise in wills, trusts, elder law, powers of attorney and probate. You do NOT want a generalist or specialist in family law, personal injury, litigation or real estate. At minimum, you will need three documents: a will and medical and financial powers of attorney. You also may benefit from a revocable trust. Your attorney can help guide you based on your family situation and your finances.
2. Talk with your loved ones about the level of care you want in the event you are disabled and cannot communicate your wishes. Choose someone you trust to make medical decisions for you and name him or her as your proxy in your medical power of attorney. This healthcare POA should require witnessed signatures by two doctors caring for you who are knowledgeable about your health and can confirm you are indeed incapacitated. One doctor may be manipulated into signing. That is less likely with two. Once it’s finalized, a copy of the document should go to your proxy, your physicians; keep a copy in your car in the event you are in an accident and are unable to express your healthcare wishes.
3. Decide who will pay your bills and manage your finances if you can’t. That person is your financial power of attorney. (Some banks require their own form for this.) If you use electronic bill pay, leave a list of your IDs and passwords (keep it current when you change the passwords) in a secure place like your safe deposit box. You should check the bank sign-in card periodically to be sure no one else is signing in. If that is the case, change your financial power of attorney and your signature card.
4. Consider a thoughtfully designed revocable trust that will instruct your care and manage your finances as you now do. Initially, as grantor, you will likely name yourself as your own trustee. Most grantors select a close family member or trusted friend to step in as a successor trustee in the event of incapacity. If you recover, the trust should provide for you to reassume your trusteeship.
While probating a will is relatively simple in Georgia and does not include a list of your holdings, it still is a public document once probated. A revocable trust is a private document you can amend as time changes your relationships and life circumstances. In addition, the trust can make statements and provide instructions you may not want included in your will for public viewing.
The trust can be named in your will as beneficiary to any assets not already in the trust. There also should be a provision to make the trust irrevocable if anyone – court or other interested party – challenges your mental or physical capacity and the court declares you incompetent and names a guardian. Your trust should be drafted to eliminate your authority to revoke the trust so that it becomes irrevocable blocking a conservator from taking over your finances. The successor trustee will continue to manage your assets as you did and pay your bills as instructed in the trust document. This prevents an expensive and complex conservatorship supervised by the court. Despite court intervention naming you incompetent, the successor trustee you name will continue to manage your assets as you directed.
5. Once the trust is finalized, your estate planning attorney should work with you to ensure that the titles to assets; e.g., real estate, investment accounts, bank accounts, annuities and life insurance policies among other items, are properly transferred to the trust. It is not wise for you to be responsible for transferring title of assets to the trust. You may overlook certain assets or make an error in transferring items to the trust.
Finally, consider an ethical will. This is a document or video that shares your life’s lessons with your descendants based on your experiences and relationships. Your attorney may suggest videographers or direct you to resources to help you draft a written document. It is not legally binding; rather, it informs those you leave behind about your values, ethics, morals and the things that have been most important to you throughout your life. It is a final lesson to the generations who will live after you.