Texas Estate Planning

My Parents Named Me as their DPoA--Now What?

If you’re reading this, it’s probably because someone you know and trust has named you as their “Durable Power of Attorney” (DPoA), which simply means you can act as their agent in financial matters while they also maintain access to their financial accounts. 

But, having a notarized document stating you have this power is really only the beginning. What good is a legal document if the principal’s (the person who named you as their power of attorney) financial institutions don’t know you have this power? 

 

DPoA Basics: 

According to the Texas State Law Library (Texas.gov), “A durable power of attorney is generally used to make plans for the care of your finances, property, and investments in the event that you can no longer handle your financial affairs yourself.” This document does not remove you from accessing your assets, but simply allows someone that you know and trust to make transfers, create and fund trusts, sign checks, and other financial tasks that can be helpful to ensuring everything is in order for your estate plan. 

As of the time this article was written, Ard Law Firm, PLLC, has found these documents to be quite helpful to our clients, especially in the Medicaid application process. In order to get you qualified and help you pay for a nursing home, we must submit financial documents that can be easier to obtain with the help of your Durable Power of Attorney.

You have a Durable Power of Attorney–now what? (process) 

Each bank and financial institution has their own process in accepting Durable Power of Attorney documents. And beware–they often try to get you to sign their own Power of Attorney forms which typically negate any prior documentation and might be only valid for that specific bank. While the bank’s form might get you access to the one account you need at that precise moment in time, it unravels everything else in personally crafted DPoA documents that our Firm might provide to you, meaning you won’t be able to access any of the principal’s other accounts. 

One reason financial institutions do this is because they don’t want to be held liable in the event that the DPoA document they receive is fake. Their caution is understandable, but we just want to prepare you for what the process might look like when enacting your Durable Power of Attorney:  

Recently, one of our team members went through the process of filing a DPoA with their father’s bank as their father’s agent. The steps they went through at their local bank are listed below: 

1. Drop off DPoA document for the bank's legal department to review. 
2. Wait 7-10 business days for the legal department to approve the DPoA document. 
3. Schedule an appointment at the bank to get onto his father’s accounts as DPoA.
4. Bring 2 forms of ID for the agent (DPoA) and the principal (person granting this power) to the appointment. 
5. Fill out a separate, additional affidavit of Power of Attorney at the bank. 
6. Sign a new signature card as both the agent and the agent of the principal. 

Our team member said the bank required all of this to be done with a banker not at the window and it took a few hours to complete. It may sound like a lot, but the inability to access your loved ones' assets could be far more time consuming than a handful of trips to the bank. 

What is National Healthcare Decisions Day?

“Healthcare decisions,” might sound like some far-off bridge you’ll cross when you get to it, but the reality is that our health is unpredictable. We really don’t know when healthcare decisions will need to be made or if someone else will need to be making them for us. 

Over the last few years, people are seeing the importance of getting a plan in place that will protect them, their family, and their assets. Scenarios in which we’re unable to make our own healthcare decisions are not easy to think about, but they are important to discuss with people that you know and trust, the people that will most likely have to make those difficult healthcare decisions on your behalf. 

National Healthcare Decision Day (NHDD) was founded in 2008 by Virginia-based health care lawyer, Nathan Kottkamp, because he saw the pitfalls in our healthcare system that occur when people fail to discuss their healthcare wishes or have a plan in place. He chose April 16th to remind us that even though it’s tax season, there are some other human experiences we can be certain to face. 

But National Healthcare Decision Day goes far beyond our “last wishes.” It is about making sure someone knows what we value so that they can confidently make decisions for us if the need ever arises. It can be daunting to think about someone else having the final say in our health care, but imagine being the one making those decisions and not having the slightest clue of what the person in the hospital needs or wants. 

 

Give your loved ones the confidence that they’re making the right decision.
Not only is it important to communicate your wishes to your friends and family, it is often necessary to outline them in a legally binding document (or two). An Advance Directive, often referred to as a “Machines or No Machines Document,” is a legal document in which you explicitly state what type of medical care you’d like under certain circumstances. 

But it’s impossible to predict exactly what your circumstances are going to be, so take April 16, National Healthcare Decisions Day, to have these conversations with the folks who need to know. Check out The Conversation Project’s “Conversation-Starter” guides on their website. The Conversation Project recommends discussing what you value in your life in order to better understand what to prioritize in the event that you become incapacitated. These broader conversations help prepare your loved ones for unpredictable medical events, as opposed to only discussing very specific circumstances that might not ever occur. 

Another legally binding document that can be helpful in ensuring you receive the care you desire is called a “Medical Power of Attorney.” If you don’t have this document in place, then your state will defer to their laws which dictate who will make your medical decisions in the event that you become incapacitated. For instance, if you’re married, more often than not, your spouse will be the one to speak on your behalf. Getting a Medical Power of Attorney not only allows you to name whomever you wish to speak on your behalf, but also allows you to name alternates in the event that your initial agent is not able to act at the time or in the place you might need them to. 

 

Celebrate National Healthcare Decisions Day– start the conversation with your loved ones.
For healthcare decisions, it can be very beneficial to have your wishes in legally enforceable documents because doctors often prefer to take every measure possible in order to keep you alive. And while this is a noble stance for doctors to take, there are certain circumstances in which this approach may be distressing for you and your loved ones. 

Celebrating National Healthcare Decision Day with honest conversations about your values can bring peace of mind to you and your loved ones. It might be difficult to begin such a conversation, but it pales in comparison to the difficulty of making healthcare decisions for someone else without any directions. 

Money & Dementia: How the Diagnosis Can Affect Your Finances

Aging is difficult, especially if you have dementia. In a recent story from NPR titled, “An older person's money management errors may be a sign of some sort of dementia,” reporter, Sarah Boden, speaks with people across America who have experienced the effects of dementia on family finances. The conversations are insightful, yet heartbreaking. 

“Dementia specialists say money problems can be one of the first signs of trouble,” NPR reported. Experts spoke of elders being scammed or taken advantage of by financial institutions and family members, but stories also included reckless spending and seniors forgetting to mail out checks. Everyone should be on the lookout for financial predators and missteps as their loved ones begin to age. 

The story continues, citing, “One study of some 81,000 Medicare recipients found that people with Alzheimer's disease and related dementias started to develop poor credit up to six years before their diagnosis.” Dementia comes in many different forms which can impact someone’s ability to handle their money. But one thing is clear: dementia negatively impacts cognition and memory, two functions necessary for taking care of financial duties such as paying bills. 

Many seniors value their independence, making conversations about money and aging emotionally challenging. And although financial institutions are taking steps to protect seniors from scams and thoughtless spending, the responsibility ultimately falls on family and friends who know the aging person and their values. 

It can be hard to see the impact of dementia on a loved one’s finances, especially if you live out of state, but it’s important to check in to avoid catastrophe. This was especially important for one family in the story who needed money to afford their mother’s care, but lost out on selling their home due to foreclosure because her dementia made her unable to pay the mortgage. 

There are private companies that will keep an eye on finances for a monthly fee and certain accounts allow owners to add a trusted contact to be notified in case of any major withdrawals, but these options aren’t available or appropriate for everyone. In estate planning, a Durable Power of Attorney is a document which grants someone you know and trust the authority to access all of your financial accounts. 

It’s a huge act of trust and respect to give someone that much access to your finances, but it’s often vital for estate planning purposes. For instance, if your loved one is in the hospital for an extended period of time, someone will need to go to their residence and pay the bills before they begin to pile up. But banks are built to keep people’s money safe, which is why a legally binding document is necessary to handle someone else’s finances when they are unable to. 

Speak with an estate planning attorney licensed in your state if you begin to notice things are changing with you or your loved one’s cognition and spending habits. Making sure the family home and other assets are protected can be immensely helpful for the next generation – start the process today by giving us a call: 713-429-0218

Does My College Kid Need an Estate Plan?

When it comes to estate planning, we usually think of older adults. However, it’s a topic that we should also consider for college students.

WDIO’s recent article entitled “Estate planning is for college students too” reminds us that there’s a number of documents you can put into place in the case of an emergency.

Power of Attorney. There are two types of POAs. The financial power of attorney allows a named agent to make financial decisions on behalf of the college student, in the event they are unable to do so. A medical power of attorney names a healthcare agent.

These can have HIPAA language written into them that authorizes their medical provider to release information about them. Remember, if your student travels away from home for college, you may need a POA for that state.

Will. A typical college student might not have a lot of money. However, they do have their own stuff, and someone needs to make the decision regarding what happens to that stuff. Ask the student to name the parents as the executor of his or her will.

FERPA Waiver. FERPA stands for the Family Educational Rights and Privacy Act. Without this waiver, a parent has no authority to call the college and request information about your student if their over 18. With a waiver, you can request a transcript and student loan information.

HIPAA Waiver. A HIPAA waiver allows an adult child’s health information to be disclosed. It’s usually for medical facilities, doctors, schools, or any other person where they are in possession of the health information of a person where that individual authorizes the release of the information to a designated person.

Reference: WDIO (Sep. 28, 2022) “Estate planning is for college students too”

What Do I Need to Do When a Loved One Dies?

The death of a loved one is hard to endure. It can become all-consuming. When someone you love passes, there are new matters that need to be addressed.

Kiplinger’s recent article entitled “A Checklist for What to Do (and NOT Do) After Someone Dies” says that it’s vital to handle these matters today and not put them off until some date in the future, which usually never comes until it becomes a crisis.

When a spouse dies and leaves their assets to the surviving spouse, the mistake many people make is that the surviving spouse often leaves the assets they inherited in their joint names or in their deceased spouse’s name.

As the years pass, the surviving spouse’s health may also begin to decline. The spouse frequently only survives a few years after the first decedent spouse.

When that happens, and the original spouse’s assets were not retitled, it can become an even more difficult process for the heirs.

This is how a typical scenario can play out: the father dies and leaves everything to the mother.

Mom calls everyone she can think of but misses several important matters. She then passes and the heirs now, while in a state of mourning, have to try to settle her affairs.

The issue is that they will now have a much more complicated task ahead of them than Mom did when she settled Dad’s affairs.

They’ll have several more steps to go through – because the mother never retitled some of the father’s original assets.

Mom unknowingly made a difficult job even harder on her heirs by not getting everything transferred over when her husband passed.

Speak with an experienced estate planning attorney to make sure you have your assets titled correctly when a spouse dies.

Reference: Kiplinger (Aug. 24, 2022) “A Checklist for What to Do (and NOT Do) After Someone Dies”

Some Key Documents Should Be Considered Before Sending Your Child Off to College

In the United States, as soon as a minor turns 18, they’re typically considered a legal adult.

As a result, parents no longer have any authority to make decisions for their child, including financial and health care decisions.

Yahoo’s recent article entitled “Don’t Let Your Child Leave for College Without Signing Three Critical Documents” asks what if your adult child becomes sick or is in an accident and ends up hospitalized?

Because of privacy laws, known as Health Insurance Portability and Accountability Act (HIPAA), you wouldn’t have any rights to get any information from the hospital regarding your child's condition. Yes, we know you’re her mother. However, that’s the law!

You also wouldn’t have the ability to access his or her medical records or intercede on your child's behalf regarding medical treatment and care.

If your child’s unable to communicate with doctors, you’d also have to ask a judge to appoint you as your child’s guardian before being able to be told of his or her condition and to make any healthcare decisions for them.

While this is hard when your child is still living at home, it’s a huge headache if your child is attending college away from home.

However, there’s a relatively easy fix to address this issue:

Ask an experienced estate planning attorney about drafting three legal documents for your child to sign:

• A Durable Power of Attorney (DPOA) for Health Care. This document designates the parent as your child's patient advocate.
• A HIPAA Authorization gives you access to your child’s medical records and lets you to discuss his or her health condition with doctors.
• A DPOA for Financial Matters, designates the parent as your child's agent, so that you can manage your child's financial affairs, including things like banking and bill paying, in case your child becomes sick or injured, or is unable to act for any reason.

Reference:  Yahoo (Aug. 2, 2022) “Don’t Let Your Child Leave for College Without Signing Three Critical Documents”

Do Young Adults Need a Will?

Everyone, age 18 and older, needs at least some basic estate planning documents. That’s true even if you own very little. You still need an advance health care directive and a power of attorney. These documents designate agents to make decisions for you, in the event you become incapacitated.

The Los Angeles Daily News’ recent article entitled “Estate planning, often overwhelming, starts with the basics” reminds us that incapacity doesn’t just happen to the elderly. It can happen from an accident, a health crisis, or an injury. To have these documents in place, you just need to state the person you want to make decisions for you and generally what those decisions should be.

An experienced estate planning attorney will help you draft your will by using a questionnaire you complete before your initial meeting. This helps you to organize and list the information required. It also helps the attorney spot issues, such as taxes, blended families and special needs. You will list your assets — real property, business entities, bank accounts, investment accounts, retirement accounts, stocks, bonds, cars, life insurance and anything else you may own. The estimated or actual value of each item should also be included. If you have life insurance or retirement plans, attach a copy of the beneficiary designation form.

An experienced estate planning attorney will discuss your financial and family situation and offer options for a plan that will fit your needs.

The attorney may have many different solutions for the issues that concern you and those you may not have considered. These might include a child with poor money habits, a blended family where you need to balance the needs of a surviving spouse with the expectations of the children from a prior marriage, a pet needing ongoing care, or your thoughts about who to choose as your trustee or power of attorney.

There are many possible solutions, and you aren’t required to know them before you move ahead with your estate planning.

If you are an adult, you know generally what you own, your name and address and the names of your spouse and children or any other beneficiaries you’d like to include in your plan. So, you’re ready to move ahead with your estate planning.

The key is to do this now and not procrastinate.

Reference: Los Angeles Daily News (July 24, 2022) “Estate planning, often overwhelming, starts with the basics”

Do You Need a Revocable or an Irrevocable Trust?

Many seniors planning for the future may want to place their home in a trust for their children.

This is especially true if the house is paid off, and free and clear of a mortgage.

However, what would happen if the home were placed in a trust and the senior then decides to sell it?

Nj.com’s recent article entitled “Can I sell my house after I put it in a trust?” explains that there are two primary types of trusts: revocable and irrevocable. In this situation, placing the home in a revocable trust may be a wise option.

The assets in a revocable trust avoid probate but stay in the grantor’s control. That is because you can always change the terms of the trust or terminate the trust. With a revocable trust, the terms can be altered or canceled dependent on the grantor (also known as the trustmaker, settlor, or trustor) of the trust.

During the life of the trust, income earned is given to the grantor, and only after death does property transfer to the beneficiaries.

A grantor can be the trustee. In that way, the grantor is still able to live in the home and sell it and dispose of it as they want upon death.

Assets in a revocable trust are available to creditors and are subject to estate taxes upon death.

In contrast, an irrevocable trust cannot be changed or altered once it is established. In fact, the trust itself becomes a legal entity that owns the assets placed in it.

Because the grantor no longer controls those assets, there are certain tax advantages and creditor protections.

An irrevocable trust is best used for transferring high-value assets that could cause gift or estate tax issues in the future.

Trust are very complicated, so in any situation consult with an experienced estate planning attorney about whether to use a trust and to make certain that you create the best trust for your specific situation.

Reference: nj.com (Feb. 25, 2022) “Can I sell my house after I put it in a trust?”

What Can’t I Forget in My Will Now that I’m 50?

Yahoo News’ recent article entitled “If You're Over 50, Don't Leave This Out of Your Will, Expert Says” fills us in on what we can’t forget in a will after the big 5-0.

Incapacity. A 2021 survey from Caring.com says that almost two-thirds of adults do not have a will. Even those thinking about estate planning do not consider a plan for addressing the possibility of incapacity.

Ask an experienced estate planning attorney to create a power of attorney, so in the event you are incapable of making decisions because of your mental state or disability, you have someone you trust doing it for you.

More than a will. A will should be one component of a comprehensive estate plan that addresses who gets what when you die, but also who can take care of business, if you are not able to care for yourself. Naming a person in advance lets you to avoid having court involvement and lets you take control of your future.

The law has many ways for you to select who will have authority and care for you, if you become incapacitated. This is something that you can and should discuss with an experienced estate planning attorney.

Will backups. Designating loved ones you trust should be the rule in all facets of estate planning. However, it is critical to be certain that you have backups (“successors” or “alternates”), in the event that a person you’ve selected can't fulfill their role.

Many people around age 50 who see their thriving, productive children making their way in the world fail to consider the thought that their children may not be available or able to serve a role. Designating more than one backup might not seem like it is a big deal, but you should consider the possibility that a loved one might be incapacitated, predecease you, or be unavailable.

Keep your will current. As your life changes, so do your needs. Therefore, it is vital to be sure that your will is up-to-date. You should review your will regularly (at least every few years) to make sure that it still reflects your current thinking.

You should also be sure you know where an original copy of the will is located. It is important to keep track of it. You can leave it locked away with your attorney or some other secure place, but you need to know where it is.

Reference: Yahoo News (Feb. 6, 2022) “If You're Over 50, Don't Leave This Out of Your Will, Expert Says”

How Can I Clean Up My Estate Plan?

Chicago Business Journal’s recent article entitled “8 steps to tidy up your estate plan now” gives you some items to think about when working through your affairs.
Make certain that your plan is accurate and up to date. Your basic documents, which include your will, health care directive and power of attorney, should be in place and up-to-date. Review them to confirm that they’re consistent with your wishes and the current laws.
Review your named beneficiaries and fiduciaries. Confirm that the names of designated beneficiaries and fiduciaries are accurate. Most assets will pass under your will or through trusts, other accounts such as retirement, or life insurance may pass directly to a named (or contingent) beneficiary. If your planning circumstances have changed since creating these designations, update them.
Review your life and property insurance coverage. Be sure that these policies offer adequate coverage and meet their intended purpose. As your wealth increases, the planning purposes behind a term policy for risk mitigation purposes or a whole life policy to ensure ample liquidity upon death may become unnecessary. However, if your assets’ value has grown, you may need to re-examine if the current property coverage is sufficient to minimize your increased potential liability.
Ensure that your beneficiaries have enough liquidity. The estate administration process can be slow and tiresome. It’s possible that a person may not have immediate access to liquidity after a spouse’s death, depending on how assets are titled. A temporary (but major) burden can be avoided, by confirming at least some liquidity will be titled in or directly available to your spouse after you have passed.
Locate and compile important information and account identification. A difficult step in estate administration is locating a decedent’s assets. Make this process easier for loved ones, by creating a list of your accounts, property of significant value, liabilities and contacts at each financial institution. Make the list easily accessible to your family or executor, and update it whenever opening or closing an account.
Review digital assets and online accounts. These assets are frequently overlooked as to access and ownership after death. Instead of divulging passwords or allowing account access, you can add a “digital assets clause” to your planning documents. This lets named parties access specific items within the bounds of accepted legal standards.
Draft a letter of wishes. This document allows you to fully express your intentions and hopes, as well as any explanations or instructions you want to impart to your loved ones.
Plan to review. Repeat the review process regularly and calendar a reminder to give yourself an annual financial and planning checkup.
Reference: Chicago Business Journal (Dec. 2, 2021) “8 steps to tidy up your estate plan now”