Paul O. Dillon, Attorney at Law

Why an Updated Estate Plan Is Critical, Especially Now

Without a properly prepared and current estate plan, property is distributed following the intestacy law of the decedent’s state of residence. In most cases, the laws are centered around kinship, with spouses and children dividing percentages of the estate.

If you had something else in mind, it wouldn’t matter—the time to create and update an estate plan is while you’re living. We all know this. However, many just keep procrastinating. A recent article, “Make sure your estate plan is updated to reflect law changes,” from Los Altos Town Crier, explains precisely what pitfalls your loved ones will face if you put off creating an estate plan until it’s too late.

Probate can be minimized or avoided with a professionally prepared estate plan. The probate experience varies with the jurisdiction: in some courts, it’s a streamlined process, while in others, it is a series of delays, sometimes stretching out over months or even years. The time and costs of probate also depend upon the complexity of the estate. In some states, probate can cost 4—7% of the estate’s total value.

An estate planning attorney works with clients to create a means of passing assets to their intended beneficiaries without court involvement. This takes many different shapes depending on the family, the value of the assets, the structure of ownership, etc. Trusts, payable on death accounts, joint tenancy ownership and LLCs (Limited Liability Corporations) are just a few means of passing wealth without involving probate.

Estate planning attorneys help clients control how and when assets are passed to heirs. For instance, if someone had a child who is exceptionally mature and responsible, they may wish to provide the child with their inheritance upon their death. A trust can be created to address the concerns of a family with an adult child who, for whatever reason, cannot manage money. The trust can have a trustee who will be charged with distributing assets according to directions provided by the parents—after achieving certain milestones, at specific ages, or when the trustee deems funds should be distributed.

Incapacity is unpleasant to consider but is as much a part of estate planning as planning for asset distribution after death. Without having a plan for incapacity, the family may be forced to go to court and petition for a supervised conservatorship, a costly and stressful process.

Incapacity or death are the last things on the minds of new parents. However, when a new child joins the family, updating an estate plan to include naming a guardian becomes critical. If there is no will or the will has never been updated to reflect the addition of children, the court determines who will raise the children. Any interested party may petition the court to be appointed as a guardian. The court ultimately makes the decision. However, the decision by the parents, as expressed in an estate plan, will have more weight than an estranged sibling.

An estate plan protects the family by lessening the chances of family disputes and legal battles, which can lead to lifelong divisions. A meeting with an estate planning attorney will give you insight into the importance of having an estate plan and how it serves as a gift to loved ones.

Reference: Los Altos Town Crier (Oct. 29, 2024) “Make sure your estate plan is updated to reflect law changes”

Estate Planning and Protecting Your Privacy

It’s never too early to start considering your estate plan and preparing for what you want to leave behind. This includes some things, like personal journals, you might not want to leave behind. These are just a few good points made in a recent article from yahoo! finance, “Planning your estate? Decide who gets your passwords—and who will burn your journals.”

If your journals are online, you’ll want to leave the platform information, login name and password of whoever you’ve decided is going to manage the journals after you’ve passed. You might consider following the example of one person, who has a pact with her estate planning attorney and close friend: whoever dies first will burn and delete all of their journals. They don’t have deep, dark secrets; they don’t want hurt feelings or misunderstandings with their family members.

Most estate planning focuses on dividing financial assets and personal possessions and deciding who will be the executor, the person in charge of administering the estate. However, there’s more than real estate and investment accounts to consider. Digital assets need to be addressed, and because they exist online and with no paper trail, they can become problematic.

Estate planning attorneys advise everyone to have an estate plan. Don’t think you have all the time in the world to do it, since we never know when an accident or diagnosis may occur. Think through all of your belongings, digital and otherwise, and make a plan so your loved ones aren’t faced with secrets or surprises.

Think of your estate plan as a kindness to loved ones. They are overwhelmed by grief and not in the best state of mind to make hard decisions, like figuring out what kind of end-of-life care you want. By having estate planning documents with specific directions, you’ve helped them through a tough time.

Some people are really good with details. One woman with no living relatives created a notebook with all her accounts and passwords and specific directions for what she wanted to happen with everything she owned, from real estate to a favorite vase. She also planned her own funeral, knowing there wouldn’t be anyone to do it, and having specific thoughts about what she wanted to occur. She listed the guests to be invited and a menu for the funeral luncheon, including who was to cater it.

Most people don’t go to this level of detail. However, it would be helpful if they did.

Regardless of your age, you’ll need to do some estate planning. Start by taking a look at your accounts. If there’s an option to name a beneficiary to inherit the account upon your death, write in a name. If you’re young, it may be a parent or a sibling. If you’re older, it’s more likely to be a spouse or an adult child. Create a notebook of your own with a list of your accounts, including digital assets.

Consult an estate planning attorney to create a will, and don’t neglect a Power of Attorney and a Healthcare Power of Attorney. These last two documents will permit a person of your choosing to take over financial and legal matters in case of incapacity. A healthcare power of attorney, sometimes called a healthcare proxy, lets a person of your choice make decisions regarding healthcare on your behalf. If you don’t have these documents, your loved ones will need to go to court and obtain guardianship and/or conservatorship if you’re too sick or are injured and can’t communicate your wishes.

For some families, the arrival of the holiday season offers many opportunities to discuss their hopes and plans. Even if you only touch on a few points, it might be a good time to start the conversation, providing clarity and promoting the understanding that these topics must be discussed in advance.

Reference: yahoo! finance (Oct. 24, 2024) “Planning your estate? Decide who gets your passwords—and who will burn your journals”

Do You Need an Estate Plan?

No matter your age or assets, estate planning attorneys know why everyone needs an estate plan, as explained in the article “Estate planning: Not just for the wealthy” from The Las Cruces Bulletin. The word “estate” is the legal term meaning all a person’s possessions. An estate plan also does more than distribute possessions after a person dies.

Establishing an estate plan protects people if they become disabled or incapacitated. If you can't, it allows you to name another person to manage your financial and legal affairs. This is done through a Power of Attorney. Once you have the right person and the right Power of Attorney in place, it will be easier for the business side of your life to be taken care of if you are physically or mentally unable to complete basic tasks necessary to maintain the business side.

If you die without a last will and testament, your property will be distributed according to the state’s laws. Suppose you become incapacitated and there is no Power of Attorney in place. In that case, your family must go to court and pursue a guardianship and conservatorship proceeding to take charge of your medical care and property. It is not only stressful and expensive. There may also be decisions and actions taken before the court finalizes these arrangements. The family won’t be able to do anything while waiting.

People often come to an estate planning attorney’s office only after experiencing the loss of a parent or family member who didn’t have an estate plan. When they have had to go through court proceedings, not be able to access accounts and wrestle with the many decisions surrounding settling an estate, they find themselves vowing not to put their own loved ones through the same difficult situation.

An estate planning attorney will also help the family prepare for things like funeral services. These are not easy conversations, but they are necessary if you want your wishes to be followed. If, for instance, your preference is cremation rather than burial, these wishes would need to be made clear. Do you want your family to follow your faith’s traditions in a memorial service? They might not if you don’t tell them.

Funeral and memorial wishes should not be in your will. The last will and testament may not be reviewed for several weeks after death or longer after funeral and memorial services. Your estate planning attorney will know the best way to include your intentions in your estate plan.

An estate planning attorney can also help create a Special Needs Trust, which is used if someone in the family is receiving government benefits because of a disability. These benefits are “means-tested,” and an inheritance could make the person ineligible and undo all their service plans.

All parents must have a last will, which includes directions for who they want to become their children’s guardian to ensure that people of their choice raise them. Otherwise, this is another decision to be made by the court. A family member may not necessarily be chosen to care for your children.

Finally, your estate plan protects the family when there are complicated relationships among family members. Blended families, families with estranged members, or economic disparities among children are especially vulnerable to family fighting when parents die, and assets need to be distributed.

Having an estate plan provides peace of mind for everyone. It establishes your wishes, provides direction, avoids conflict and allows the family to grieve without guessing.

Reference: The Las Cruces Bulletin (Aug. 28, 2024) “Estate planning: Not just for the wealthy”

What Should You Do when a Hospitalized Sibling Is About to Receive an Inheritance?

A woman learns she has a half-brother with no heirs who left her and a sister with a $3 million estate to be divided equally. The sister is a paranoid schizophrenic with a long history of not taking medication and was recently hospitalized after an incident involving the police.

A thoughtful article from Market Watch examines the issues being faced by the well-sister: “’She’s a danger to herself’: Our late brother left us $3 million, but my sister is in hospital with schizophrenia. Should I take control of her finances?”

Since both sisters are residents of Florida and the estate is going through probate, they are advised to retain an experienced estate planning attorney who focuses on setting up trusts for people with disabilities. One option is to have a Special Needs Trust created to plan for the sister’s care in the short and long term.

If the schizophrenic sister agrees to give the well-sister Power of Attorney, the well-sister could manage her sister’s finances. In some states, there is a Psychiatric Power of Attorney, similar to an Advanced Healthcare Directive or Medical Power of Attorney. However, the sister can only permit these documents to be created and executed when she is of sound mind and can make these decisions.

A Durable Power of Attorney gives one person authority to make financial and medical decisions for another. These documents can only be executed when the person has legal capacity. This is another reason why everyone should have these documents as part of their estate plan: We never know when they may be needed.

Another option is to put the sister’s funds in a trust to distribute funds regularly, which could prevent her from burning through the money in a short time. This is especially important if others might take advantage of her when she is suffering an acute episode of schizophrenia.

A conservatorship or guardianship may be necessary if the sister continues being hospitalized and is unwilling to grant her sister Power of Attorney. This is difficult when mental illness is the reason for incapacity, requiring more witnesses and documentation of the individual’s incapacity.

As many as approximately one in five adults suffer from mental illness at some point in their lives. Schizophrenia is a complicated mental disorder with psychotic symptoms, including hallucinations, delusions, paranoia and thought disorders. The unpredictability of the disease makes it more challenging than other mental illnesses.

An experienced estate planning attorney who understands how to structure inheritances when an heir suffers from mental illness will be an essential ally in this situation.

Reference: Market Watch (July 29, 2024) “’She’s a danger to  herself’: Our late brother left us $3 million, but my sister is in hospital with schizophrenia. Should I take control of her finances?”

Celebrity Estate Planning Mistakes to Avoid

It’s hard to miss the major mistakes celebrities make—their lives and deaths are public and not always pretty. Expensive mistakes on a grand scale aren’t what most of us deal with, but there are good lessons to learn from their mistakes, says a recent article from Market Watch, “Sharon Stone’s missing $18 million, Prince’s estate back in court: what to learn from celebrity estate mistakes.”

Eight years after Prince’s death, his estate is back in court, while Sharon Stone was in the news when she revealed $18 million in savings disappeared while she suffered a life-threatening illness more than two decades ago. For conservatorship stories, while we aren’t hearing much about Britney Spears anymore, Jay Leno has filed for conservatorship for his wife Mavis, who has dementia, and musical legend Brian Wilson of the Beach Boys faced conservatorship issues when his caretaker wife died, and another caretaker had to be named.

We expect people with great professional success to be surrounded by a small army of trusted caretakers, estate planning attorneys, accountants, managers, and others. And we’d also expect them to want to keep as much of their lives private as possible. But as headlines show, people who are incredibly talented performers aren’t necessarily skilled in the legal and business aspects of their lives.

In 2001, Sharon Stone suffered a stroke. It took seven years for her to overcome the effects of the stroke, and she counted on others to manage her affairs. When she was finally able to start taking control of her life, she found everything had been put into someone else’s name, and $18 million was missing from her bank account.

While she’s not forthcoming with details, this was likely a trusted person abusing their role as Power of Attorney, where a fiduciary was appointed without enough oversight. For regular people, an estate planning attorney could create a plan where, in addition to a Power of Attorney for certain accounts, like running the household, more considerable assets are placed in a trust, and the trustee is not the same person as the POA. Checks and balances need to be built into an estate plan to protect individuals in case of incapacity.

In cases where the fiduciary has performed poorly, and a family member challenges the results, the results are common. When the court reviews the matter, changes can be made to appoint another person to the POA. Courts can also step in to take over another person’s finances, but it usually doesn’t happen until after significant damage has been done.

A meeting with an estate planning attorney should include discussions about who is qualified to serve as a Power of Attorney and how their actions may be reviewed. In many instances, trust is not the issue, but competence is. Are they capable of managing the affairs of an incapacitated person? If not, another person should be selected, regardless of whose feelings might be hurt by the decision.

Reference: Market Watch (July 13, 2024) “Sharon Stone’s missing $18 million, Prince’s estate back in court: what to learn from celebrity estate mistakes”

Caregiving and Estate Planning Provides Peace of Mind for All Generations

If your goal is to keep the farm, ranch, or small business in the family, planning, including estate planning and caregiving, is the number one strategy to making it happen. Families may dissolve the farm or business without advance planning to pay for long-term care expenses. A recent article from AgWeek, “Caregiving plans can provide peace of mind for farming and ranching families,” explains what needs to be done.

Part of the issue is that most ranchers and business owners won’t qualify for Medicaid because they own a significant asset. Having to sell off something they’ve worked their entire lives to build is often a result of no planning.

If you have a long-term care insurance policy, it needs to be carefully reviewed to determine what conditions need to be met for benefits to be paid. For example, most policies have a “waiting period,” so you’ll need to plan how to pay for caregiving during the months before the policy kicks in.

There’s also confusion about the difference between Medicare and Medicaid. Medicare is health insurance for medical expenses, while Medicaid is usually used for long-term care and caregiving needs. However, Medicaid is a needs-based program. An estate planning attorney can help the family determine what needs to happen in advance, whether the goal is to protect the farm, ranch, or small business while helping the aging parent become eligible for Medicaid.

Estate planning includes planning for incapacity, which can occur at any time but is more likely as we age. Suppose the individual hasn’t completed a power of attorney, healthcare power of attorney, and other medical directives. In that case, the family will need to go to court to obtain conservatorship or guardianship to take over the person’s financial matters and make healthcare decisions on their behalf. An estate planning attorney can help the family prepare the documents and create a plan.

Having an estate plan in place is also another means of protecting the family’s assets from elder abuse. Everything needs to be documented, and records need to be well-organized so every family member knows where documents are, where assets are and the plan for the inevitable events of aging.

Meeting with an estate planning attorney to create the last will and testament, power of attorney and all other planning documents can minimize the stress and costs involved. Without planning, everything becomes far more complicated, costly and stressful for all concerned.

Reference: AgWeek (May 14, 2024) “Caregiving plans can provide peace of mind for farming and ranching families”

Do You Need Conservatorship or Power of Attorney?

There’s a long list of celebrities involved with conservatorship matters, although the thirteen-year conservatorship of Brittany Spears may have gotten the biggest headlines. A recent Paso Robles Daily News article, “Conservatorship or power of attorney? The answer it: it depends,” explains the difference.

A conservatorship occurs when a court appoints a person, the conservator, to oversee decision-making for another person. A conservatee is a person who has been deemed unable to make decisions for themselves or to care for themselves. Different states have different names for this process; in some states, it’s known as guardianship, and the appointed person is the guardian, with the person under their care known as their ward.

There are several different forms of conservatorship. They include:

• Of the estate, where the conservator has full authority over the person’s finances. The person may retain their physical autonomy but cannot access finances. Trusts are not included in this arrangement.
• Of the person, if the person has been found unable to make decisions about their life and physical health, including medical care but not medication for psychiatric care.
• Some states have specific conservatorships/guardianships designed to provide care by a conservator/guardian for people with mental health disorders.

A Power of Attorney gives one person many of the same abilities as a conservator, minus the involvement and required reporting to the court. The person who executes the POA must be legally able to do so; they cannot be incapacitated. The POA is useful for someone who is undergoing surgery, for instance, and knows they will be incapacitated in the future for a certain amount of time but wishes to have someone else take care of their affairs.

Similarly, an Advanced Health Care Directive (AHCD) gives another person the authority to make medical decisions on behalf of another person. Like a POA, the AHCD doesn’t require going to court to be executed.

Planning ahead and creating a Power of Attorney, Advanced Health Care Directive (sometimes referred to as a Power of Health Care Attorney), and other estate planning documents is how a responsible person ensures that their family is ready if something unexpected occurs. An estate planning attorney in your state can create these documents as part of your estate plan.

Reference: Paso Robles Daily News (March 12, 2024) “Conservatorship or power of attorney? The answer it: it depends”

How to Get a Conservatorship for a Parent

One woman felt she had no choice but to retain an attorney and petition the court for a conservatorship to manage her father’s finances. Her father had been targeted by a family acquaintance who tried to isolate him from his family. The acquaintance then married the widower and promptly took over his bank accounts. She was also appointed as the trustee of his revocable trust, as explained in an article from The Atlanta Journal-Constitution, “When it’s the right time to pursue conservatorship for your loved one.”

Conservatorship concerns the financial affairs of a person, managing assets and handling financial decisions for someone who cannot do so for themselves, whether from illness, injury, or other types of incapacity. A guardian is more concerned with the well-being and personal care of an incapacitated individual or minor, including day-to-day decision-making and healthcare decisions.

For the family situation mentioned above, the daughter researched ways to protect her father from losing everything. All resources pointed to conservatorship as the solution. The family was able to protect the father’s assets, including the nearly $200,000 eventually needed to provide round-the-clock medical care during his final year of life.

One daughter served as legal guardian, while a third-party county conservator managed financial matters. The pressure was relieved from the woman and her siblings by deferring the money management to a professional. Having a neutral third party handle finances allows the siblings to focus on their father’s care.

A conservatorship or guardianship is court-supervised and established when a person is deemed incompetent. By contrast, a Power of Attorney is a voluntary arrangement made while the person is still competent, offering a less intrusive alternative without court involvement.

In some situations, even when a Power of Attorney is in place, a court-appointed guardianship or conservatorship becomes necessary.

A conservatorship may become necessary because of significant mental decline from diseases like Alzheimer’s or a person’s inability to manage their personal or financial affairs. Anyone considering a conservatorship for a loved one must speak with an estate planning attorney. The attorney should have experience in probate courts, estate law, conservatorship and guardianship law and an empathic understanding of family dynamics.

People are advised to create estate plans as soon as possible, including executing an advance directive for health care and a durable power of attorney. If they lose their mental capacity without having executed a will, they leave themselves vulnerable to elder financial abuse.

Reference: The Atlanta Journal-Constitution (March 1, 2024) “When it’s the right time to pursue conservatorship for your loved one”

Wendy Williams’ Guardianship

Former talk show host Wendy Williams is the subject of a docuseries about her ongoing health and financial battles, which focuses on the months following the start of her guardianship in May 2022. Williams is far from the only celebrity ever placed under guardianship. As an NPR article reported, “Wendy Williams’ guardianship is the subject of a new documentary. Here’s how it works.”

In late February, Williams’ care team announced she had been diagnosed with primary progressive aphasia and frontotemporal dementia. Aphasia affects the ability to speak and understand speech, while frontotemporal dementia leads to a loss of function in the frontal and temporal lobes of the brain.

A guardianship, also known as a conservatorship, is a legal process when an individual can no longer manage their own affairs because of an illness, injury, or disability. In some states, there are different types of legal guardianships:

• Article 17-A Guardianship is for adults 18 or older with an intellectual or developmental disability, whose guardians can make the most decisions for them.
• Guardianship of a Child is requested by a parent or individual to be granted when there is concern that one or both parents cannot care for the child.
• Article 81 Guardianship is a type of guardianship where a judge gives a guardian the power only to meet the needs of the person deemed incapacitated, including managing their finances, property, personal needs, or both.

Guardianship cases vary depending on the person’s circumstances and what a judge orders the guardian to do. In many states, they are reviewed on an annual basis. Guardians must keep detailed records of everything they do, from financial transactions to health care decisions.

While individuals don’t always have the choice to choose their guardian, they can sometimes recommend a person they would like to be appointed to the role. A family member is often named. However, there can be an institutional guardian, including a banker or a professional guardian.

There are other ways a person can give someone else decision-making power, including Power of Attorney, typically appointed by the person and made legal with an estate planning attorney. No court involvement is needed.

Supported decision-making agreements are community designations for specific individuals in a person’s life to help make major decisions.

A person or organization approved by the Social Security Administration can manage a person’s Social Security or Supplemental Security Income benefits is known as a Representative Payee.

The ideal situation is when the person and their spouse or family meet with an estate planning attorney before or shortly after a diagnosis to create a plan and the accompanying legal documents so they can be part of the decision-making process for their future, whatever it may bring.

Reference: NPR (March 1, 2024) “Wendy Williams’ guardianship is the subject of a new documentary. Here’s how it works”

Brian Wilson’s Case Highlights Need for Secondary Agent

Beach Boys co-founder Brian Wilson has been diagnosed with a “major neurocognitive disorder” just about two weeks after his wife, Melinda, who had been his caretaker, died. Melinda, who died at age 77 on January 30, was also his agent in his advance care directive, reports an article from Market Watch, “Beach Boys’ Brian Wilson’s conservatorship case highlights an important—and sometimes necessary—estate planning tip.” Simply put, having one person responsible for your future health is not enough.

Wilson’s family filed for conservatorship with the Superior Court of California on February 14, and documents stated the musician, age 81, could not manage his everyday needs. Documents were filed because Wilson had not named a successor to his late wife, and a conservator now needs to be appointed.

The petition is for conservatorship of the person only, not the estate to manage the finances. Documents state Wilson is not able to provide informed consent to medical treatment, and the co-conservators would manage the care for his neurocognitive disorder.

Having a successor to the principal agent named in estate planning documents, typically a healthcare proxy or healthcare power of attorney can keep issues like this out of court and away from needing a conservatorship. Individuals may name one or more successor agents to step in if the primary agent is unable or unavailable to take on the role.

The family issued a statement explaining their decision to go forward with a petition for conservatorship. Their goal was to protect Brian from any major changes to the household and allow him and the children still residing in the home to remain there and continue to be cared for by a team of people who have cared for the family for many years.

The family told a reporter they had named family representatives LeeAnn Hard, Wilson’s business manager, and his publicist and manager, Jean Sievers, to serve as co-conservators. Hard is not asking to be conservator of the estate because Wilson’s assets are held in a trust, and she is a trustee. She is also his agent under a Power of Attorney.

The plan for the future is for Ms. Sievers and Ms. Hard to serve as co-conservators of Wilson, and if and when appropriate, they will file a petition for a substituted judgment to establish a new irrevocable Advance Health Care Directive for Wilson, which would terminate the need for a conservatorship of the person.

The Wilson case comes shortly after comedian Jay Leno filed for conservatorship of his wife, Mavis Leno, to carry out estate planning on her behalf.

Celebrities have been in the news for their lack of estate planning or leaving behind controversial documents, but Wilson did have some documents in order. The court hearing is scheduled for April.

The lesson here is to include successor agents in any plan concerning health, well-being, and property. Your estate planning attorney will be able to help you determine who the secondary and perhaps tertiary representative should be.

Reference: Market Watch (Feb. 16, 2024) “Beach Boys’ Brian Wilson’s conservatorship case highlights an important—and sometimes necessary—estate planning tip.”