Elder Law Issues

Say you need to get authority over your father’s finances because you don’t think he can manage them himself any longer. You know you need a power of attorney (POA). Can’t you just go online, download a financial POA form, and get your dad to sign that?

Last week we talked about Arizona’s online health care power of attorney form. It was put on the web by the Arizona Attorney General, and it’s based on the Arizona statute for health care powers of attorney. While we don’t exactly recommend you use it, it certainly is available, recognized and effective. So why can’t you find the same kind of form for financial powers of attorney?

Because they’re dangerous. That’s why. They’re dangerous for your father to sign, and they can even be dangerous for you to use.

In this week’s podcast episode, we talk about financial powers of attorney and why it makes sense to involve a lawyer in their preparation. We also explain why the Arizona state government doesn’t have a financial POA form online for you to download.

If you look around, there are a number of places you can download an online health care power of attorney. Some will assure you that they are valid in Arizona. A few are Arizona-specific.

For example, the Arizona Attorney General’s office provides a set of online form documents (they call it “life care planning“). Those forms come straight from the Arizona law on advance directives. The packet of documents includes a health care power of attorney, a living will, a mental health care power of attorney, and even a pre-hospital medical care directive (Arizona’s so-called “orange form”).

Do these online health care power of attorney forms work just as well as attorney-drafted documents? Can you save legal fees by just downloading the forms, completing them and getting them properly witnessed?

As we discuss in this week’s podcast episode, that might work just fine. But we customize your documents to cover your actual wishes. We assure that they are properly completed and distributed. We think we add value.

But here’s our biggest tip: once you’ve completed documents, don’t just sign whatever your doctor’s office, or the hospital admissions worker, puts in front of you. Make sure your advance directives properly reflect your actual wishes.

A month ago, a podcast listener asked us a series of detailed questions about self-settled SNTs (special needs trusts). We tackle the questions in this episode.

Actually, the listener’s questions didn’t specify whether their questions were about self-settled special needs trusts or third-party trusts. And the answers differ quite a bit depending on which trust type is involved.

So in two earlier podcast episodes (here and here), we addressed the questions for third-party SNTs. Those trusts hold a third-party’s money — like an inheritance set up by a parent of grandparent, for instance.

When the money was once directly available to the beneficiary, though, the trust has to be different. This comes up with personal injury settlements, direct inheritances (money left outright to a beneficiary with a disability) or accumulated wealth. It is harder to qualify for Supplemental Security Income and Medicaid benefits, and when a trust is created the options tend to be more restrictive. So we back up and tackle the same questions, about self-settled SNTs.

We do love to hear/read questions from our listeners. Of course, we can’t give individualized legal advice based on those questions. But they often give us an opportunity to explain a key part of the elder law that we practice — and love.

Purchasing Cars with Ashley? Wait: does Fleming & Curti, PLC, have a personal shopper for auto acquisition?

Not exactly. But because of our unusual service mix, one of the things we often deal with is setting up transportation for trust beneficiaries and others. That frequently means we use trust (or conservatorship) funds to buy or replace automobiles.

Meet Ashley Cooper. Ashley is one of the hard-working and thoughtful Fleming & Curti, PLC, employees, and usually is the main contact for vehicle acquisition, titling and replacement. And no, her name doesn’t indicate that we have any special deals with a leading automotive marque.

Of course that’s not all Ashley does. Join us for a review of some of the unusual duties Ashley has taken on in our fiduciary administration practice.

Consider the challenge: we need to make sure that transportation is available and reasonably priced. But vehicle management (and driving itself) is one of the main risks affecting many drivers and vehicle owners — not to mention trustees. So we have to regularly deal with buying, maintaining, insuring and replacing vehicles. And that doesn’t even address how to take title and (sometimes) assuring that someone can actually drive.

That’s why we think Purchasing Cars with Ashley is an interesting problem. Join us for this episode of Elder Law Issues, in which we talk with Ashley about her unusual job description and experiences at Fleming & Curti, PLC.

In our previous podcast episode we answered listener’s questions about SNTs — special needs trusts. This week we finish up with more questions about SNTs.

As we explained in that previous podcast, special needs trusts can be “self-settled” or “third-party.” The difference: follow the money. If the funding came from outside sources, the SNT is usually a third-party trust. If the assets came from the beneficiary herself (or himself), the trust is usually a self-settled SNT. When the trust’s assets came from outside sources the SNT may still be a self-settled trust — if the beneficiary could have claimed the funds outright.

These two podcast episodes concentrate on third-party SNTs. In a later episode, we’ll review the same topics and our answers and explain how they differ for self-settled SNTs.

We hear a lot of confusion about SNTs from our clients. Colleagues, accountants, investment managers and even eligibility workers often express confusion about the details. An entire industry of public benefits assistance tackles some of the most common problems — but often not particularly about special needs trusts.

We try to clear up some of the confusion, and address the most common questions we hear. One listener graciously submitted a list of questions that included most of those we hear most often. With thanks, we tackle those questions in this two-part series.

A listener sent us several questions about SNTs (that is, special needs trusts). We thought the questions were good, and if we talked about them it would give us a chance to explain a number of things about trusts for people with disabilities.

Broadly speaking, there are two different “flavors” of SNTs. Sometimes the beneficiary’s assets fund the trust (those are called “self-settled”). Others are “third-party” (that is, the money comes from someone else — a family member’s estate plan, for example). Those “third-party” trusts generally have more generous rules than their “self-settled” cousins.

When we get questions about SNTs, our answers usually have to be doubled-up. “If the SNT is a self-settled trust, the answer is …” we might explain. And then: “but if it is a third-party trust, the answer is different.”

In order to keep the “Answer A/Answer B” distinction to a minimum, we’ve decided here to answer all the questions only for third-party SNTs. When we recorded this podcast, it spanned two longer-than-usual sessions. In a third, later, session, we will go back over the same territory but for self-settled SNTs.

A word about terminology: we use “self-settled” and “first-party” interchangeably. We do not believe that there is widespread acceptance of a distinction between “special needs” trusts and “supplemental benefits” trusts, but some use the latter term for one (or the other) of the two types of trusts.

And there are actually four or five other types of special needs trusts to consider. We haven’t talked here about pooled trusts, or “Miller” trusts, or “sole benefit” trusts or “Qualified Disability” trusts because they are less common terms, not because they are unimportant. But we’d love to get your questions about those designations for later episodes.

What is the scope of duty for an agent on a power of attorney? Are there requirements, and limits?

First, language. The person you give authority to in your power of attorney is an agent, or an attorney-in-fact. They are not your “power of attorney”, as that is the name of the document itself.

Also, there is a difference between health care powers of attorney and financial (sometimes general, or just durable) powers of attorney. There are also other subdivisions of the power-of-attorney genre. Each has its own scope of duty.

Join us for our weekly Elder Law Issues podcast, as we discuss the duties and limitations on your attorney-in-fact (or, if you prefer — as we usually do — agent).

Trust administration rules are complicated. They involve state law on fiduciary duties. The trustee also has to worry about tax rules — estate tax, income tax, and even generation skipping transfer taxes. Trustees have to provide accounting information, and sometimes some formalities about the style and timing of those requirements. Property management — both for dealing with real estate and valuing, protecting, and distributing personal property — can add challenges.

Then there are the interpersonal dynamics among trust beneficiaries. Oh, wait: the trustee might also be a beneficiary, raising conflicts of interest as a possible concern.

In this podcast discussion, we review how some of those complex principles interplay with one another in the real world. Join us for a little role-playing exercise that might ring true with your own trust (and family) situation.

Though you might face difficulty with trust administration, there are a number of strategies you can use to minimize mistakes and problems. Good legal advice and a competent CPA can make all the difference. You should contact your professional advisers before you liquidate trust assets, make decisions about distributions (even small amounts of personal property), identify trust beneficiaries or respond to requests for more information. That’s exactly what those professionals train for.

In late 2019, Congress dramatically changed the rules on IRAs and other retirement accounts inherited from a deceased owner. We talked (and wrote) about the changes at the time. But now it’s time for an update on SECURE, the Act which changed the rules.

Lord knows there’s a lot of information available on the SECURE Act. In this podcast episode, we highlight the practical considerations we see clients grappling with every day. Rather than diving deeply into the rules, exceptions and special cases, we describe the practical impact on real people.

We also talk about how our clients need to reconsider their beneficiary designations in wake of the Act. We don’t intend (at least not here) to give comprehensive information on retirement plans and beneficiary designations. Instead, this is our 2021 update on SECURE and what it means. And, by the way, that includes some thoughts on how to deal with the IRA custodian after the death of the IRA owner.

[Notice that we talk — and write — about IRAs in this SECURE update. Generally speaking, the same rules apply to 401(k) accounts, 403(b)s and most other defined contribution retirement accounts.]

Last week we wrote (in our weekly newsletter) about how to modify a trust by restating it into a whole new trust document. This week’s podcast episode gives us a chance to talk about the idea — a sort of Restatements 101 class, if you will.

What is a trust restatement? Think of it as a new edition of your trust. Or, as we describe, maybe Your Trust 2.0 (or 4.0, or maybe even 9.0). The basic principle of Restatements 101: the restatement washes away the old trust document altogether, and replaces it with a new trust. But it keeps the same name, so nothing has to change in trust funding.

When do you want to restate your trust (as opposed to just amending it)? It depends, but we will recommend a restatement when there are multiple amendments, or you want to entirely remove language that no longer serves its purpose.

We sometimes use trust restatements for other purposes, as well. In Arizona, for instance, a trust “decanting” may be accomplished by a trust restatement (with, of course, good legal advice). But most often the trust restatement is just a tidier way of modifying the trust without having to keep multiple versions at hand.