Elder Law Issues

Clients often ask to set incapacity standards in their trusts and powers of attorney. Typically, they might suggest a requirement that two physicians certify incapacity before a successor trustee, or an agent, may act.

We discourage these limitations. In practice they cause more problems than protections. Anyone tried to get a physician to write a letter recently? Compound that with two letters. And who is your physician, anyway? Is your primary care actually in the hands of a nurse practitioner? If you’re in the hospital, or have moved to a facility, who is responsible for determining your level of capacity.

A recent case in our office pointed out the folly of rigorous incapacity standards. The document required two physicians licensed in the state where the signer lived when he executed the documents. But he hadn’t lived there in a year or more. He couldn’t sign new documents at this point.

So what did we do? We filed a court proceeding to determine his capacity. In other words, the very kind of action he intended to avoid by planning ahead and signing a power of attorney and a living trust.

We frequently see one of the same handful of trust administration misunderstandings. From the length of time required, to the tax effect, to the court’s involvement, there are a batch of common misunderstandings.

Do we have to go to court? Can we do anything to cut off creditors’ claims? How long does it take? Can the trustee make distributions right away? These are some of the issues we discuss in this week’s podcast episode.

You may have heard of an after death checklist but what does it contain? Losing someone you love is always difficult so people often find keeping a list helps them stay organized through the chaos.

Should you prioritize getting death certificates? Should you notify Social Security or the various places your loved one did business with? Did your loved one have pets that need care? What about firearms, creditors and real estate?

Today we discuss the most important things to do right after a loved one has died.

Have you ever heard of an Advance Directive? Do you know what this document is? How do Advance Directives work in practice? What is the difference between an Advance Directive and a Health Care Power of Attorney?

Probably the best question: What is the difference between having a law firm create an Advance Directive for you versus filling out a form online or at the doctor’s office?

We will discuss these questions. Your health care wishes are unique and we believe you should understand how the medical community uses Advance Directives in practice.

Remember: we practice law in Arizona, and are telling you how things work in our state. In other states you might see different results.

Are you considering buying a house for your child? Or maybe helping finance the purchase with a loan or gift?

We have so many questions for you. Are you planning on taking a note back, secured by an interest in the house? Or maybe jointly owning it? And what effect will either of those choices have on your own credit rating, income, and taxes?

Not the least important question: how will buying a house for one of your heirs affect your estate planning for the others? Will the house be treated as an advance on their inheritance? What about gain in value of “their” house between now and your death? If you buy it in your own name, can they afford to “buy” it back from your estate (by paying off their siblings’ interests, for example)? And at what price.

We discuss these and other questions about the idea of buying a house for one of your children. We think your gesture is generous, and we hope they appreciate it. But there are complications.

Should you name co-fiduciaries in your estate planning documents? In other words, should you name your two (or more) children to serve as joint successor trustees, or personal representatives, or agents?

Our short answer: no. Co-fiduciaries do not generally make things easier or fairer — they instead are likely to create additional confusion and disagreement. And with two people in charge, it’s harder to identify who is responsible for which steps.

The inclination is common. I love my children equally, and don’t want to choose one over the other. So I want them to serve as co-fiduciaries. They mostly get along, and they work together well. What could go wrong?

A lot. And not just in their relationships with one another. Think about your banker, your stockbroker, your real estate agent. Do all of them get along with your children, too?

Arizonans can hold title to a vehicle your name, in joint names or in the name of your revocable living trust. Which should you use?

As it happens, it’s easy to transfer title to a vehicle after your death. Married couples often hold title in “or” form (e.g.: John or Mary Doe). That amounts to the same thing as joint tenancy. Either John or Mary can transfer the title, and either can transfer title after the death of the other.

But even if there is only one name on the title, most vehicles can be collected by a simple affidavit of collection. That simplified method works in Arizona for up to $200,000 of personal property.

Arizona even permits a “beneficiary designation” for vehicle titles. You can download the form on the Arizona Department of Transportation’s Motor Vehicle Division website and simply attach it to your vehicle title.

So should you transfer title to your vehicle(s) to your trust? Mostly we think it’s more trouble than it’s worth. But join us for our podcast and we will explain more fully.

Keep in mind that we are Arizona lawyers, and we’re explaining Arizona law and process. In other states, well, your mileage may vary.

We usually agree to joint representation of spouses in estate planning. Most married couples would be surprised to hear that there is any controversy or concern about that kind of arrangement. But joint representation is actually an ethical challenge for lawyers.

We try to make sure married couples understand that there are tradeoffs in having us represent both spouses. This is true for any lawyer, incidentally. Your lawyer owes you a duty of disclosure AND a duty of confidentiality. That usually works just fine when a married couple is in agreement about their plans, and willing to waive any conflict. But we don’t know that the joint representation will remain appropriate for the long haul. If and when things change, it may be too late to pull away from the dual role.

We are generally comfortable if married couples agree to waive the potential conflict. And we are not interested in creating conflicts where none exist. But it is usually not such a simple concept to create joint representation. Once we do embark on the arrangement, we remain alert to the possibility that things might change.

How do we know that there is a growing problem? Perhaps one spouse calls and asks whether they could unilaterally change their estate plan. Or they tell us that they are separating from their spouse, or that their spouse has become demented. In each of those circumstances, joint representation can be a concern, and we may have a duty to disclose the contact to the other spouse. And that may be true even if there has been a prior waiver of the conflict.

And, by the way — the exact same concerns arise in joint representation of unmarried couples. Except, perhaps, that there is an even higher likelihood of things getting crosswise down the road.

Are there alternatives available to creation or management of small trusts? Of course there are. We talk about several of the most common alternatives in this week’s podcast episode.

In the appropriate circumstances (and after good legal advice) an Arizona trustee might be able to simply terminate the trust and distribute the balance to the appropriate beneficiary or beneficiaries. Sometimes it might be advisable to look into a Uniform Transfer to Minors Act (UTMA) account. Other trustees might consider educational account arrangements (like a 529 account) for a beneficiary or, if the beneficiary is disabled, an ABLE Act account.

Be careful. Get good legal advice. But consider some of the alternatives for managing a small trust.

Even earlier than that, an individual or couple thinking about establishing a trust might consider some of those same alternatives. Creation of what might turn out to be a small trust might not be the best — or only — choice. Or the creator (settlor) of the trust might want to expressly give the trustee some flexibility. That might inlude some of the same alternatives to consider once the trust is established. Of course, the settlor of the trust might not be able to anticipate exactly what the circumstances might turn out to be later. And what seems to one person like a small trust might actually be a very substantial amount to the beneficiary or others involved.

As always, get good legal advice. And, as always, we want to make clear that our information relies on Arizona law. The rules might be different in your jurisdiction.

Do you have a spendthrift provision in your trust? Have you wondered how that actually works? In this week’s podcast, we discuss the mechanics of spendthrift trusts and how a trustee might interpret the limitations — and the authority.