Paul O. Dillon, Attorney at Law

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.”

Prevent Difficulties in Probate with Advance Planning

If you think gathering your papers, passwords, logins, account information and estate planning documents is a challenging task, consider your heirs trying to do it after you’ve passed and while they are grieving your loss. By preparing all the information they’ll need, you’ll make their inheritance process as easy as possible, says a recent article from Next Avenue, “6 Ways To Save Your Heirs from a Painful Probate.”

A List of Passwords for Hardware, Online Accounts and More Our cellphones, tablets, computers, online accounts and other technology all hold important information. If your executor tries to access information and accounts, they’ll need more than your passwords. If you have accounts with two-factor authentication, for instance, they’ll need to be able to access your email and/or cellphone to access other digital assets. The list should include things like social media usernames and passwords. The information must be kept somewhere safe where a spouse or executor can find it. Some tech platforms allow you to name a legacy contact with the right to access accounts after you pass. A password manager system might be helpful. However, this may add another layer of frustration for non-technical people.

List All Assets and Accounts with Contact Information. Whether you use a spreadsheet or a notebook, this is crucial information. Make sure to include investment accounts, checking and savings accounts, 401(k)s, IRAs, pension accounts, brokerage accounts, etc. Provide contact information for your estate planning attorney, accountant and financial advisor.

The information must be well organized because it will be a lot of data. Your executor will also need the accounts for running your household, paying utilities, mortgage, cable, etc. The same goes for health insurance, Medicare or Medicaid information, life insurance policies, car insurance and deeds to your home and car.

Tell the Executor and/or Heirs Where Your Information is Located. One estate planning attorney reports receiving a few monthly calls from grieving heirs who have no idea where the estate planning documents are, who takes care of the financial accounts, or how to access these accounts. Sometimes, the calls come from people who aren’t even clients but are hoping there might be some special resource known to estate planning attorneys to provide this information. There is no such thing.

Plan for the Unexpected A significant part of estate planning is planning for financial and healthcare decisions while you are still living. A living will details whether or not you want to be kept alive by heroic or artificial means, and a power of attorney authorizes someone to make decisions on your behalf. Without a POA, the person may recover from their medical emergency to find a financial mess of late bills, missed insurance premiums, or a host of issues that could have been dealt with on their behalf. Without healthcare surrogate documents and discussions of your wishes in difficult health situations, the family will need to make difficult healthcare decisions in highly stressful situations.

If the proper documents are not in place, the family must go to court to have someone named a guardian, who can then make health care decisions for you. The same process will be needed to have someone manage your financial affairs, called conservatorship. These are expensive and invasive court processes that can easily be avoided.

Talk with your estate planning attorney and family members to plan for the future. You’ll all feel better knowing that you’ll all be prepared when difficulties arise.

Reference: Next Avenue (Jan. 9, 2024) “6 Ways To Save Your Heirs from a Painful Probate”

Why You Need Two Kinds of Power of Attorney Documents

Wills and trusts are used to establish directions about what should happen to your property upon death and who you want to carry out those directions, explains an article from Coeur d’Alene/Post Falls Press, “Power of attorney documents come in two main varieties—do you have both?” However, the estate planning documents addressing what you want while you are still living but have become incapacitated are just as important. To some people, they are more important than wills and trusts.

A comprehensive estate plan should address both life and death, including incapacity. This is done through Power of Attorney documents. One is for health care, and the other is for financial and legal purposes.

A Power of Attorney document is used to name a decision maker, often called your “Agent” or “Attorney in Fact,” if you cannot make your own decisions while living. You can use the POA document to state the scope and limits the agent will have in making decisions for you. A custom-made POA allows you to get as specific as you wish—for instance, authorizing your agent to pay bills and maintain your home but not to sell it.

The financial POA document gives the chosen agent the legal authority to make financial decisions on your behalf. In contrast, a Health Care Power of Attorney document gives your agent the legal authority to make healthcare decisions on your behalf.

By having both types of POA in place, a person you choose can make decisions on your behalf.

Suppose you become incapacitated and don’t have either Power of Attorney documents. In that case, someone (typically a spouse, adult child, or another family member) will need to apply through the court system to become a court-appointed “guardian” and “conservator” to obtain the authority the Power of Attorney documents would have given to them.

This can become a time-consuming, expensive and stressful process. The court might decide the person applying for these roles is not a good candidate, and instead of a family member, name a complete stranger to either of these roles.

The guardianship/conservator court process is far less private than simply having an experienced estate planning attorney prepare these documents. While the records of the legal proceedings and the actual courtroom hearings are often sealed in a guardianship/conservatorship court process, there is still a lot of personal information about your life, health and finances shared with multiple attorneys, the judge, a social worker and any other “interested parties” the court decides should be involved with the process.

For peace of mind, having an experienced estate planning attorney prepare these documents when creating or updating your estate plan is a far better way to plan for incapacity.

Reference: Coeur d’Alene/Post Falls Press (Oct. 11, 2023) “Power of attorney documents come in two main varieties—do you have both?”

Pros and Cons of a Will vs. a Trust

There are many estate planning strategies available for passing your financial legacy across generations, but what works best for one family may only work for some. Some of these estate planning tools work best together, says the recent article, “Which Is Best For Your Estate Plan: A Will Or Trust?” from Forbes. One of the key differences between a will and a trust? Property passed through a will goes through probate, and property owned by a trust avoids probate.

There are pluses and minuses to probate. The best-known disadvantage of probate is its cost and the time it takes to settle matters. Probate requires a complete inventory of the estate’s assets and liabilities to be compiled and submitted along with the will to the court. The court then reviews these documents and allows people to challenge the will. Assets may not be distributed to heirs until the court approves.

There are fees associated with probate; in some states, going through probate can be costly, even if the estate's total value is small. Probate is a streamlined process in other states, making it less expensive and time-consuming. These states reserve the traditional lengthy process of probate for high-value estates. Your estate planning attorney will know the process in your jurisdiction.

Another issue for heirs is the lack of privacy in the probate process. Once the will is filed with the court, it is open to the public. Many celebrity wills are available online. One famous American actor and singer, Bing Crosby, is said to have revised his estate plan by moving most of his assets to living trusts after his first wife died and details of her will became public.

Many wealthy people and celebrities transfer most assets into trusts to avoid publicity. However, the public scrutiny of a will and probate has certain advantages. Probate provides checks and balances. In addition to the court reviewing the details, heirs and potential heirs can see the asset inventory presented to the court and the details of the estate’s distribution. This provides an opportunity to see if assets are missing or if someone seems to have persuaded the decedent to change the terms of a will.

A will is more likely to be challenged than a trust since trust details remain private. The rules for challenging wills are well-established. Some people choose to use a will because it seems easier to change their minds about how they want assets to be distributed. With a trust, you have to name the trust as a legal property owner. This is done by transferring the legal title of the property to the trust. The trust must have legal title to assets to be funded and to work properly.

A revocable or living trust provides for a smoother transition of management and property ownership. The grantor—the person who establishes the trust—serves initially as the trustee and manages the property. Successor trustees named in the agreement automatically take control of the trust if the grantor becomes incapacitated or dies. There is no court involvement.

When a will is used, title to property first passes to your estate and eventually to final beneficiaries. If you become disabled, whoever holds your power of attorney must present it to financial institutions and have the POA accepted before they can manage assets. If there’s no POA in place, the courts will need to be involved in a conservatorship or guardianship proceeding.

Trustee transitions aren’t always smooth, as financial institutions must decide to accept the authority of a successor trustee, which requires a high degree of substantiation before recognizing the trustee’s authority.

Each estate plan needs to be designed for the needs of the individual situation, and all the details must be carefully managed. By working with an experienced estate planning attorney, your family and your legacy will be protected, and your goals for efficiency and privacy can be met.

Reference: Forbes (June 25, 2023) “Which Is Best For Your Estate Plan: A Will Or Trust?”