Our blog provides education and information on estate planning issues to help you keep you informed on new developments in this area of law. Please note that information in this blog and website is informational only and is not legal advice.
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There are two basic ways a person’s assets pass after they die. You can think of this as two buckets.
Bucket #1: Assets that Pass via Beneficiary Designation
The first bucket holds assets that pass by beneficiary designation. Perhaps the best-known example of this type of asset is a retirement account. When you open a retirement account, the financial institution or your employer asks you to name one or more people or charitable organizations who will receive the funds in that account after your death, as well as a secondary beneficiary in case the primary beneficiaries predecease you. When you die, the retirement account is transferred directly to whomever you have designated.
Another example of assets that pass via designation is property you own jointly with another person, such as a joint bank account or real estate you own in joint tenancy. In these cases, the person you own the property with is the automatic beneficiary of that property on your death.
Assets with a beneficiary designation do not need to pass through probate to be distributed to your beneficiaries. The beneficiary simply needs to provide the financial institution or other entity with documentation of the asset-holder’s death, usually a death certificate and social security number. After receiving sufficient documentation, the assets are transferred directly to the named beneficiaries.
You also do not need a Will or Living Trust to pass these assets to your loved ones, as the beneficiary designation specifies whom you want to inherit these assets. Indeed, beneficiary designations supersede any instructions included in your Will or Living Trust. Accordingly, it is important to make sure these designations align with your overall estate plan, which we will discuss in more detail below.
Examples of assets that pass via beneficiary designation include:
Example: Peter and Penelope are married and have a joint checking account. When Peter dies, Penelope provides the bank with a copy of Peter’s death certificate and his social security number. The bank removes Peter’s name from the account and the assets in the account pass to Penelope.
Bucket #2: Assets that Pass via Probate or a Trust
The second bucket holds everything else! That includes:
Example: Arthur owns a home in Boise and has a Will. When Arthur dies, his children hire an attorney to probate Arthur’s estate according to the terms of Arthur’s Will. Arthur’s house is distributed to Arthur’s children in equal shares according to his wishes after the probate is concluded, a process that takes about six months.
Example: Abe owns a home in Lewiston and has a Living Trust. When Abe dies, the successor trustee of his Living Trust reviews its terms and distributes the home to Arthur’s children in equal shares within a month after Abe’s death.
Planning for Assets in Both Buckets
Some people with very simple estates only have assets in Bucket #1. In this case, these people may be able to direct all of their assets to their loved ones by beneficiary designations. Most people, however, have assets in both Bucket #1 and Bucket #2. An important part of the estate planning process is making sure that you properly direct the assets in both buckets in a way that achieves your goals.
For more information on planning for assets in both buckets, check out our blog post on The Importance of Aligning Beneficiary Designations With Your Estate Plan.
Leaving Final Disposition Instructions
While taking care of loved ones financially is often the first reason people create an estate plan, a well-crafted estate plan also can help take care of loved ones emotionally at a time when they are grieving. Final disposition instructions, which name the people you want to oversee your funeral or other disposition arrangements as well as your wishes regarding how you want those arrangements to proceed, can help provide certainty and closure to your loved ones. They can also mitigate conflict around what can be an emotionally-charged decision.
Under Idaho law, you have the right to designate whom you want to control the disposition of your remains. The best way to do so is in a written document separate from your Will or Trust. In the same document, you also may express your wishes regarding cremation or burial, a funeral service or celebration of life, where you wish your ashes to be spread or your remains buried, and any other aspect of your disposition that is important to you and your loved ones. So long as you sign your final disposition instructions in front of witnesses or a notary, your agent designations and your directions are legally binding under Idaho law.
If you do not leave legally binding written instructions, Idaho law dictates who controls your final disposition. In order of priority, those are: (1) a person named as agent under a healthcare power of attorney; (2) a person named as agent under a financial power of attorney; (3) a competent surviving spouse; (4) a majority of competent surviving children; (5) the competent surviving parents; (6) the personal representative of the estate; and (7) a majority of those entitled to inherit. Moreover, the person is not bound to follow any wishes you might have expressed in conversation or otherwise if you did not follow the legal formalities of signing in front of witnesses or a notary public.
Including separate final disposition instructions in your estate plan can avoid the kind of conflict that we have seen when those left behind have different religious beliefs or otherwise disagree about the deceased’s wishes. For example:
After receiving a terminal diagnosis, Amanda prepared powers of attorney naming her son, Charles, as her healthcare agent and her daughter, Donna, as her financial agent. Although Amanda was happily married at the time, she and her wife, Betty, agreed that Betty was not great under crisis and therefore they preferred to name Amanda’s children to make health and financial decisions if Amanda became incapacitated.
Amanda then sat down with her wife and two children and told them that, after her death, she wanted to be cremated and have her ashes scattered in the city where she and Betty had met. Amanda also specifically stated that she did not want to be buried in her family’s historical plot because her parents had shunned Betty. During the conversation, Donna wrote her mother’s wishes down on the back of her copy of her financial power of attorney and Amanda initialed the handwritten notes.
After Amanda died, Charles immediately began making arrangements for Amanda to be buried in the family plot. When Betty and Donna reminded him of Amanda’s wishes, he stated that, as healthcare agent, he had the right to make final decisions and, regardless of what she might have said, it was only right that his mother be buried with her birth family. When a distraught Betty and Donna showed the funeral director Donna’s handwritten notes, the director stated that he was sympathetic but, under the law, he had to follow Charles’s direction.
Don’t put your loved ones through this additional emotional upheaval. Consult with a qualified attorney to properly document your final disposition wishes.
Don’t Try This at Home: The Risks of Trying to Revise Your Will or Trust Without an Attorney
Recently, we’ve had several new matters involving individuals who attempted to revise their estate planning documents without the assistance of an attorney. The results were disastrous for their estates.
As we have discussed in this previous post, estate plans are intended to be fluid; we highly recommend reviewing and revising your plan every few years or as new life circumstances arise. When you find that it is time to make changes to your plan, it may be tempting to avoid the cost and hassle of engaging an attorney for what seem like simple little amendments. But trying to modify your documents on your own almost always ends poorly. In most cases, the desired changes are unenforceable because they do not comply with legal requirements. The unenforceable attempted changes then lead to confusion and potential conflict among your beneficiaries and an estate plan that no longer reflects your wishes.
Idaho law requires that individuals seeking to amend a Will, Trust, and other estate planning documents follow certain legal formalities. Primary among these are verification requirements intended to ensure that you – and not someone pretending to be you – are the person making the changes, that you have the mental capacity to revise your documents, and that the changes reflect your wishes. These formalities require more than simply typing up an amendment or initialing a change. By consulting with an attorney, you ensure that your revisions are legally enforceable and achieve your goals.
If you aren’t yet convinced, here are a couple cautionary tales illustrating the perils of trying to revise your documents without the assistance of a qualified attorney:
James prepared a Will in 2018 that left all of his assets to his three brothers in equal shares. A week after James finalized his documents, he decided he wanted to leave his house to his younger brother Fred, who did not yet own a home and with whom James had a closer relationship.
James did not want to “bother” his attorney with this change after having just finalized his Will so he decided to make the change on his own. Using the Personal Property Distribution Form, James handwrote: “I leave my house to my brother Fred.” Then he signed and dated the form.
James died unexpectedly the next year. When Fred took James’s Will to an attorney to be probated, he was informed by the attorney that James’s revision gifting his house to Fred was unenforceable because it did not meet the legal requirements for amending a Will.
If James had consulted with an attorney, he would have been told that the Personal Property Distribution Form is only for distributing “personal property” – items you can touch and hold such as jewelry, furniture, collectibles – and not for large assets like a home. An attorney would also have told him that under Idaho law, changes to a Will must be signed in front of two witnesses and a notary public.
Carlos had an attorney prepare a Revocable Trust for him in 2004. In 2019, Carlos’s youngest son David asked to borrow $25,000 to start a business. Carlos was happy to loan his son the money but wanted to make sure this amount was deducted from David’s share of the inheritance in order to be fair to his other children. The attorney who had prepared Carlos’s trust had retired. Rather than trying to find a new attorney, Carlos decided he would save some money and make the change himself. On his computer, Carlos typed out a document stating his wish that the loan to his son David be deducted from David’s share of the estate. On this document, Carlos typed his full name. He printed the document but did not sign it in ink.
When Carlos died a few years later, Carlos’s children found his Will and the type-written amendment. The type-written amendment was invalid, however, because the terms of Carlos’s trust stated that any amendments had to be signed, dated, and notarized. Predictably, an argument resulted between David and his siblings, who felt that David should honor his father’s wishes. David did not agree to deduct his loan from his share of the inheritance and his siblings had no legal recourse.
Not only was Carlos’s estate distributed contrary to his wishes but, more importantly, due to the conflict created by the unenforceable amendment, Carlos’s children remain on bad terms, the last thing Carlos would have wanted.
Don’t risk finding yourself in this situation. If you or a loved one want to change your estate planning documents, make sure to consult with a qualified attorney to ensure you make your changes properly.
Probate is the judicial process in which a Court oversees the distribution of person’s assets after they die. In Idaho, probate can proceed “informally” if the original signed Will is available or if the decedent did not have a Will and the Estate is uncontested, or “formally” if the original Will is missing or the Estate is contested. As the names suggest, informal probate involves the least amount of judicial supervision and does not involve appearing before the Court whereas formal probate includes direct involvement by the Court and attendance at Court hearings.
Although it is possible to initiate a probate proceeding without using an attorney, known as proceeding “pro se”, the highly technical nature of the probate process is best navigated with the assistance of an experienced attorney. The probate process can take anywhere from six months to more than a year to complete depending on the size of the Estate and whether the Estate is contested.
Informal probate is the most common type of probate proceeding. Typically, there are seven steps in Idaho's informal probate process:
We recommend reviewing your estate plan every five to seven years to ensure it reflects your current wishes and to address any changes in the value of your estate or in the tax laws. But sometimes, life can surprise you with a major event in between those regular reviews. The following life events can have a significant impact on your estate plan and merit scheduling an appointment with your estate planning attorney right away.
1. Your Marital Status Changes
A Trustee or Executor (sometimes called a Personal Representative) is the person responsible for gathering and distributing your assets after you pass and settling your final affairs. In some cases, this person also may be responsible for managing assets held in trust for your beneficiaries for a certain period of time. Although this may sound simple enough, depending on the nature of your assets, these tasks can be time-consuming, complex, and require a high degree of financial sophistication.
While many people select friends or family members (often adult children) to serve in this role, for some people it makes more sense to appoint a professional fiduciary. A professional fiduciary is a company, bank, or individual, such as an accountant, who specializes in serving as a trustee or executor. These professionals have years of institutional experience administering estates and have the staff and resources to manage long term trusts.
A professional fiduciary charges your estate for its services. Charges may include a set minimum fee to settle an estate plus hourly fees for administrative services. Alternatively, the fee may be calculated as a percentage of the value of the estate. If the professional fiduciary is managing the assets held in trust for a period of time, they will also charge asset management fees.
Paying a stranger to perform tasks you believe your friends or family members could do for free may feel like an extravagance. But there are many situations in which the benefits provided by a professional fiduciary significantly outweigh the costs, including:
If any of the above situations apply to you, you should strongly consider using a professional fiduciary to ease the burden on your friends and family and ensure that your estate plan is carried out according to your wishes in the most effective way.
Certain types of assets pass to your loved ones by “beneficiary designation” outside of your estate plan. This means that when you die, these assets go to whomever you have listed as the beneficiary of your account, rather than according to the distribution provisions in your Will or Trust.
The most common examples of these types of assets are retirement accounts, life insurance policies, pay on death accounts, and any assets held in “joint tenancy” or titled as “joint.” When you set up these types of accounts, you designate primary and contingent beneficiaries. The primary beneficiary is first in line to inherit the asset after you die. The contingent beneficiary will inherit if the primary beneficiary cannot.
If you are like the majority of people, after you first set up these accounts, you rarely think about who you designated as the beneficiaries. Because these accounts pass outside of your estate plan, however, it is important to review these designations as part of the estate planning process to ensure they match your current wishes. Without taking this step, your estate plan may not work as you intended.
The following examples show how failing to review beneficiary designations can undermine an estate plan:
Who you should designate as the beneficiaries of your accounts depends on your unique estate plan. Here are a few examples of how these assets are typically designated:
Estate Planning for Unmarried Couples
If you have committed to a long-term life partner but don’t plan to get married, you are not alone. According to recent U.S. Census Data, the number of adults in cohabiting, unmarried relationships is up 29% since 2007.
Although many people think estate planning is only for married couples, the opposite is true. Couples in unmarried relationships who do not set up an estate plan are more vulnerable than married couples when it comes to making end-of-life decisions for each other and passing property after death. In addition, without legal documents entitling them to information about their partner’s health status or allowing them to remain in the couple’s residence after one of them dies, unmarried partners may find themselves literally shut out in the cold.
Luckily, there are a few simple steps unmarried couples can take to protect against this bleak scenario.
Ensure That Your Children Are Taken Care Of
The first most important step for all couples with minor children, whether those couples are married or not, is to create a Will naming guardians. Without a Will setting forth your wishes, if you die unexpectedly, this important decision will be left to a Judge. Although Judges do their best to pick the right person, Judges almost always pick a family member, which may not be what you want. Naming a guardian is particularly critical, however, when your partner is not the children’s biological or adoptive parent but has become a trusted primary caregiver. If you want your partner to be your children’s guardian or remain active in their lives if something unexpected happens, you need to state your wishes in a Will.
Ensure That Your House and Property Pass According to Your Wishes
If you die without an estate plan, your assets will pass according to state intestacy laws. For married couples, the surviving spouse usually inherits a significant portion of the deceased spouse’s estate. For unmarried couples, however, this is not the case. Your unmarried partner is entitled to none of your estate unless you have a Will or a Trust leaving your assets to them. Even worse, if your home is in your name only, if you die, your spouse will not inherit your home and will have no right to live in the home even if they contributed to mortgage payments while you were together.
Ensure That You Have Named the Proper Beneficiaries for Accounts that Pass Automatically on Your Death
Unmarried couples also should ensure that they have updated the beneficiaries for all accounts that pass automatically upon death, which typically include life insurance policies and retirement accounts. If you want your partner to inherit these accounts, you must name them as the beneficiary because the beneficiary designations in these accounts take precedence over a Will or a Trust.
Ensure That Your Partner Is Involved in Health Care and End-of-Life Decisions
Health care decisions are also a critical area for unmarried couples to plan proactively. Whereas spouses have the right to make healthcare decisions for an incapacitated spouse and can obtain medical information related to their spouse, unmarried partners do not share these rights. If you want your partner to make health care decisions for you or have access to your health care information if you are not able to communicate with your doctor, you must have a Power of Attorney appointing your partner as your agent for health care decisions, and a HIPAA authorization allowing that your partner to access your healthcare records.
Understanding Idaho's Living Will
A Living Will, sometimes called an Advanced Medical Directive, is a legal document that allows you to state your wishes for the type of end of life care you want if you become so ill or incapacitated that you are no longer able to communicate with your doctor. The Living Will spares your loved ones the burden of trying to guess your wishes, helps avoid conflict among family members advocating different levels of treatment, and protects you from receiving more medical care than you want.
In Idaho, the Living Will comes into effect if (1) you are unable to communicate and (2) a doctor certifies that:
The election you make is entirely up to you. It is a personal decision and there is no “right” or “wrong” choice. And, importantly, you can always change your election if you decide you want to make a different choice.
If you’d like more information on making these decisions, there are several resources available on the web. A few of these resources include:
For small business owners, an important part of the estate planning process is making sure you have your key corporate documents – such as Operating Agreements, Shareholder Agreements, Partnership Agreements, and Employee contracts – organized and in a location where your Trustee or Personal Representative can find them. This ensures continuity in the business if something unexpected happens and also provides critical documentation of the amount and value of your ownership interest.
One of my clients is unfortunately in the process of learning this lesson the hard way. Ann’s father Frank died two years ago in California without a Will or Trust. Without a Trust, Ann’s father’s estate has to go through probate, which in California is a very expensive process. The bigger problem for Ann and her brother, however, involves Holy Cannoli, a bakery her father owned with a good friend, Sally.
After Frank’s death, Ann and her brother spent hours looking through Frank’s papers trying to figure out how much of Holy Cannoli Frank owned. Ann thought her father owned 60% of the bakery, but Ann’s brother thought their father owned only 25%. Ann found some documents referring to an Operating Agreement for Holy Cannoli – which would list each owner’s interest – but she was unable to find the Operating Agreement itself.
Ann contacted Frank’s business partner Sally and asked her for a copy of Holy Cannoli’s Operating Agreement. At first, Sally said she didn’t remember an Operating Agreement. When Ann told her that she’d found several documents referencing the Operating Agreement, Sally changed her tune and said that she would look for the document in her files. Months passed and Sally did not produce an Operating Agreement.
After repeated calls, Sally suggested Ann contact Sally’s attorney to see if he had a copy of the Operating Agreement. The attorney, after waiting several weeks to respond to Ann’s email, said that he would get back to her after tax season. Tax season came and went, however, and Ann and her brother still do not have an Operating Agreement and still do not know how much of Holy Cannoli belonged to their father. In addition, Sally has not provided Ann and her brother with access to the Holy Cannoli books nor have they been paid any of the profits since Frank died. Sally claims she is keeping their “share” in a separate account, but Ann has received no information about how much their “share” is or where this alleged account is located.
Sally, meanwhile, has offered to “settle” the issue by paying Ann and her brother $200,000 in exchange for Frank’s interest. Ann’s brother is tired of the whole thing and wants to settle. Ann, however, thinks it is ridiculous to “settle” when they don’t know how much of Holy Cannoli Frank owned! Ann and her brother are currently deciding how to proceed. Frank could have avoided all of this heartache and wasted time by giving Ann and her brother a copy of the Operating Agreement, or, at a minimum, telling them where to locate this critical document.
Whether you own a bakery, a family business, a rental property, or a large corporation, take the time now to make sure your key corporate documents are organized and someone – other than you and your business partners – knows where to find them.
One of the many benefits of putting together an estate plan is minimizing potential disputes between your loved ones after you die. By clearly stating your wishes about who inherits your assets, in what amounts, and when your beneficiaries receive their assets, you significantly decrease the likelihood of disagreement between your loved ones.
One important, but often overlooked, part of this process is deciding how your personal property should be distributed. Personal property – which is tangible items you can touch such as your furniture, jewelry, collectibles, guns, art, family photos and other sentimental items – can be a major point of contention. This is a particularly vexing problem for parents, as sibling dynamics can result in significant strife over items of sentimental, but little monetary, value.
Earlier this month, this issue came to mind when one of my clients told me about her family’s grand piano. This beautiful musical instrument has been in her family for several generations. My client is a musician so her siblings understood why their parents left the grand piano to her. However, my client now has three grown sons of her own – all of whom are musicians and all of whom want the piano! My advice to her was to hold a family meeting with the boys to reach a consensus on what happens to the piano when she dies. Although this may be a challenging conversation, it is much better to take on this problem now rather than leaving it to your heirs.
When considering what to do with your personal property, think long and hard about your loved one’s personalities and relationship. For example, I have two daughters who are 9 and 11 years old. Given their current willingness to invest 20 minutes arguing over whose turn it is to set the table, I know that at some point I need to sit down and divvy up certain artwork and sentimental items to avoid future conflict.
There are many ways to approach this issue. For unique items that many loved ones desire, you can draw straws for the item now so the matter is settled for the future. Some of my older clients choose to give away such items during their lifetime which has the dual benefit of resolving the problem and giving them the pleasure of seeing their gifts enjoyed. Other clients elect to include specific procedures for distributing personal property in their estate plans, such as setting the order in which beneficiaries choose items.
Every person and family is different. What makes sense for a family with an only child is likely very different than a family with five children or a couple with no children. The most important thing is to give some thought to the disposition of your personal property with an eye towards minimizing the potential for conflict. And rest assured, we’re here to help you find the best solution for you and your loved ones.
Why I Charge Flat-Fees
The trend among estate planners, including myself, is to offer flat-fee estate plans. I think this a great development for both attorneys and our clients.
A flat fee estate plan allows my clients to know the cost of their estate plan up front. I provide my clients with a menu of estate plan options, which differ in price based on complexity. For example, a plan with a simple will as the central organizing document is easier to draft and therefore costs less than if a revocable living trust is the key document. All of my estate plans also include the other key documents you should have in place, including a durable power of attorney for health care, a living will, a financial power of attorney, and HIPPA waiver.
I like flat fee plans because they simplify the relationship between me and my clients and allow me to spend as much time as needed to understand my clients and their family’s needs. I also find that my clients like the flat fee model because it lets them call or email me with questions without having to worry about how much each minute is costing them.
In my practice, the fee I charge reflects how long it takes me, on average, to prepare the plan. A revocable living trust plan takes me longer to draft, so it costs more. This is also why the price for couples – in which I have to produce documents for both spouses – is more than for a single person.
My goal is to keep my plans affordable while also offering a superior level of service. For me, the flat-fee model is the best vehicle to achieve this goal.
I was reminded of the importance of keeping your estate plan up to date last month when a client asked me to probate her father’s estate. Her father, who I’ll call “James”, prepared his estate plan over 15 years ago. Since that time, one of James’ children passed away, both of the individuals he nominated as his Personal Representative have died, and he purchased an investment property in Sunnyvale, California. Since James’ estate plan was not updated, none of these changes were addressed in his estate plan, which created significant problems for his beneficiaries.
First, because James owned property in Idaho and California, he should have had a Revocable Living Trust as part of his estate plan. A Revocable Living Trust would have allowed his estate to avoid probate in both Idaho and California. Instead, because James only had a Will, his beneficiaries had to hire attorneys in both states and pay probate fees in both states. California has some of the highest probate fees in the United States, so the amount his beneficiaries inherit will be reduced by tens of thousands of dollars.
Second, James’ 15-year-old estate plan did not address the fact that one of his children predeceased him. James’ Will directed that the estate be divided between his “then-living” children, which effectively disinherited his deceased child’s son (i.e. his grandson). If James had updated his estate plan, he likely would have made provisions for his grandson.
Third, because both people James nominated as his Personal Representative were deceased, this issue had to be addressed during probate, making the process more time consuming and costly. It also caused a strive between James’ two oldest children, each of whom thought they would make the better Personal Representative.
Finally, because it had been such a long time since James prepared his estate plan, none of his adult children knew where to find the original copy of his Will, which they needed for the probate proceeding. The attorney who prepared James' Will had also died, which made it even more difficult to locate the original Will.
All of the problems encountered by James' beneficiaries could have been avoided if James had updated his estate plan. By taking the time to review and update your estate plan, you ensure your plan reflects your current wishes and your loved ones are spared unnecessary hassle and expense.
Make Sure You Tell Your Executor and/or Trustee Where to Find Your Estate Planning Documents
Once you’ve taken the time to invest in your estate plan, it’s critical that you let your executor and/or trustee (also known as your “fiduciaries”) know where to find your estate plan documents.
When I finish any client’s estate plan, I email them electronic copies of their executed documents in addition to providing them with the original copies of their documents in their Estate Plan Portfolio binder. I advise sharing the electronic copies of your estate plan documents with whomever you’ve appointed as your executor and/or trustee, and, if you are married, to whomever you’ve appointed as your successor executor and/or successor trustee. Included in the email should be a note letting them know where to find the originals of your documents.
If you’re not comfortable sharing the contents of your estate plan documents with your fiduciaries, you should let at least two trusted people, who are not your spouse, know where to find the originals of your documents.
If you have a will-centered estate plan that does not include a trust, the location of the original will is critical information that your executor must have. This is because a court will only accept the original will for purposes of opening a probate proceeding (the judicial proceeding in which a judge supervises the disposition of a person’s assets after they pass). If your executor does not know where to find the original of your will, a copy of your will may only be admitted as “probative evidence” of your wishes, but a court is not bound by its terms.
For some people, this may not be an issue, but, in cases in which there is the potential for discord among your heirs, not knowing the location of the original of your will can create a huge headache.
A good illustration of the problems caused by not telling someone where to find your will occurred in the estate of the famous Olympic sprinter, Florence "FloJo" Griffith Joyner.
When Ms. Joyner died unexpectedly at the age of 28, she had not told anyone where to find her original will. This proved a significant issue when Ms. Joyner’s mother claimed that Ms. Joyner promised that she could live in Ms. Joyner’s house until she died. Ms. Joyner’s husband disputed his mother-in-law’s claim, and the case wound up in court. Hundreds of thousand of dollars in legal fees could have been avoided had Ms. Joyner told someone where to find her will.
The moral of the story is make sure at least a couple of different trusted friends or family know where to find your original estate plan documents.
Why do college students need to think about estate planning? The short answer is because most college students are over the age of 18.
When your child turns 18, a significant legal event happens in their lives: they are considered an “adult” under the law. This means they are responsible for making their own health care decisions, and, under the Privacy Rule of the Health Insurance Portability and Accountability Act (commonly referred to as HIPAA), a parent can no longer access their adult children’s medical records or other healthcare-related information.
The combination of these two factors – your child turning 18 and HIPAA – means that as a parent, you are no longer able to make health care decisions for your child nor are you able to access their medical records. Practically speaking, this makes it difficult – if not impossible – to intervene and assist if your child needs medical help, especially if you are trying to do so from a distance. And while this may come as a surprise, this is the case even if your child is still on your medical insurance.
For example, if your child is injured in a car accident while away at school and arrives at the emergency room unable to communicate with the doctors, you as their parent cannot automatically step in and help. In fact, in some instances, the hospital may not even be willing to tell you if your child has been admitted to the hospital, let alone give you information on the extent of their injuries.
This is an awful position to find yourself in as a parent. Fortunately, it can be easily avoided with three simple, easy to prepare estate planning documents.
Power of Attorney for Health Care
A Power of Attorney for Health Care allows your child to appoint an agent (typically one or both parents) to make health care decisions for them if they are incapacitated and cannot make such decisions for themselves. With a Power of Attorney for Health Care in place, there are no legal barriers preventing you from obtaining information about your child and making decisions for them if they cannot do so themselves.
A HIPAA Authorization allows your child to designate who can access information about their medical records and health condition. It is important to have a HIPAA Authorization in place because a Power of Attorney for Health Care only comes into effect if you child is incapacitated, but does not allow you to access their medical records if they are not incapacitated. If your child has a complicated or long term health condition, access to their medical records is important if you’re helping them make appointments with specialists or identifying the best course of treatment.
Springing Power of Attorney for Finance
A springing Power of Attorney for Finance allows your child to designate someone to access their financial accounts and undertake other important activities, such as filing a lawsuit on their behalf, if they become incapacitated. The word “springing” means that this document is only effective in the event of an incapacity. This strikes a nice balance between allowing your child to be financially independent while also making sure they are protected in the event of an emergency.
Without these three documents in place, a parent’s only choice is often to petition a court to be appointed as their child’s guardian or conservator. This is an expensive process and involves dealing with attorneys and courts, the last thing a parent wants to worry about during an emergency.
If you have children heading off to college this fall, or if you have a child over 18 who you want to be able to assist in the event of an emergency, take the time to put these three documents in place. Hopefully, you’ll never need to use them, but it’s always better to prepared in case some doesn’t go as planned.
We work hard to build up the assets that compromise our estate and the last thing we want to happen is for one of these assets to be missed by our loved ones.
Years ago, when someone passed away, the executor of their estate would spend several days at the decedent’s home carefully reviewing every document they could find – bank statements, credit card statements, files, paperwork, bills, etc. It was a labor-intensive process, but by the end, the executor could feel reasonably confident they had located all the assets.
These days, however, things aren't as simple. Take a minute to think about how many of your financial statements have gone paperless. If you’re like me, it’s the majority of your accounts. Indeed, as more of our financial statements and communications move online – each with its own separate user name and password – the harder your executor’s job becomes and the more likely an account gets missed.
The solution is to leave a detailed list of your financial accounts, including financial institution, account numbers (the last four digits of the account number are enough), and approximate values, so your executor knows how much you have and where to find it. It's also helpful to include the contact information of your accountant, financial advisor, life insurance agent, and estate planning attorney.
Obviously, it goes without saying that this document should be kept somewhere secure, like a locked fire proof box. And although you’ll have to update it from time to time, once you invest the time to make your initial inventory, it’s fairly easy to keep up to date.
Given the importance of this issue, I provide my clients with an Asset Inventory to fill out and record this critical information, and include this document as part of the Estate Plan Portfolio they receive from my office.
During a divorce, there are five essential changes you should make to your estate plan to protect yourself and your assets. In Idaho, after a divorce is final, your ex-spouse is prohibited by law from inheriting your assets. However, if you die while your divorce is pending, these protections are not available and your spouse would likely inherit all of your assets, either under the terms of your current estate plan or under state law if you do not have an estate plan. This is probably that last thing you want to happen. Here are five steps to take when you file for divorce (or if you are contemplating filing for divorce) to exercise as much control as possible.
1. Update Your Will or Trust. In a typical estate plan, most spouses leave everything to each other. Your Will or Trust should be updated as soon as possible leaving your half of the community property, and all of your separate property, to someone other than your spouse. If you don’t have a will or trust, you should prepare one. Otherwise, your spouse will inherit all of your assets under state law.
2. Create a Children’s Trust if You Have Minor Children. If you have minor children, you should have a trust that names someone you choose as trustee to manage the assets your children inherit from you. If you don’t have an estate plan designating a trustee, your spouse will control these assets if something happens to you.
3. Revoke and Update Power of Attorney for Finance. A Power of Attorney for Finance allows you to nominate someone to manage your finances if you become incapacitated. Most spouses nominate each other as their agents and, in many cases, this power is immediate, meaning your spouse can access all of your accounts and assets, even if they are in your name alone. You want to revoke these powers as quickly as possible and provide notice to your spouse of your revocation. You also want to choose someone else to act as your agent.
4. Modify Medical Power of Attorney. You also likely have a medical power of attorney empowering your spouse to make health care decisions on your behalf. Given the current situation, your spouse is probably not who you want making these decisions. Revoke any medical powers of attorney naming your spouse, nominate a new agent, and notify your health care providers of this change.
5. Update Your Retirement Plan Beneficiary Designations. Your spouse is likely listed as the primary beneficiary of your retirement plan. Update your beneficiary designations to name someone other than your spouse. Although your spouse is probably entitled to a portion of your retirement account as part of the divorce, changing this designation now protects your interest in your retirement account.
At Shaila Buckley Law, we specialize in helping clients with this process to ensure your estate plan protects you during, and after, your divorce. Questions? We’d love to help. Give us a call at (208) 995-9224 or send an email to email@example.com.
Understanding Medical Powers of Attorney
One of the most important documents in an estate plan is the Durable Power of Attorney for Health Care, which allows you to nominate a Medical Agent to make decisions on your behalf.
What Is a Medical Agent?
A medical agent (also called a healthcare agent, healthcare surrogate, a healthcare proxy, or a medical proxy) is a person you authorize in a medical power of attorney to make decisions about your medical care if you are too ill to make them yourself or are otherwise unable to communicate your wishes.
Why is it important to choose a medical agent now?
The Covid-19 pandemic has rendered an unusually high number of patients in critical condition, with some on ventilators and under heavy sedation. Although the majority of people who get sick have mild symptoms and recover quickly, since no one knows exactly how they will be affected by the virus, it’s best to plan for the worst and hope for the best. Part of that planning is making sure someone can make healthcare decisions for you if you fall ill and are unable to make those decisions for yourself.
Factors to Consider in Choosing Your Medical Agent
A medical agent is an important role, and the person you choose will have the power to make critical healthcare decisions—like consenting to a treatment plan, whether to accept or refuse medical treatment, and which healthcare providers or hospitals to use for your care. As a result, it is crucial to think carefully about who you choose to fill this role. Many people simply assume that their spouse or their oldest child should take on this role, but they are not always the best suited. Here are some factors to consider when selecting an agent:
Medical directives may be among the most important legal documents you prepare - especially in light of COVID-19. Picking a medical agent can be tricky. If you need help thinking through your options, or if you need help with any other estate planning needs you may have — whether that’s setting up a financial power of attorney, last will and testament, or a trust — please give me a call 208-995-9224 or shoot me an email at firstname.lastname@example.org.
While most of us have thought about putting together an estate plan, it is not usually at the top of our “to do” list given the many things we juggle on a daily basis: work, taking care of kids or elderly parents, managing households, keeping up the house or garden, planning vacations, trying to exercise, seeing friends. . . and the list goes on.
As a result, many people now find themselves in the midst of a lethal and unpredictable global pandemic wondering what would happen to them and their loved ones if they became ill. Estate planning has suddenly become a top priority, but, given shelter in place orders and social distancing, putting together an estate plan right now can feel overwhelming.
Here is a short list of the bare-minimum estate planning documents that everyone should have in place as we move through this pandemic:
If you want more information on preparing these essential documents or estate planning in general, give me a call at 208-995-9224 or shoot me an email - email@example.com
Most people I know have years of old papers tucked away in filing cabinets, piled up on desks, or stored in the infamous “To Be Filed” folder. In the world of estate planning, these troves of documents are often left for heirs to sort through after a loved one’s passing. A big reason for this is that we don’t know what records to keep or for how long.
Here’s a list of the types of documents you should hang on to and the amount of time to keep these records.
Keep indefinitely in a safe place (such as a fireproof box or safe)
Estate Planning After a Divorce
Divorce stinks. It’s awful for everyone and usually involves paying seemingly (and often actually) exorbitant sums of money to attorneys. Undoubtedly, the last thing you want to do after your divorce is meet with yet another attorney to discuss – of all things – estate planning.
But the period after a divorce is a critical time to address your estate plan. Under an Idaho law passed in 2018, an ex-spouse is treated as if they predeceased their spouse for the purposes of a will or trust. In simple terms, this means that if the will you created when you were married left everything to your spouse, then after you die, your assets would go to whomever you designated in your will after your spouse.
Given this law, why should you redo your estate plan? First, with your ex-spouse out of the picture, you should think about how you want your estate distributed. You may find that your feelings now are quite different than when you were married.
Second, an important part of a comprehensive estate plan includes designating who you want to make medical and financial decisions for you if you become incapacitated (in the form of a durable power of attorney for health care and a power of attorney for finances). For some couples, the only person they designate is their spouse. Without a backup listed, and with your ex-spouse prohibited by law from assuming this role, you have no one to make these decisions. This is not a desirable result.
Third, in my experience, most people don’t want their ex-spouse to play any role in managing their assets if they die. But, if you have children and don’t have an estate plan designating a trustee to manage the assets your children inherit from you, there is a high likelihood that a Court would appoint your ex-spouse to this role.
Fourth, redoing your estate plan ensures the least amount of hassle for your family. Although Idaho law prohibits an ex-spouse from inheriting your assets, the financial institution holding your retirement account and life insurance company may not know you were divorced. These types of assets pass outside of probate directly to whomever you named as your beneficiary (on forms you likely filled out years ago). The last thing you want is for your heirs to have to try to collect funds improperly paid to your ex-spouse, especially if your divorce did not end on good terms.
Last, unlike the attorney fees accrued in your divorce – which undoubtedly were hard to predict and multiplied at unsettling rates – redoing your estate plan, at least in my office, involves a flat fee. You’ll know the cost up front and will be able to ask questions without worrying about how many billable minutes just went by.
Did you know there is such as a thing as a Pet Trust? The most famous example of a Pet Trust may be the one set up by the hotel heiress Leona Helmsley. When Ms. Helmsley died, she left most of her $5 billion estate to charity, but also created a $12 million trust for her beloved Malatse dog, appropriately named Trouble. Further complicating matters was the fact that Ms. Helmsley cut two grandchildren out of her Will completely. As you might imagine, years of costly litigation resulted.
Formal Pet Trust are just one of many ways to provide for your pet in your estate plan. Here are some things I recommend considering when planning for your pet.
Who do you want to care for you pet?
Pets are considered “personal property” and will pass to whomever inherits your other assets unless you designate someone specific. Give some thought to your pet’s needs – health, activity level, disposition – when choosing who should care for them after you die. It’s also a good idea to check with that person and make sure they’re up for the job.
Do you want to leave money to care for your pet?
You can’t leave money directly to your pets. If you do so, those funds will simply be added back to the “residue” of your estate and distributed to your heirs. However, there are many options for providing financially for your pet.
Pet Trusts are one vehicle for doing so. Most Pet Trusts aren’t funded to the tune of millions of dollars. Instead, the average Pet Trust holds a modest amount of money set aside to help cover the cost of feeding and caring for your pet. And, as with all trusts, the terms are entirely up to you. Some people like to designate a trustee who is different from the person caring for the pet to manage the funds and make sure they are being used for the benefit of the pet.
A more informal option is to simply gift a certain amount of money to the person who becomes the guardian of your pet. Setting a little something aside to defray costs and thank the person who will care for your pet is a thoughtful gesture that is often unexpected but much appreciated.
Will your pet be hard to place?
If you have an exotic pet or one that may be hard to find a home for, it’s good to consider this in your planning. There are several organizations that can help, such as the ASPCA and private rescue organizations. In some cases, you can leave money to an organization to care for your pet during its lifetime and also to support the organization.
These are just a few of the many resources and options available to provide for your pet after you're gone. If you have questions or would like to discuss options, Shaila Buckley Law can help. Give me a call at 208-995-9224 or shoot me an email – firstname.lastname@example.org – to discuss. You can also click here to schedule an appointment.
When to Update Your Estate Plan
When to Update Your Estate Plan
Once you have a well-drafted, personalized estate plan in place, the hardest work is done and you should congratulate yourself on checking this critical item off your “To Do” list.
Nonetheless, every couple of years, you’ll want to review your plan and make sure it still reflects your family’s needs and wishes. Life happens: children grow up, people move, you buy or sell a house. You want your estate plan to keep up with these changes.
Life changes that should be addressed in your estate plan include:
If you’ve experienced any of these life changes, or something else you think should be addressed in your estate plan, give me a call at 208-995-9224 or shoot me an email - email@example.com - and we’ll get it taken care of.
Choosing a guardian is often one of the most difficult choices my clients have to make. It’s terrible to imagine not being able to care for your children as they grow up, especially if your children are very young.
But not choosing someone is a much worse option. If you don’t designate a guardian for your children, a court would make the decision for you. And although Judges do their very best to decide what would be in the best interest of your children, they don’t know your children, or you family, like you do. As hard as it might be, it’s much better for you, your children, and, quite frankly, your entire family, to make this decision yourselves rather than leave it to someone else.
That said, what should you look for in a guardian? The first advice I give my clients is to think about people who share your values and parenting style. This may mean looking outside of your family. This is okay. There’s no rule that says your guardians have to be blood relatives, and some people find they have much stronger bonds with the family they chose rather than the family they’re born into.
Second, think about your children. Is their sense of place and home very important to them, or are they free spirits up for an adventure? Do they have a strong support network where you live? When my husband and I talked through our options, we felt that we wanted to pick a person who lived in Boise so that our children wouldn’t have to be uprooted from their friends and their community. For other people, however, this may not be an important consideration.
Third, talk to whomever you’ve chosen to make sure they’re up for the job. Perhaps your younger sister who is still single and living on her own in San Francisco isn’t ready to take on the responsibility and sacrifice that comes with raising children. Or, maybe your dearest friends are having problems in their marriage and aren’t able to manage anything more. In most cases, people are honored to be asked and happily agree. But it’s much better to know now that they are unwilling than to put someone in a difficult position down the road.
Fourth, and perhaps most important: you can change your mind. Pick someone and see how you feel about it. If you’re still worried about your decision a month after signing your will, you may not have picked the right person. Also, people and children change over time. Perhaps your parents were the right choice when your children were young, but may not be suited to raising teenagers. Or perhaps your younger sister has settled down and is now in a position to be a guardian. Regardless of the reason, changing your guardian is a simple (and inexpensive) thing to do.
So . . . hire a babysitter, go out to dinner, and have a long discussion about what feels right. Then make your decision, check your estate plan off your to do list, and devote your energy to something more pleasant!
For more information on Estate Planning for Parents, please click here.
A Children’s Trust is a trust that you create in a will, by means of a “testamentary trust”, or in a revocable living trust, to manage a child’s inheritance if something were to happen to you. In its most simple form, a Children’s Trust appoints a “Trustee” – a trusted adult picked by you – to manage your children’s assets until your children reach an age when they are mature enough to manage their assets on their own.
For example, a typical Children’s Trust structure I often recommend to my clients provides that a Trustee will manage the children’s assets until they reach the age of 23, at which point they will be able to request distribution of up to 25% of the principal of the trust. At age 25, they’ll be able to request up to 50% of the principal, and, at age 28, they’ll be able to control all of the funds in their trust.
I like this structure because it allows children to “practice” managing their own money while a majority of their assets are kept safe under the watchful eye of the Trustee. If they run through the first 25% in a matter of weeks, they’ll hopefully take note and do a better job the next time they receive a distribution.
In many cases, the amount of assets your children would inherit if you were to die is much greater than you might imagine. A lot of our assets are tied up in our homes, our retirement accounts, and in life insurance policies. None of these assets are “liquid” so you may not feel like you have a lot, but when everything is added up, you may end up with a much bigger number than you expected.
Imagine how you would have felt if you were given a substantial sum of money when you turned 21? I don’t know about you, but I thought I was invincible at that age and, quite frankly, had a pretty limited understanding of how to manage money. A Children’s Trust accounts for the exuberance and naivete of youth by protecting your children’s assets until they have the life experience to do so themselves.