Estate Planning Basics Palisades Alliance for Seniors July 8, 2019
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EstatePlanningBasicsPalisadesAllianceforSeniors
July8,2019
BetTzedekLegalServices–ElderJusticeUnitFormorethan30years,BetTzedekhasbeentheonlyproviderofelderlawservicesintheCityandCountyofLosAngeles.Today,BetTzedekisanationally-recognizedleaderandcontinuestoservelow-incomeseniors,andthosewhocareforthem.
Ourteamhelpswith:• Conservatorships• Elderabuserestrainingorders• Financialelderabuse• Realestatefraud• IHSSandotheradministrativehearings• Medi-Calestateplanning• PowerofAttorneyforfinancesandhealth
• Simple,StatutoryWills
Advance Planning Tools • AdvanceHealthCareDirectives
• CompareDNRandPOLST• PowersofAttorneyforFinances
• CompareRepresentativePayee,jointtenancy,communityproperty
• Wills• ComparepropertytransferredbyPOD,jointtenancy,assetswithdesignatedbeneficiaries
• Trusts• TransferonDeathDeeds
• Comparetransferwithlifeestateoroutrighttransfer.
Capacity
Californialawsetsoutajudicialstandardforgeneralcompetencytomakedecisions.ThelawisknownastheDueProcessinCompetencyDeterminationsActorDPCDA.PC§810-813.• AdvancedHealthCareDirective-abilitytounderstandthenatureandconsequencesofadecisionandtomakeandcommunicateadecision.
• FinancialPowerofAttorney-understandthenature,purpose,andeffectoftheterms.
• Will–understandwhatyouhaveandtowhomyouwanttoleaveitwhenyoupass.
AdvanceHealthCareDirective
Alegaldocumentthatallowsapersontomakedecisionsnowforhealthcaretreatmentinthefutureifandwhenheorsheisunabletomakesuchdecisions.
WhatarethemaincomponentsofanAdvanceDirective?
1)Theappointmentofanagentanduptotwoalternate
agentswhowillmakedecisionsfortheprincipalwhentheprincipalcannolongermakedecisionsforhim/herself.
2)Instructionsforhealthcaretreatmentpreferences.
Whodecideswhenapersonlackscapacity?
Theclient’sprimarycarephysicianwilldeterminewhentheyareunabletomakedecisionsabouttheirhealthcare(unlesstheclientspecifiessomeoneelseontheAdvanceDirective).
AppointingaHealthCareAgentWhoCANbeanagent:
• AnyadultwhoisNOTtheclient’sphysicianoranemployeeofahealthcarefacilitywheretheclientreceivescare.
• Canbemorethanoneagent.Mustactunanimously.WhoSHOULDbeanagent:
• Apersonthatistrustedbytheclientandwhoknowsoftheclient’spersonalvaluesandbeliefs.
• Typicalagents:ü Familymembersü Spouseü Partnersü Closefriends
Agent’sAuthority • Righttoreceivemedicalinformation• Makemedicaldecisionforprincipalifprincipalcannotmakehis/herowndecisions.
• Noexpressrighttoreceivecompensation.• Nopowertoplaceprincipalinmentalhealthfacility(unlessprincipalagrees).• Nopowertoplaceprincipalinlockeddementiafacilityifprincipalrefuses.• Withdrawingorwithholdinglifesustainingtreatment• DispositionofRemains• Authorizeautopsy• MakeanatomicalgiftsifspecifiedinDirective.
Musttheagentfollowtheclient’shealthcareinstructions?
• YES–Theagentmustfollowallinstructionsandwishestothebestofhisorherknowledge.
WhatiftheclientdoesnotwishtoappointanAgent?
• TheclientcanstillhaveanAdvanceDirective.
• Insteadofappointinganagent,theclientcanmakespecificwritteninstructionstohisorherhealthcareproviderforfuturehealthcarefollowingthelossofcapacity.
MakinganAdvanceDirectiveVALID1. TheclientmustsignanddatetheAdvanceDirective.AND2. ThedocumentmustbeeithernotarizedORwitnessed
bytwoindividuals.Witnesses:Cannotbetheagentsandcannotbetheclient’shealthcareprovider,employeeofthehealthcareprovider,oremployeeofacommunityorresidentialcarefacility.Theombudsmanmustbeawitnessiftheprincipalisinaskillednursingfacility.
IstheAdvanceDirectivevalideverywhere?
• TheAdvanceDirectivethatyousigninCaliforniaisvalidinCalifornia.
• OtherstatesmayNOTrecognizealegallyexecutedCaliforniaAdvanceDirective.
• California,however,DOESrecognizelegallyexecutedAdvanceDirectivesfromotherstates.
HowlongwilltheAdvanceDirectivebevalid?
• TheAdvanceDirectiveisvalidforever,UNLESSØ ItisrevokedORØ Theclientsetsadateforittoexpire.
• IftheclientexecutedanAdvanceDirectivebefore1992,itmaynolongerbevalid.Ø TheclientshouldexecuteanewAdvanceDirective.
CananAdvanceDirectiveberevokedorchanged?
TheclientmayrevokeanyportionoralloftheAdvanceDirectiveatanytime.
• Mustcommunicatetheintenttorevoke.• E.g,tellingthehealthcareprovider,signingarevocation,or
tearinguptheAdvanceDirective.• Theclientshouldinformallagentsandhealthcareprovidersofanychanges.
• SigninganewAdvanceDirectiveformwillrevokeanypreviousAdvanceDirective.
WillanAdvanceDirectivestopparamedicsfromgivingtheprincipalCPR?
NO–theAdvanceDirectivedoesnothavelegaleffectonemergencymedicalpersonnel.
DNRandPOLST
• PrehospitalDoNotResuscitate(DNR)–astatedocumentthatinstructsemergencymedicalpersonnelregardingapatient'sdecisiontoforgoresuscitativemeasuresintheeventofcardioplumonaryarrest.Theformdoesnotaffecttheprovisionoflifesustainingmeasures.
• Physician’sOrdersforLife-SustainingTreatment(POLST)-amedicalorderthatgivesseriouslyillpatientsmorecontrolovertheircarebyspecifyingthetypeofmedicaltreatmentapatientwishestoreceiveattheendoflife.ThePOLSTformmustbesignedanddatedbyaphysician,oranursepractitioneroraphysicianassistantactingunderthesupervisionofthephysician,andthepatientorlegallyrecognizedhealthcaredecision-maker.
DurablePowerofAttorneyfor
FinancialMatters
CaliforniaUniformStatutoryFormPowerofAttorney
• StatutoryFormPowerofAttorney(ProbateCode§4401)allowsyoutograntanagenttheauthoritytomanageyourfinances.• Thismayincludebankaccounts,real
property,insurance,taxmatters,legalmatters,orotherfinancialtransactions.
FinancialElderAbuse
• PowersofAttorneyforFinancialMattersareveryimportantplanningtools.• Payingbills,maintainingproperty• Preventativetoolstoprotectagainstelder
abuse
• However,thesedocumentsmustbehandledcautiouslyastheycanalsobetoolsforabuse.
TypesofPowersofAttorneyforFinances
• Durablev.Non-Durable• ThispowerofattorneywillcontinuetobeeffectiveeventhoughIbecomeincapacitated.
• Generalv.Limited(e.g.foronlytransactiononly)• Immediatev.Springing
• ThispowerofattorneyiseffectiveimmediatelyandwillcontinueuntilitisrevokedVS.Thispowerofattorneyshalltakeeffectuponmyincapacity.Myincapacityshallbedeterminedbymyprimarycarephysicianinwriting.
• TermsforSpecificAssetsandIssues• Trusts• Gifting• Loanstoagent• Changingbeneficiaries
POWER OF ATTORNEY FOR FINANCES
I, appoint _______________________, as my agent (attorney-in-fact) to act for me in any lawful way with respect to the following initialed subjects:
INITIAL
(A) Real property transactions.
(B) Tangible personal property transactions.
(C) Stock and bond transactions.
(D) Commodity and option transactions.
(E) Banking and other financial institution transactions.
(F) Business operating transactions.
(G) Insurance and annuity transactions.
(H) Estate, trust and other beneficiary transactions.
(I) Claims and litigation.
(J) Personal and family maintenance.
(K) Benefits from social security, medicare, medicaid, or other governmental programs, or civil or military service.
(L) Retirement plan transactions.
(M) Tax matters.
(N) ALL OF THE POWERS LISTED ABOVE.
YOU DO NOT NEED TO INITIAL ANY OTHER LINES IF YOU INITIAL LINE (N).
Agent’sStandardofCare
Agentshallobservethestandardofcarethatwouldbeobservedbyaprudentpersondealingwithpropertyofanother.Ifagentbreachesthisstandardofcareoranotherdutyinbadfaith,heorsheischargeableforanylossordepreciationinvalueoftheproperty.
Agent’sDuties
• Dutyofcare• Dutyofloyalty• Dutytokeepprincipal’spropertyseparatedandidentified• Dutytokeepprincipalinformedandfollowinstructions• Dutytokeeprecordsoftransactionsonbehalfofprincipal• Dutytousespecialskills• Dutytodeliverpropertyonterminationofagent’sauthority.
Termination
• Revocationbyprincipal• Agentlackscapacitytoact• Dissolutionorannulment• Principalregainscapacity• Principal’sdeath• Bycourtorder(canusecourtactiontocompelaccounting,revokeagent’sauthority,etc.)
SometimesaConservatorshipCannotbeAvoided!
• Abuseofpowersofattorney.• Multiple,conflictingpowersofattorney.• Thirdpartynon-acceptance.• Principal’srefusaltocooperate,maycontinuetoacttohis/herowndetrimentevenwithPOAinplace.
• Canstillmanageaccounts,givepropertyaway.• Canrefusetoenterintoacarefacility,canrefusehealthcareassistance.
Wills&Trusts
WhatisaWill?
• Alegaldocument,draftedorexecutedinaccordancewithstatelaw,thatbecomesirrevocableupondeath.
• InaWill,youmaydesignatewhowillreceiveyourassetsatyourdeath.
• Differenttypesofwills,includingahand-writtenwill,statutorywill,orattorneypreparedwill.
WhatisaStatutoryWill?
• California“fillintheblanks”willform,governedbyCaliforniaProbateCodeSection6240.
• Providessimpleinstructionsfordistributingyourassetsafterdeath.
• DesignedonlyforCaliforniaresidentsage18orolderandofsoundmind.
WhatcanIdowithaStatutoryWill?
Ø Designatebeneficiariesofpersonalresidence.
Ø Designatebeneficiariesofallpersonaleffects.
Ø Providespecificgiftsofcash.
Ø Designatebeneficiariesofremainingassets.
Ø Designateguardian(s)forminorchildren.
Ø Designateexecutor(s).
Ø DONOTuseastatutorywillifyouwanttoleavespecificitemstospecificpeopleorifyouwanttosplityourestateunequally.
DoesaWillgiveawayallmyassets?
• Lifeinsurance• Retirementplans,suchasa401(k)oranIRA
• Assetsownedasjointtenants• “Transferondeath”or“payondeath”
NO.Some“nonprobate”assetsarenotcoveredbyaWill,suchas:
• “Communitypropertywithrightofsurvivorship”
• Livingtrusts• Yourspouse’sorregistereddomesticpartner’shalfofcommunityproperty
AdvantagesofStatutoryWill
• Simpleandcheap• Mostcommonandreadilyunderstood• Onlytakeseffectaftertestator’sdeath• Easytoamend
DisadvantagesofStatutoryWill
• Mustbeadministeredthroughthecourt,sothewillbecomesapublicrecordandthecourtfeescanbecostly.
• Generallyneedtopayanattorneytofileforaprobate,notmanyfreeservices.
• DoesnotavoidMedi-Calestateclaims
Trusts
• Intervivosrevocabletrust=allowsformanagementduringaperson’slifetimeandservesasatestamentaryinstrumentafterperson’sdeath.
• Settlor=personwhocreatesthetrust• Trustee=personwhomanagesthetrust• Successortrustee=personwhotakesovermanagementofthetrustoncethesettlorlosescapacityordies.
TrustAdvantages
• Supposedtoavoidneedforprobate/courtintervention.• Private.Noneedtolodgetrustanywhereorgivetocourt.• AvoidsMedi-Calestateclaims.• Goodwaytomanagealotofpropertyduringlifeandafterdeathformultiplebeneficiaries(minors,adultswithdevelopmentaldisabilities)andavoidconservatorshipandguardianship.
• Maybetaxplanningopportunities.
TrustDisadvantages
• Canbeexpensivetocreate.• Veryeasyfortrusteetoabusepowerbecausenocourtoversight.• Trusteesdon’toftenunderstandtheirdutiesandinadvertentlycreateproblems.
• Peopleforgettoputpropertyinthetrust.
TransferonDeathDeeds(TODD)
AlawthatbecameeffectiveJanuary1,2016createsaRevocableTransferonDeathDeed(“TODDeed”)asawayforCaliforniaresidentstotransferresidentialpropertytonamedbeneficiaries,effectiveupondeath.Thenewlawrequiresuseofaspecificformwithspecificprovisions,andincludesa“frequentlyaskedquestions”provision.ThestatutorydeedformandrevocationformareintheCaliforniaProbateCode,Sections5642and5644.
TODDAdvantages• AvoidsMedi-Calrecoveryclaims.• Maybesimpletouse,willbelessexpensivethancreatingalivingtrust,andmayeliminatethewaitingandexpenseofaprobate.
• CanberevokedatanytimeduringthelifetimeoftheGrantor.• Shouldsimplifythetransferprocessatdeath,aslongasthedeedisnotvoidedbyadraftingerrorinthepartoftheGrantor.
• Retainsthetaxadvantagesofatransferviatrustorinheritanceunderawill.
• Lesspotentialforabusethansimplytransferringpropertytoanotherfamilymember(eitherwithorwithoutalifeestate)toavoidMedi-Calclaimsandprobate.
TODDDisadvantages• OffersnoprotectionfromtheGrantor’screditors(exceptfromMedi-Cal),sothebeneficiarymayendupwithnothingifthedebtsoftheGrantorarelargerthantheworthoftheproperty.
• Canonlybeusedtotransferonetofourresidentialdwellingunitsorcondominiumunits,orasingle-familyresidencewith<40acresofland.
• CannotbeusedtotransferresidentialpropertyheldasJointTenancyorasCommunityPropertywithRightofSurvivorship,andcannotbeusedtocreatesplitinterestssuchasalifeestate.
• Doesnotpermitthedesignationofbeneficiariesbyclassdescription(e.g.,“mychildren”);thebeneficiaryorbeneficiarieshavetobespecificallynamed.
• Cannotdesignate“contingentbeneficiaries”:ifabeneficiarydiesbeforetheGrantor,thepropertygoestotheothersurvivingbeneficiariesinequalsharesor,ifnootherbeneficiaries,thenitrevertstotheGrantorestateandmaythenrequireaprobate.
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