Estate Planning Bits

Living Wills and Health Care Proxies in Massachusetts

Scientific and medical advances have presented society with numerous bioethical issues. These advances have provided physicians with enhanced control over the time and nature of death. As seen last year in the Terri Schiavo case, one major issue is decision- making regarding the authorization or withholding of extraordinary medical care for patients who are unable to decide for themselves. Two types of documents have arisen to address the challenges posed in making end of life decisions when the patient is unable to personally make the decision. These are living wills and health care proxies.

In 1990, Massachusetts enacted “An Act Providing for the Execution of Health Care Proxies by Individuals.” No such act exists presently that authorizes living wills, but court decisions have given weight to them.

A health care proxy typically differs from a living will in that it designates someone to serve as the patient’s agent in making health care decisions if the patient is incapable of personally making them. A living will is a document that sets forth the desired actions and procedures the patient would like the physician to undertake if the patient is unable to personally make decisions. Living Wills can be found as a separate, stand alone document or included in a health care proxy.

By: Brett A. Kaufman, Esquire

Guardianship of minor children - How do you pick someone?

Despite the importance of a Will in estate planning documents, frequently people don’t complete one due to indecision about who is the best choice to become the guardian of their minor children. Ironically, this is probably one of the most important reasons to write a Will, this elimination of the possibility of a judge making that determination.

Guardianship lasts only until your child is of legal age, eighteen, although many children at that age are not ready to be emancipated. Guardians are in charge of the well-being, care, protection, and overseeing the day to day and lifetime responsibilities for their designated children. Guardians must make medical and social decisions, as well as all personal care and related decisions including educational assistance and financially related issues.

Guardianship of your children should not be confused with guardianship over assets. The mere fact that a person is appointed to be in charge of your children does not necessarily put him or her in charge of funds. Oftentimes, another person is delegated to share the financial responsibility for your children relative to investments, decisions as to distributions of principal, etc. The control of assets may be shared with either a person or a bank, based on the size of your estate and the complexity of the situation. For instance, if your child has disabilities and is receiving any governmental assistance, then he or she should have funds held in a trust for his or her lifetime at the sole discretion of the trustee, with special language so that governmental benefits will not be terminated by the receipt of funds.

When determining the most appropriate individuals to serve for your children in any capacity, it is very important to discuss the issues with the proposed guardians or trustees. Perhaps one doesn’t wish to serve, feels that he or she is too old, or has too many issues going on in his or her life, which would make it difficult to attend to the needs of your children. In such cases it is important for this person to be candid and express their unwillingness to serve.

It is also important to note that the designated person should not decide that he or she does not wish to serve at the time that they are called upon to assume the responsibility, as that will likely leave your children’s guardianship in the hands of the court for determination. Also, when naming guardians, in the event that an older person is being named, it should be remembered that the guardian will have to serve until the child is eighteen. Therefore, if that person is going to be relatively old when the child turns eighteen, then there should be a backup or contingent guardian named, in the event that the first-named guardian is unable to serve.

By: Hyman G. Darling, Esquire

Inheritance - Is it a right?

Oftentimes it is an adult child who contacts an attorney for estate planning advice for his or her parents. While the attorney must determine who the client really is in providing advice, it is frequently the case where the child claims to attempt asset protection for his or her parents, when in fact; the truth is that he or she wants to preserve an inheritance.

The attorney must explain to the child that no specific advice may be given to the child relative to the parent’s wishes without the consent of the parent, who presumably, will become the client of the office. Nevertheless, after all of the disclosures, explanation of the privacy act, and also the attempted explanation of the disciplinary rules and code of ethics, the child is often relentless in a pursuit of information.

It may be acceptable to provide generic information as to what the laws are and what a person may or may not do, but in the event that something goes awry, it will be the attorney who receives the wrath of child for providing basic information without specifics. This may be compared to a recent medical program on television where a person showed up at a hospital and basically said that he followed directions from the internet and cut off of a finger. When the doctor informed him that it was not done properly, there were going to be serious complications and the finger could probably not be reattached, the patient blamed the internet. In estate planning, not every client signs the same documents, makes the same decisions and appoints the same individuals under their documents, so generic information may not be very helpful.

The lesson here is that with an overzealous child who anticipates his or her inheritance may take any and all necessary steps in order to attempt to provide for the receipt of assets. However, not every child is dishonest or greedy. There are many children who do, in fact, have their parents’ best interests at heart and are not concerned about money.

By: Hyman G. Darling, Esquire

2006 estate planning checklist

Many people are secure when they determine they are “all-set” because they have completed their estate plan. However, each plan should be reviewed on a regular basis to ensure that their entire plan is in order, not just the documents. It is suggested that a plan be reviewed each time there is a birth, death, marriage or other life-changing event such as an adoption of family member. If not, then it is normally suggested that a plan be reviewed every three to five years, or on some other regular basis, like having a medical check-up, eye exam, dental exam, etc.

It seems that the majority of the Wills that are contested, (the minority of those filed,) are those where a thorough review and revision of documents were probably not attended to in a timely basis. Either the situations changed significantly or the incapacitated decedent did not change documents, which led to a breakdown in communication within the family, and greed took over.

Questions to ask in reviewing a plan:

1. Is my will still up-to-date?
2. Does my will meet the requirements of state law? Is there a self-proving affidavit or have I moved to a different state that requires a revision in the new jurisdiction?
3. Are the named executors under the will still appropriate?
4. Are there any beneficiaries with special needs for whom a separate trust should be established?
5. Is my spouse healthy or should there be some additional planning in order to preserve assets in the event of long-term institutionalization?
6. Is my health proxy up-to-date and does it contain waiver of privacy language?
7. Is my power of attorney still appropriate relative to my named agent to serve?
8. Does my power of attorney contain the necessary language to make gifts if necessary?
9. Are all my assets properly registered to take advantage of the necessary tax advantages and are all beneficiaries coordinated with the plan?
10. If there are other business assets, such as a family limited partnership or limited liability company, are the shares registered properly to avoid probate?
11. Am I utilizing the benefits of annual gifting now, rather than waiting until the end of the year? (If a proposed donor dies before the end of the year, the advantage of gifting the annual exclusion amount is lost, so possibly, Christmas should come early!)
12. Are there family members for whom I feel a trust should be established so that they do not receive their money in a lump sum? This prevents a child's share from being taken by his or her creditors or spouse.
13. Is the proper amount of life insurance in effect or should I buy more? Or should the current policies be reviewed to ensure that they are the correct types of insurance and provide the proper coverage?
    

By: Hyman G. Darling, Esquire

Prenuptial Agreements and estate planning

Although it may be a difficult topic to broach before marriage, a discussion about the distribution of assets post-marriage is a wise one. It is important for an engaged couple to plan in the event of one spouse’s death as well as the possibility of divorce. A discussion of this sort was once thought to be contrary to the success of a marriage; however today it is seen as practical. Because some engaged couples have had troublesome divorces in the past, many of them desire to mitigate the consequences should it happen again. Thus, a properly drafted prenuptial agreement can be an invaluable estate planning document.

Parties can agree to keep their own property separate in the event of a divorce. However, the simple presence of a premarital agreement does not mean the court will take it without examining its content. In drafting a premarital agreement, one should be aware that in Massachusetts, courts will “look back” on the circumstances existing at the time the document was drafted. Consequently, the following principles are fundamental when drafting the prenuptial agreement:

• The agreement cannot encourage divorce
• Both parties must make full and fair financial disclosures
• Both parties must have independent counsel
• The agreement must be fair and reasonable at the time of execution
• The application of the agreement must not be unconscionable at the time of divorce
• A spouse must not be deprived of needed support while the marriage continues
• The agreement will not be enforced if one spouse will become a public charge or if the agreement is not in the best interests of the children

Although the court has the power to “look back” into a prenuptial agreement, it does not desire to simply fine tune or distribute assets arbitrarily. Rather, the court will only declare a prenuptial agreement invalid when one party is “stripped of all marital interests” in the event of divorce.

Also relative to a prenuptial agreement, the court typically does not enforce contract language pertaining to moral or personal choices. Thus, decisions about religious practices, the education of children, employment decisions, waiver of alimony post-divorce and promises to not contest a divorce proceeding are unenforceable, despite their possible inclusion in the agreement.

By: Hyman G. Darling, Esquire