How to talk to your parents about estate planning. Tips for the sandwich generation.

From our webinar on March 15, 2018, attorney Joel Beck shared the following:

I saw an article online from one of our local Atlanta television stations recently.It was a story about a couple from Arizona, Bob and Linda. Bob is a 75 year old retired navy veteran, and Linda is 70 years old. A few years ago, she began having health issues relating to her capacity, and has been diagnosed with dementia.Over time, Bob could no longer care for her at their home, and he moved her to an adult group home where she could receive better care.

As you can imagine, the bills for Linda’s care started adding up.

Bob wanted to tap into an IRA account that Linda had, worth about $25,000, and use some of those funds to help with Linda’s care.

The problem was that Linda had not done any estate planning to provide for situations like this. She had never signed a durable power of attorney giving Bob, or anyone else, authority to act on her behalf and manage her financial affairs.

When Bob went to see a lawyer to get help, he learned that because Linda no longer had the legal capacity to sign a POA, now, instead of just getting a POA for her that might run a few hundred dollars, Bob was going to need to petition the probate court to have a guardian and conservator appointed for Linda.

Bob explained that, to date, he had spent over $6,100 in legal fees and court costs on this, and expected that there would be another couple of thousand in fees as well. All of this – time, energy and a big chunk of money, to access about $25,000 in Linda’s account.

Bob told the reporter that interviewed him that – quote “Older people need help with Arizona probate laws.No one should have to go through this.”

I agree with Bob on that. People should not have to go through situations like that.

The good news is that these situations can often be avoided, and the process to do that is not complicated, time consuming or very expensive.

For those of you I have not met, my name is Joel Beck, and I’m the founder of The Beck Law Firm, LLC in Lawrenceville, Georgia.

In today’s presentation, I want to share with you some thoughts on talking with your parents about estate planning, and educating you on the basics of the three foundational documents that adults in Georgia should have.

I want to give you the basic information you need to know, so that you can have a discussion with your parents and help them understand some of the larger issues and concerns that they need to plan for, so that your family won’t have a story similar to Bob and Linda’s story.

Now for the disclaimer. This presentation is for general, educational purposes only, and it is not legal advice for you or your family.If you want legal advice, consult a lawyer directly, and in confidence, to receive advice specific for your situation.

When we think about estate planning, a lot of people think this just relates to a Will or a Trust. But a Will is only one piece of the puzzle, and the reality is that we need more than that to complete what we might call a basic foundational estate plan.

A good estate plan is going to also provide for the incapacity and end of life issues that adults may face. To help take care of these issues, here in Georgia we generally use the Durable Power of Attorney and the Georgia Advance Directive for Healthcare.Let me share with you a bit about each of these.

The Durable Power of Attorney


The Durable Power of Attorney is a document that lets the client appoint someone to be their agent, who can manage their financial affairs in the event of the client’s incapacity, or, as we do in some situations, for the convenience of the client even though the client is not incapacitated.

With a good durable power of attorney, the agent will be able to manage the principal’s financial affairs and do things like manage money in bank or investment accounts, pay the principal’s bills, deal with insurance issues and retirement benefits, handle personal and family maintenance, handle tax matters, and handle contracts on behalf of the principal. Further, it may also give the agent the ability to access the principal’s electronic communications – emails, online bills, and online accounts, etc.

This is increasingly important because so much financial management is moving from paper based to online, and people may get more bills and account statements online as opposed to paper in their mailbox.

Because this POA is durable, it is effective even if the principal is incapacitated. That’s what durable means.And ensuring that the POA is durable is really critical, as many people outlive their capacity and need help with these things.Think back to Bob and Linda’s story.

A well-written durable power of attorney will generally prevent the need for conservatorship proceedings, and that can save a lot of time, energy and money. If Linda had a Durable POA giving Bob authority as her agent, they almost certainly would not have had to face the issues that they did, as well as incurring the significant costs that they are incurring now.

One thing to understand as well, is that the POA terminates upon the principal’s death. A POA does not allow anyone to manage assets after the principal dies.

And, the principal may also revoke the agent’s authority under the POA as well, if they have the capacity to do that.

Last year, on July 1, 2017, Georgia’s laws regarding powers of attorney were changed significantly. And that’s really good.

To solve issues of financial institutions not always accepting a POA that was not completed on their own form, and to address other issues, Georgia enacted the Georgia Uniform Power of Attorney Act on July 1st of last year. This is a series of laws that is codified as Chapter 6B of Title 10 in the Georgia code.Look for O.C.G.A. 10-6B-1 and the following statutes if you want to read it.

But here’s what you need to know about this: Under the new act, the agent of the client has certain duties codified in the law, to help protect the principal from misuse of assets by strengthening penalties against the agent who takes advantage of or swindles the principal.

Importantly, under the new Act, a third party – such as a bank or other financial institution, can be forced to accept the POA (or at least forced into a formal process to seek to ensure that they accept the POA) and NOT require the client to sign a POA on their own internal form. This helps solve the problem where the principal may no longer have the capacity to sign the bank’s form.

But, there’s a catch. And you need to understand what that is: These provisions apply ONLY to a POA signed on or after July 1, 2017 AND the POA must be the form laid out in the new law, OR be substantially similar in language to that form.

A power of attorney signed last year prior to July, or several years ago can still be effective, but these third parties may still reject it and there is not a mechanism to force them to accept the POA. So, we’ve recommended that ALL of our estate planning clients sign a new POA that is valid under the new laws.

For your parents, you may want to ask if they have a POA, if they do, when it was signed. If it is prior to July 1, 2017, then they very likely need to do a new one, if they have the ability to do so.

Also, the new form POA also provides space for the client to designate someone to be a conservator for them, in the case that conservatorship proceedings are initiated. This may help insure that the client’s wishes are followed and that certain persons do not become involved in the client’s financial affairs against the wishes of the client.

Advance Directive for Healthcare

The Advance Directive for Healthcare is another foundational document that you should ensure that is in place for your parents.

The ADH essentially combines a living will and a medical power of attorney. It lets the client appoint someone to make medical decisions for them if they can’t do so, and also lets the client set forth how they want to be treated if they are in a couple of conditions, such as dealing with a terminal illness, or being in a comatose state.

The ADH came to be in Georgia almost eleven years ago, in 2007, and is now very widely used and accepted.

If your parents completed some good estate planning prior to 2007, then they would not have this document, but may have addressed the issues with a variety of documents including a living will and a medical POA. If so, they may want to execute a new ADH to streamline their planning, but if their earlier documents were done well, they will continue to work and they may be just fine for them today.

The important thing is to make sure that your parents have selected who they want to make medical decisions for them if they cannot make them for themselves, and also that your parents have specified how they want to be treated.

By making these plans, your parents get to have the people they trust in positions of authority for them, and also give some valuable input into their treatment. I think that this can help reduce the level of stress and anxiety for a healthcare agent who does not have to guess how mom or dad would want to be treated.

Having “the talk” with your parents.

Let’s talk about having “the talk” with your parents about this type of planning.

You’ll see here on the slide a couple of my general thoughts about this. When you get ready to chat with your parents about this, you might want to consult with your siblings first and get folks on the same page that good planning is important, and then plan to have a talk with your parents.

Now I’m not a social worker or counselor, I’m a lawyer. But it seems to me, that if I’m speaking with my parents about these issues, I want to communicate that I’m not trying to take things over. Instead, I want to make sure that if you can no longer manage your financial affairs or direct your healthcare, that the appropriate plans are in place where you have put the right people in place to do these jobs, and that you have documented your wishes in writing, in the legal manner.

I think that when the parent has made their choices, they can certainly take some comfort in that, in knowing that they are in control of the process, as opposed to perhaps having a judge that they don’t know, determine who is going to look after their healthcare arrangements and who will manage their finances, all subject to oversight of the court, and subject to the costs for that process. As Bob said, people shouldn’t have to go through that.

One more point to make – but this is for you- and not your parents: Understand that it is a good thing, in my view, that you are concerned about making sure your parents have their legal ducks in a row. But let me add this :be prepared that your parents may not choose you to handle certain things for them. You may not be the person selected to be their primary agent under a power of attorney, or to be their healthcare agent under an advance directive for healthcare. Just because you are encouraging your parents to make sure they have planned for these situations, does not mean they they’ll pick you. And it does not mean that you are necessarily the best person for the job.

From my perspective as a lawyer, if I’m working with the parents, I want to make sure that they have put the right people in place who can do the jobs at hand. I’m not concerned about stroking your ego. Who your parents choose in these different roles is not about who they love the most, or anything like that – I hope – it should be about who is appropriate for the job – about who has the capacity to do this work, and the knowledge and ability to do it. That may be you, it may be someone else.

Wills

Now let me quickly address a few points with respect to Wills.A Will is the third and final foundational document for most Georgia adults.

What you need to know is this: A will maps out a plan to distribute assets when someone dies.

The person names an executor to be in charge of this process, and to follow the will, subject to the probate court process.

Now, as an aside, probate in Georgia is not a bad word. It is not typically unduly burdensome, too expensive or inefficient. Most people are not concerned about avoiding probate; but some are, and for those people some additional planning beyond a will can be done.

Not all assets are passed down via a Will, and those assets that do not go through the Will are called NON-PROBATE assets. Examples of non-probate assets include life insurance policies, IRA accounts, 401(k) or 403(b) retirement accounts, as well as certain bank accounts with a TOD transfer on death, or a POD, payable on death, designation. Also assets held as JTWROS – joint tenants with right of survivorship -are going to be disposed of pursuant to that titling, and do not pass through the Will if there is a surviving owner.

The way that the common non-probate assets such as retirement accounts and life insurance proceeds are distributed is based upon how the person completes a beneficiary designation on file with the custodian of the asset. So, when you buy a life insurance policy or open up a retirement account, you select who should receive the asset when you die. You can generally list a primary beneficiary, and then s secondary beneficiary or beneficiaries in case the primary has died or disclaims the assets.

As your parents think about their Will, and their estate planning, they need to also consider how they have selected beneficiaries for these non-probate assets, and ensure that those are done in accordance with the parent’s wishes.

Special Situations

So far, I’ve hit on three foundational planning tools we use in GA – a Will, a Durable Power of Attorney, and an Advance Directive for Healthcare. For a lot of adults in Georgia, those three documents are all that is needed. But, for others, it may be appropriate to use some additional planning tools as well, including situations where a family has members with special needs, or blended family situations, and for persons who own small businesses, for example.

Dangers of Failing to Plan

Two big dangers I’ve seen over the years with respect to attitudes about estate planning are these:

1. I’ve got time. I’ll do my planning later.

Of course, the problem here is that we don’t know if we’ll be able to do it later. Unfortunately, I get way too many calls from loved ones wanting their parent, spouse, etc. to get some needed planning done, but we can’t do it because their loved one has lost their legal capacity to execute the documents. They are no longer of sound mind.

Capacity is an issue, but so too is sudden death. We just don’t know how long we have.

And the attitude about taking time is not limited to just putting together initial documents, but extends to reviewing and updating plans, as well as reviewing and updating beneficiary designations.

2. The second danger I see is this: I’m not worried about some of these things, because my son or daughter, or whoever, they’ll do the right thing.

Here’s what you need to know. When we talk about planning for incapacity concerns, doing the right thing does not mean that it will be easy or cheap, or even possible. Think back to the story of Bob and Linda. A lack of planning meant going through a costly guardianship and conservatorship proceeding that sucked away a chunk of change, and I’m sure it also increased the stress level on the family, too.

I want my parents to know that the right thing to do is for them to get this basic planning done, so that they are involved in making critical decisions, and that if they become incapacitated, there is a plan in place that can be followed by the people that they have chosen to help them.

Conclusion

Well, that’s it. We’ve covered the basics of what you need to know to begin to talk with your parents about estate planning in Georgia. I hope you found the information shared today to be helpful.

If you’ve got questions, I invite you to contact me. I’d be happy to chat with you and see how I can be of help.If you’d like more information about estate planning in Georgia, just call our office and request it. We have a kit we can send you in the mail, free of charge and no strings attached, that you’ll find helpful and informative.