Most Americans have not done any estate planning, and of those that have, many plans are outdated. Everyone has different reasons for not making sure their affairs are in order. However, if you were to become incapacitated (e.g., serious illness, injury or advanced age) or die without a complete and current estate plan, those you care about and vice versa would likely experience undue challenges (e.g., delays in accessing funds to pay your bills, uncertainty or conflict regarding your medical or other wishes, extra legal fees and costs, court, and potential unexpected inheritance outcomes). However, by simply establishing and keeping your estate plan up to date, you can arrange for the orderly management of your medical and financial matters in case of your later incapacity and distribution of your estate to best take care of your loved ones after your death. For seniors, there are unique issues related to aging that make estate planning with an elder law attorney particularly important. The following are a few common estate planning considerations for seniors:
Every adult should have these legal documents:
□ Durable Financial Power of Attorney designates Agent(s) to manage your financial matters either immediately or in the event of incapacity. Many seniors rely on close relatives to assist in financial management. If so, you may wish to consider making the financial power of attorney effective immediately so that you and the Agent have concurrent authority to act with regard to managing your financial matters. It is also critical to have a thorough and recently executed (within the last 3-5 years) financial power of attorney in place to avoid Conservatorship (court proceeding) in the event of your incapacity. Seniors are more prone than the general population to periods of incapacity; we often see Conservatorships for seniors who had no financial power of attorney in place prior to the onset of serious illness or injury. If married, would your spouse be able to serve as Agent? What if they are not competent? Do you have several alternate Agents listed? Lastly, if you are concerned about affording long term care an elder law attorney familiar with public benefits, such as Arizona Long Term Care System (ALTCS) or Veteran Administration Aid & Attendance pension benefits programs, may also want to include in your durable financial power of attorney specific authority for the agent to apply for these benefits in case of future need and engage in “spend-down” to preserve your assets against the cost of long term care, including expansive gifting language not typically included in power of attorney documents drafted by estate planning attorneys unfamiliar with elder law issues.
□ Health Care Power of Attorney designates Agent(s) to handle your medical decisions in the event you were unable to do so yourself. In the absence of this document, state law designates persons with priority to act which may or may not be the persons you would prefer. You are also more likely going to be the subject of a Guardianship (court proceeding) without this document. If married, would your spouse be able to serve as Agent? What if they are not competent? Do you have several alternate Agents listed?
□ Mental Health Care Power of Attorney allows your Agent(s) to consent to inpatient mental health treatment for you, if ever needed. This document avoids the need for emergency mental health guardianship (court proceeding). Seniors, in particular, may require in-patient mental health treatment due to effects of medical conditions such as dementia, Alzheimer’s disease, Lewy Body dementia, Parkinson’s disease, brain injury, and other causes. The law creating mental health power of attorney was created to allow seniors, in particular, admission to psychiatric hospitals specializing in treatment of seniors without court intervention to avoid court-ordered treatment and hospitalization with younger mentally ill population. If you never need this treatment, great. However, if you do need this level of mental health treatment this document allows your agent to consent to the treatment you need without court or state government involvement.
□ Living Will states your preferences regarding end-of-life medical treatment. Without a Living Will, you may receive treatment you would not want and/or create family conflict in the absence of your known written wishes. The Living Will ensures your family and medical providers know your end-of-life medical treatment wishes and can honor them.
□ HIPPA Medical Release. Without this document your medical providers may not share any of your medical information with anyone, even a spouse. This is very helpful so that even while you are capable of making your own medical decisions the persons you designate can talk with your documents, help schedule appointments, confer with hospital staff during any hospitalizations, etc. It is often helpful to have the “team” approach to medical care for a senior individual.
□ Last Will & Testament. A Will designated Personal Representative(s) to administer your estate and provides for the distribution of estate assets after your death. If you die without a Will (known as “intestate”), state law dictates how your estate will be distributed, which may or may not be consistent with your wishes. Note, probate (court proceeding) of the Will is required in AZ if the estate’s equity interest in real property exceeds $100,000.00 or the estate’s combined other assets exceed $75,000.00. For seniors, if your spouse is incapacitated and you are their medical decision maker you may worry about who would take care of them if you died first. Did you know that you can designate a legal Guardian to be appointed for an incapacitated spouse in the event of your death? You can also leave your share of the estate in trust for their benefit if they were unable to manage assets themselves to ensure proper management and use of the trust funds for their benefit. Is your spouse the designated Personal Representative? If so, do you have successor Personal Representatives designated to act if your spouse could not?
Most individuals should also include a Revocable Trust:
□ Revocable Trust. In a typical Revocable Trust, the creator of the trust (commonly referred to as trustor, settlor, or grantor) is also the beneficiary and trustee during his or her lifetime. This allows the trustor unfettered management, control, and benefit of the assets transferred to the Trust. If the trustor is later incapacitated, the designated Successor Trustee would then assume responsibility and manage the trust assets for the benefit of the trustor. This can be particularly beneficial in preventing financial exploitation of a vulnerable senior; we often recommend use of trusts where possible for anyone with a diagnosis of a progressive cognitive impairment (e.g., early dementia or Alzheimer’s disease). Some seniors would like assistance in handling management of their trust assets, but do not wish to resign as Trustee themselves. In these instances, Co-Trusteeship may be appropriate. After the trustor’s death, the successor Trustee will distribute the trust assets to or for the benefit of the beneficiaries pursuant to the express terms of the Trust. There are significant advantages to use of a Trust, including but not limited to quicker access to assets upon trustor’s incapacity or death, financial institution cooperation, probate avoidance, reduced legal fees and quicker post-death administration, and privacy. There are many different types of trusts; this is only a broad and basic overview.
Coordination of account ownership and beneficiary designations:
The estate planning documents themselves are only part of the plan. You must also carefully review ownership, pay on death, transfer of death, and beneficiary designations (primary and contingent) on all assets, accounts and policies, as the case may be, to be certain they reflect your testamentary wishes, and coordinate with your overall estate plan. Note, if you have a Trust, assets should be retitled to the trust (commonly referred to as “trust funding”). Warning: seek advice of counsel regarding ownership and beneficiary designations as a misstep can have unfortunate tax or other consequences. You need to review all assets, accounts, and policies, such as:
□ IRAs and 401(k)s □ Life Insurance policies □ Brokerage Accounts
□ Annuities □ Bank Accounts □ Vehicles
□ Stock and bonds □ Real property deeds □ Business interests
□ Pension benefits □ Employee benefits □ Timeshares
□ Digital assets □ Promissory Notes □ Oil & Gas interests
It is also recommended that you organize your medical and financial information so that if someone were to assume responsibility as your Agent, Personal Representative or Successor Trustee they have the information readily available and necessary to do their job.
Timing of Establishment or Update of Estate Planning Documents:
As the saying goes, “there is no time like the present” to establish or update estate planning documents. To execute these legal documents, one needs to be legally competent. Our office receives multiple calls a year from adult children reporting their elderly parents are in the hospital with permanent disabilities and they need a power of attorney to handle financial matters, and that there are issues related to medical decision making among family. At that point, however, it is too late for the patient/parent to execute powers of attorney and appoint the persons they would wish to step in and assist. Our only option is to petition the Court to appoint a Conservator with authority to manage the parent’s financial matters. In addition, frequently the parent will also end up under court ordered Guardianship. In the event of death, outdated or non-existence of an estate plan can also lead to probate or even unanticipated or undesired estate distributions.
We recommend that estate plans be reviewed every 3 years, unless change in circumstance warrant earlier review. While elder law attorneys handle estate planning for persons of all ages, we recommend that seniors in particular work with an experienced elder law attorney to establish and/or update their estate plan. Elder law attorneys not only understand estate planning, probate and trust administration but also have the knowledge and experience necessary to guide clients and their families through issues often related to aging to achieve best personal and financial outcomes for seniors and their families.
To schedule your complimentary estate plan review consultation, call us at 480-922-1010 or email firstname.lastname@example.org. We are here to help.