Category: Incapacity Planning

The Marriage of Divorce and Estate Planning

August 11, 2016

In case you missed the series about the impact of divorce on estate planning, here is a brief recap of some points to consider.

1.  The Property Settlement Agreement may require that you maintain life insurance for any minor children.  If that is the case, then have you revisited your estate plan recently?  What obligations to maintain life insurance do you have?  Does the Property Settlement Agreement have certain requirements for the creation of a trust, and if so, what are those requirements?  Have the requirements of the Property Settlement Agreement been fulfilled or incorporated through your estate plan?  Are there any provisions of the Property Settlement Agreement that will survive death?

2. When was the last time you updated your beneficiary designations on qualified retirement accounts (e.g., 401(k) or IRA accounts), annuities, life insurance or payable on death or transfer of death designations on bank or brokerage accounts?

3.  What should happen to your real and personal property?  Are there steps you need to take to ensure your real and personal property are distributed to the individuals or entities you want to have benefit?

4.  If you are divorcing and have a disabled child, how is that child being provided for upon the incapacity or death of a parent?  Is eligibility for public benefits preserved through a properly structured special or supplemental needs trust?  Who has authority to make healthcare decisions for the child and in what manner?  Has guardianship been determined and the terms in which parents plan to share guardianship specified, if applicable?

5.  What happens if an estate plan already exists and you do nothing to update it?

#estateplanning #divorce @bgnthebgn

Elder Law Update – Changes to Laws Impacting Virginia’s Seniors and the Disabled

July 21, 2016

On July 1st (unless otherwise noted) a number of new laws took effect in Virginia that may have an impact on you.  Below is a summary of a few key pieces of legislation of which you should be aware.

Section 51.5-44.1 – It is a now a Class 4 misdemeanor to misrepresent your dog as a service dog to gain access to public areas with the animal.

SB 553 – Requires the Board of Health to promulgate regulations relating to audio and visual monitoring of residents in a nursing home by July 1, 2017.  The regulations are to address privacy, notice, disclosure, liability, responsibility for equipment, costs and security, among other items.

Section 63.2-1806 – An assisted living facility is not required to provide or allow hospice care at the facility so long as this is disclosed to the resident prior to admission and is otherwise allowed by Federal law.

Section 64.2-2019 – A guardian of an adult incapacitated person is not permitted to ‘unreasonably restrict’ an incapacitated person’s ability to communicate with, visit, or interact with others with whom they have had an ‘established relationship’.

Sections 37.2-817, 37.2-837 and 37.2-838 – A person being discharged from involuntary admission in general or to mandatory outpatient treatment who does not have an advance medical directive must now be provided with a written explanation of the process for executing an advance medical directive and a form of an advance medical directive.

Sections 64.2-2011 and 64.2-2014 – The Department of Medical Assistance Services must now be notified of guardianship appointments, modifications and terminations.

Sections 64.2-2001 and 64.2-2009 – In a petition for a guardianship and/or conservatorship of an incapacitated individual who has not reached age 18, the statute clarifies that the court may enter an order for such guardianship/conservatorship appointing a guardian or conservator prior to age 18, but the court order should state whether the order is effective immediately or when the person turns 18.

Section 63.2-1605 – When investigating financial exploitation of an individual age 6o or older, if the department of social services or adult protective services believes there is ongoing exploitation totaling more than $50,000, then the police are required to be told so an investigation can ensue.

Section 8.01-220.2 – The principal residence held by tenants by the entireties (i.e., ownership between spouses) cannot be used to pay for one spouse’s debt incurred for emergency medical care unless the property is refinanced or transferred to new owners.

Section 23-38.81 – ABLE savings accounts are excluded as countable resources for means-tested public benefits. (Effective October 1, 2016.)

#elderlaw #guardianship #Virginialaw #incapacityplanning #specialneeds @bgnthebgn

 

Digital Assets Under Virginia Law

July 14, 2016

In an earlier post, there was a discussion about Maryland’s Fiduciary Access to Digital Assets Act.  But what has Virginia done with respect to digital assets?  Virginia has not adopted the Uniform Fiduciary Access to Digital Assets Act (“UFADAA”) or any version of it.  Instead, in 2015 Virginia adopted a version of the Privacy Expectation Afterlife and Choices Act (“PEAC”).  Under this statute, a personal representative or executor may petition a court for access to certain information within a deceased individual’s digital records for the 18 month period prior to death.  However, the petition will not permit the personal representative to gain access to the content within the digital records unless it can be shown that the deceased individual consented, in some fashion, to have that information released.  If the deceased individual did not consent or deleted the information, the information will not be released.  Furthermore, the holders of the digital content have the ability to show an undue burden if they release the information, and therefore, can argue against disclosure.  The overall impact of Virginia’s statute is still being tested, and therefore, whether it is now simpler for a personal representative to gain access to digital assets is questionable.  Furthermore, the statute does not appear to apply to trustees, guardians or agents under a power of attorney or address access to such digital assets during any period of incapacity. 

So, what can you do to protect your digital assets but also ensure that your fiduciaries have authority to act on your behalf with respect to your digital assets?  You can make sure your last will and testament, revocable living trust and/or general durable power of attorney are updated to include authority and power regarding digital assets.  Moreover, you need to organize your digital assets by making sure the location of hard files and back-up files (i.e., in the cloud, on a USB drive, etc.) are known to your fiduciaries.  Your fiduciaries will need to be able to provide user names, passwords, answers to security questions and any other authentication methods associated with the accounts. 

Finally, your fiduciaries also need to know what digital assets are out there, so be sure to list the following information: e-mail accounts, domain names, online storage accounts (e.g., Dropbox), financial software, bank accounts, securities or brokerage accounts, types of devices, taxes, retirement accounts, credit cards, insurance (e.g., health, homeowners’, car, disability, etc.), debts (e.g. mortgage or car loans), utilities, social media, digital media (e.g., Netflix, Kindle, iTunes), membership or loyalty programs (e.g., frequent flyer accounts) as well as any other account that requires an online presence (e.g., Skype, Amazon or professional affiliations). 

When you really think about it, your digital footprint might be quite extensive and your fiduciaries need the information to be better able to provide for your care and handle your estate.  #estateplanning #incapacityplanning #estateadministration #digitalassets @bgnthebgn

Maryland Enacts Fiduciary Access to Digital Assets Act

July 7, 2016

On October 1, 2016, Maryland’s Fiduciary Access to Digital Assets Act will come into effect, thereby giving a fiduciary (i.e., personal representative, guardian, agent or trustee) or a designated recipient (i.e., a person named using an online tool) the ability to request access to a person’s digital assets in certain circumstances.  Digital Assets is defined as “an electronic record in which an individual has a right or interest.”  The Act allows an individual to direct whether their digital content is disclosed, to whom and to what extent.  This authority can be granted through an online tool provided by the custodian (e.g., Google has Inactive Account Manager or Facebook has Legacy Contact) or through an individual’s will, trust or power of attorney.  Access may still be subject to the terms of service agreement and gives the custodian of such information (e.g., Google) some discretion as to the breadth of the disclosure and the ability to charge an administrative fee.  If a request is made, the Act requires that a custodian comply no later than 60 days from the receipt of the request, including receipt of all the ancillary documentation associated with the request as detailed under the statute.

So, next steps for you?  When creating accounts be sure to look for whether the website requires you to complete an online tool.  You may want to opt out of using the online tool so that you can better control your wishes through your estate planning documents.  Furthermore, if you reside in Maryland, you should review and update your estate planning documents to ensure that access to digital assets has been addressed in accordance with your wishes.  Finally, you should create and store in a secure location a list of all your digital assets, including your credentials, so that your nominated fiduciaries know what assets to access during any period of incapacity and upon death. #estateplanning #estateadministration #digitalassets #MFADAA @bgnthebgn

How Divorce Can Impact Your Estate Plan – Property Settlement Agreements

May 19, 2016

With the increased divorce rate in today’s society, many individuals experiencing a divorce focus on the issues directly involved in the divorce.  For example, they may focus on spousal support, child support and the division of assets, but those same individuals forget that after a divorce or even during, there are additional considerations involving their estate plan.  This article is the beginning of several articles that will highlight a number of those additional considerations.  We begin with a discussion about property settlement agreements and the requirement to maintain life insurance. 

As a result of most divorces, a property or marital settlement agreement (“PSA”) is executed in an effort to dictate the obligations of each party to the other party.  In most cases the focus is on finalizing the PSA and not the effect of the PSA on other aspects of an individual’s life, such as his or her estate plan.  However, during this phase of the divorce, it may be helpful to consult with an estate planning attorney to ensure that the PSA permits some level of flexibility from an estate planning perspective. 

For example, if there are children from the marriage, very often the PSA will contain a provision requiring each party to maintain life insurance with a certain death benefit.  Thus, one spouse may be required to maintain five hundred thousand dollars ($500,000.00) of life insurance and name the other spouse as the beneficiary, name the children as beneficiaries or name the other spouse as trustee for the benefit of the children.  The purpose of such a provision is to provide a substitution for child support in the event of the death of either parent.  Very often the requirement to maintain the life insurance ceases when the obligation to pay child support ends.

But what happens if a death occurs and the life insurance proceeds are paid out to the former spouse directly or for the benefit of minor children?  In the first instance, the former spouse can receive and use the monies without much oversight.  Hopefully, the PSA specifies the permitted uses, but the PSA may be silent and/or the former spouse may disregard the PSA.  If the minor children are named as direct beneficiaries, then a court proceeding requesting guardianship of the child’s estate may be required and the court’s oversight continues until the child reaches age 18, at which point the child has the ability to receive unfettered access to the funds.  If the PSA simply states that the former spouse is to be named trustee for the benefit of the children, what are the provisions of the trust agreement?  Does the so-called trust remain discretionary and then become available when the child reaches age 18? 

The complexity surrounding the beneficiary designation and possible involvement of the court can be resolved if the PSA permits the parties to name a revocable living trust that would include provisions for the benefit of the children.  Therefore, the beneficiary designation is simpler since only the revocable living trust is named.  Moreover, a properly drafted revocable living trust agreement would contain provisions specifically detailing the trustee, dispositive provisions for the funds and handling any ‘what ifs.’  For example, what if the named trustee (i.e., former spouse) predeceases or what if a child predeceases, who will manage the funds and what happens to the funds in those circumstances?

In the case where complex estate planning exists, such as irrevocable life insurance trusts, the need to review the estate planning is important to prevent negative tax consequences and to ensure that the proper beneficiaries ultimately receive the assets.  Ideally, the initial drafting of such complex estate planning will take into account the possibility of a future divorce.  For example, the trust agreements can address what happens in the event of divorce with respect to a spouse continuing as a beneficiary and/or trustee.  The PSA would then detail how the assets connected to the complex estate planning are handled or distributed, and by revisiting the estate plan post-divorce, any necessary adjustments can be made.

Therefore, for those who have experienced a divorce or are in the midst of a divorce, have you revisited your estate plan recently?  What obligations to maintain life insurance do you have?  Does the PSA have certain requirements for the creation of a trust, and if so, what are those requirements?  It is better to begin to review all these issues sooner before an event, such as incapacity or death, makes it impossible to resolve later.  #estateplanning #divorce #lifeinsurance #revocabletrust

A Lesson from Sumner Redstone’s Competency Battle

May 12, 2016

For a variety of reasons, many have been following the drama filled court battle involving Sumner Redstone’s capacity that was dismissed earlier this week.  Unfortunately, a battle over control of an individual and his or her money is not an uncommon occurrence.  Typically, the higher the stakes the more likely a challenge will be lodged if a so-called beneficiary is cut out, which appears to be part of the rationale behind the Redstone case.  For the individual who has been cut out, there may be nothing to lose by objecting.  On the other hand, for the individual creating the Last Will and Testament or revocable living trust, there may be a desire to avoid a major legal battle between those beneficiaries who are to receive distributions after he or she is gone.  If that is the case, then one way to deter such a battle is to have a ‘no contest’ or ‘in terrorem’ clause.

A no contest clause simply states that if a beneficiary objects to the provisions of the Last Will and Testament or revocable living trust, then they run the risk of completely losing or diminishing their share of any distribution.  It may also mean that any of their descendants may lose or diminish their share depending on how the provision is drafted.  The goal is to dissuade beneficiaries from objecting and possibly overturning the intent behind certain provisions of the Last Will and Testament or revocable living trust. 

The use of no contest clauses depends on whether the jurisdiction in which one resides recognizes such provisions as valid.  For example, not all jurisdictions recognize such clauses within revocable living trusts.  Some jurisdictions place emphasis on a person’s final wishes as evidenced by the execution of a Last Will and Testament or revocable living trust and it is difficult to overturn that intent.  Other jurisdictions void such clauses if there is good faith, probable cause or reasonable justification for bringing a suit, which may lessen the deterrent factor in using a no contest clause.  However, these defenses also recognize that at times there are in fact valid reasons for objecting, such as undue influence, lack of capacity, or the like.  In all three neighboring jurisdictions (Virginia, Maryland and the District of Columbia), each recognizes no contest clauses in some fashion. 

Thus, it may be that in a case like Redstone’s, a no contest clause would have prevented court action.  But if there is a likelihood of litigation, the use of such clauses should be carefully considered.  #sumnerredstone #incapacity #competency #nocontestclause #estateplanning 

 

 

Caring for Pets As Part of Your Estate Plan

April 21, 2016

Many if not all of us have had a pet during our lifetimes.  But what happens to that pet if the owner becomes incapacitated or dies?  Virginia (Section 64.2-726), Maryland (Section 14.5-407)  and the District of Columbia (Section 19-1304.08) all have statutes that permit the creation of a trust for the care of a pet.  In determining how to provide for a pet during incapacity and/or at death, here are a few items to remember:

1.  The owner should ensure that, at a minimum, they have a Power of Attorney giving someone authority to take care of their pets using the owner’s monies to do so.   In addition, the owner should ensure that instructions for caring for the pet have been provided for in their estate plan.  This can be done in various ways including specific provisions in a Last Will and Testament or through a Revocable Living Trust.

2.  An owner of a pet may want to carry information in a wallet or purse that identifies the fact that he or she owns a pet, what kind of pet, where the pet is located and any special instructions regarding care.  The thought is that if the owner is unable to return home those going through the wallet or purse will find this information and ensure the pet receives the proper care.

3.  Along with other important papers relating to one’s estate plan, there should be a document that summarizes all pertinent information relating to the pet including any medical history, veterinarian’s contact information, allergies, likes/dislikes, etc.  The information carried in the purse or wallet would also be included and further detail provided, if necessary.

4.  Many pet owners now post a notice near their front door that they have pets in the house to alert anyone entering the home to be on the look out for the animals.

5.  If the owner is considering establishing a Pet Trust, then the following questions must be asked:
     a. Who will be named as caregiver for the pet?
     b. Will there be different caregivers for different pets? 
     c. Is the proposed caregiver willing to serve? 
     d. Who are the alternate caregivers?
     e. Who will be Trustee of the Pet Trust? 
     f. Will the Trustee be the same as the caregiver?
     g. Who will be successor Trustee?
     h. How much money should be set aside for the pet or pets that the Trustee will manage?
     i. What special care instructions should be included in the Pet Trust?
     j. How should the Trustee make distributions from the Pet Trust (i.e., to the caregiver or directly to the vendor)?
     k. Should any monies be paid to the caregiver from the Pet Trust?
     l. What should happen to any remaining monies upon the death of the pet or pets?
     m. Are there any specific burial and/or cremation instructions for the pet or pets?

There is certainly more information that can be included in the Pet Trust depending on the kind of pet, the standard of care, the amount of money to be set aside and the overall goals and objectives of the owner.   But these items will help you to start thinking about what happens next for your pets who are more likely than not a part of your family, and therefore, need to not be forgotten in any estate plan.  #pettrust #estateplanning #incapacityplanning #caringforanimals

National Healthcare Decisions Day – April 16

April 14, 2016

Previous posts have talked about you controlling your final moments and also how you want to be remembered.  April 16 is National Healthcare Decisions Day and provides a reminder that having a living will in which you express your wishes regarding life-prolonging procedures or choosing not to have a living will are crucial components in every estate plan.

To that end, during this past legislative session of the General Assembly of Maryland, a bill was introduced that would authorize a qualified individual to request aid in dying.  The Richard E. Israel and Roger “Pip” Moyer End of Life Option Act would have allowed individuals meeting certain criteria to request and receive from their physician a lethal dose of a particular medication.  The bill was withdrawn from consideration as it lacked enough support, but not before sparking public conversation about the topic.  At this juncture, there are four states that have death with dignity statutes: Washington, Oregon, Vermont and California.  In fact, California’s statute is so new it will only take effect in June.  Montana does not have a statute, but a 2009 Montana Supreme Court case (Baxter v. State of Montana) examined whether a physician could prescribe a fatal dose of medication to a terminally ill individual without being charged with a crime because consent was involved.  In the end, although attempts have been made to pass aid in dying legislation, Montana does not have a statute legalizing the practice and the Baxter case addressed a very narrow aspect of the practice.

Regardless of your position on death with dignity statutes, end of life decision-making and advance healthcare planning is an important conversation to have and to share with your loved ones and National Healthcare Decisions Day helps remind us of the need to begin the dialog on the subject.  @deathwdignity @NHDD #livingwill #estateplanning #endoflife #advancedirective #NHDD

Your final moments…

January 3, 2016

We may not know what Army veteran Matthew Whalen’s final wishes were, but one can imagine that dying so young was not in his plans although saving lives seemed to be part of who he was.  Many of us would like to control our final moments, but very often cannot. However, by having an advance medical directive and living will, we can control who is in charge of making those final healthcare decisions and provide guidance to our family and friends about end of life decisions and organ donation.  And, what is more important is that by establishing these directives, the conversations can be had with family and friends about those specific wishes and desires and avoid having to figure out what was wanted at an already stressful time. #advancedirective #estateplanning #livingwill #organdonation