Is something missing in your estate plan? Do the documents that you rely upon still serve you and your loved ones? There are certain recurring estate planning shortcomings to be aware of.
In the event of incapacity is the power of attorney and living trust, as relevant, sufficiently robust to manage all important necessities? People who choose to grant “all powers” on the California statutory power of attorney incorrectly believe that doing so means that the power of attorney is sufficiently broad to cover all situations. In fact, special instructions are often required to be added to the statutory power of attorney to deal with particular planning goals. Consider a parent who financially supports a dependent adult child, does the parent”s power of attorney authorize the agent not only to pay the bills related to the parent”s household affairs but also to continue providing the same support to the adult dependent child.
Moreover, consider an incapacitated married person who needs skilled nursing home care and is trying to become eligible for Medi-Cal, does the person”s well spouse as agent have authority to gift the person”s residence and other assets to the well spouse to accelerate Medi-Cal eligibility and to preserve assets for the couple”s children?
The limited gifting authority provided in most powers of attorney does not contemplate such gifting and falls short. In fact using the power of attorney to make such unauthorized gifts would be a breach of the agent”s duty and a conflict of interest if the agent were gifting to him or herself. All of this needs to be expressly authorized in the power of attorney and/or trust.
Will there be an unintended probate at death? A not too uncommon misconception some people have is that having a will avoids probate — not true. With a will, an estate is subject to probate if assets — excluding certain assets — with a combined gross value more than $150,000 go to someone other than the decedent”s own surviving spouse. Do each one of the person”s non-probate assets have up-to-date and complete death beneficiary designation forms? Are both primary and alternative/contingent beneficiaries named? Not naming alternative beneficiaries can sometimes result in an unintended probate or in unintended distributions when a primary beneficiary does not survive to inherit.
Does the person”s estate leave assets outright to beneficiaries who — for any variety of reasons — should not receive outright inheritances? This may be because the beneficiary receives needs based government benefits, has substance abuse problems, has creditor problems or is unable to manage his assets.
It is much more feasible to identify and to correct inadequacies in one”s estate planning beforehand, when there is no compelling necessity to do so, than to remedy the situation after unfavorable events occur. A periodic update to one”s estate plan will bring peace of mind.
Dennis A. Fordham, attorney, is a State Bar-certified specialist in estate planning, probate and trust law. His office is at 870 S. Main St. in Lakeport. He can be reached by email at dennis@dennisfordhamlaw.com or call 263-3235.
