How can you make it easier for your family to handle your affairs upon death or loss of mental faculties? What are the advantages and disadvantages of guardianships and powers of attorney? Karen McBride from Schweigert, Klemin & McBride explains in this week's "Ask an Attorney."
I want to do everything I can to make it easy for my family to handle things after I die, and also if I should not be able to handle my own affairs at some point.
• Good thinking
• Saves lots of trouble and expense to plan ahead
• Two part question
What would those two parts be?
• Start with plan for possible disability before death
• Talked before on this subject
• Everybody should have a POA
Remind us, why is that so important?
• If you should become incapacitated and you haven't done a POA, there is no one with the legal right to handle your affairs, or arrange for health care
• So there would usually need to be a court-ordered guardianship/conservatorship to get someone appointed to do those things for you
What's the difference between a guardianship and a conservatorship?
• A guardian is the person who takes care of you physically
• A conservator is the person who handles your financial affairs
• Often will be the same person, but doesn't have to be
You made it sound like this is probably not a good thing to have happen; why?
• Mostly because it's a pretty expensive court action
• POAs are cheap to do; no court involvement
• I call it a cheap insurance policy you hope you will never need
• If you have a POA, you shouldn't ever have to be in court for a guardianship
• Can happen if you have family fighting with each other; not impossible to happen, but very rare
• The court will almost always honor what you did in your POA if you were competent to sign it in the first place
• And usually there's no family fight, and therefore no court action
Why is a guardianship court action expensive?
• Statutory requirements requiring several outside people to become involved
• At least four highly paid professionals in these cases
• (1) Attorney who starts the case asking that a guardian be appointed
• (2) Physician to examine the person and report opinion to court whether 2 guardianship is needed, and how extensive it should be
• (3) Visitor (social worker) to talk with the allegedly disabled person, with the proposed guardian, with family, with anyone who might have information about the situation, and provide report and opinion to court
• (4) Guardian ad Litem (an attorney) to talk to all those same people and appear in court
• (5) Might also be a third attorney who actually represents the allegedly disabled person directly
• Hearing is required in all cases, even if the person has had a major stroke, for example, and clearly needs the guardianship
• Action often costs several thousand dollars to pay for all those professionals
• And then, after appointment, annual report to court every year
And a power of attorney is less expensive?
• Much cheaper; often less than $200 total for a husband/wife pair of POAs
• Less than that if the person is single
• And you're getting to choose the person you would want handling things for you
• In court, the judge is the one to do the choosing
But if you sign a power of attorney, doesn't that give your agent the right to simply take over even if you're not ready for that to happen?
• That's the big fear people have that keeps some from doing this
• No need to fear losing control
• We do "springing" POAs that can only be used if a doctor signs an affidavit saying that you're incapacitated so that the POA needs to "spring" into being
Okay, you said at the beginning that a disability during your life is the first part of the question, and apparently the POA is what you need if that should happen. What's the second part of this question?
• This person indicated they want things to be as simple as possible after they have passed away
• Whole separate issue
Why? doesn't the power of attorney take care of everything?
• No; everyone should have one just in case of disability occurring
• But POA can't be used once the person has passed away
• Separate planning needed for the post-death tasks
Well, we've talked about wills before; doesn't that take care of everything, if you do a will?
• Always a good idea to do a Will
• But the big question is, how do you own your property? • Might need a probate to pass it on to heirs you name in your Will
• Often can avoid the need for probate, by doing pre-death planning
What are some of the things this person could do?
• Very case-specific, so I'll just mention examples of good planning:
• Joint tenancy of home, bank accounts, etc., by a husband and wife
• No probate necessary on first death
• Just simple paperwork to fill out that puts title into the name of the survivor
That's on the first death, you said; what happens when the second spouse dies?
• Here's where careful planning helps
• For financial accounts, insurance, etc., name POD beneficiaries (spouse, then children, probably)
• No probate needed for them to receive that kind of thing after parents are gone
• Little trickier with land or minerals
• Seeing a lot of mineral ownership issues in recent years - oil boom
Can this person avoid a probate on land or minerals? you can't put a beneficiary name on a land deed, can you?
• Not as such, no
• Can do a TOD (transfer on death) deed where you keep full title and use until your death, but the title transfers without probate after you die to the people you've named
• Or sometimes a deed where you keep what's called the life estate, and your heirs would be what's called the remaindermen, who get it when you're gone
• Same type of situation, but easier to get rid of a TOD deed if you should ever want to sell
• Not enough time to discuss today, but we can get into that in another program
• Bottom line is that either course would avoid probate on that land or minerals
• Simple process to get title into heirs' names
• So both before and after death, we can make things simple for the people who come behind