Powers of Attorney, Living Wills, and Such: The Problem of Staleness

Remember when you were in your teens and still driving your parents’s cars? Every Friday night, it was the same routine, “Dad, Mom, can I use the car tonight?” And either the keys would come flying your way–or they wouldn’t. But when they did, you were off in a flash and out for the night.

IMG_2773Did you ever try to take advantage of that permission slip a day or two later? You know, as in, “Well, they gave me permission on Friday, it must be okay today”? I’ll bet you tried something like that at least once. I know I did. What was the result?

For me, it was a lecture and, if I recall correctly, my car privileges were revoked or some such. Why? The conditions that prevailed when my parents gave me the keys on Friday no longer existed on Tuesday. Now, Mom needed one car to go to a church function. Dad needed the other car to do business 20 miles away. In other words, my permission slip had grown stale.

Ever eaten stale food? Last night I cooked some boxed scalloped potatoes that were way past their “best-used-by date,” as in five years past. I can still taste the taste of stale in my mouth. Yuck.

Staleness can be a problem with powers of attorney, living wills, and the like as well. According to Jeremiah Barlow, an attorney with WealthCounsel.com, many financial institutions and hospitals won’t accept a power attorney, living will, and other such document if they’re more than two or three years old because, well, conditions may have changed. The principal–the person granting the power to the agent–may no longer have the need for an agent–the person granted the power–to do things for him. Or he may want someone else to do it.

Or, as the financial institution or hospital may be thinking, maybe the power of attorney or living will has been revoked or changed by the principal.

And so, it’s good practice to update–literally–any of those documents you may have signed years ago. Make them fresh again, so your bank or hospital will accept them. Update them, so they work when they’re supposed to.

 

Quote for the Day

Plans to continue the [farming] firm may be frustrated by the lack of a competent management team. This situation may be avoided by taking steps, such as the following, to prepare for the future:

  • Stressing the idea of a team approach to making decisions.
  • Focusing on developing management skills.
  • Emphasizing cross-training.
  • Developing a system of routine communications.
  • Implementing routine, nonthreatening evaluations.
  • Agreeing to share in the general work load of running a farm or ranch.

In one instance, a highly promising plan for the three sons and a son-in-law of a generous father, who was able to pass 160 acres of land to each one debt-free, fell apart in less than a year because none of the four anticipated having to do the laborious work in producing crops, feeding and caring for livestock, and doing the marketing and record keeping involved in a sizeable operation.

Neil E. Harl, attorney, “Farm and RanchEstate (and Business) Planning—Part 1,” Farms and Ranches, (March 2015)

Quote for the Day

 I have shewed you all things, how that so labouring ye ought to support the weak, and to remember the words of the Lord Jesus, how he said, It is more blessed to give than to receive. Acts 20:35

Quote for the Day

“Decanting is the act of distributing the assets of an old trust to a new one with more desirable terms. It provides an easy method for correcting errors or ambiguities, adapting a trust to changes in a settlor’s objectives or changes in a beneficiary’s circumstances, taking advantage of new planning opportunities or adding flexibility to a trust.”

Peter J. Melcher, Robert S. Keebler & Steven J. Oshins, “A Guide to Trust Decanting,” Estate Planing & Taxation, (2015)

What’s on Your Family’s Wish List?

I listened to an interesting seminar yesterday titled “Estate Planning in Agriculture: Protecting a Way of Life” sponsored by WealthCounsel.com. Stan Miller and Robert Serio were the presenters. Serio covered the Farm Service Agency (FSA) Subsidy Programs and the Natural Resource Conservation Service (NRCS) Programs. He cautioned attorneys to be careful to not to do anything in an estate plan that would cause their farmer and rancher clients to lose benefits under those programs. Quite interesting. I briefly reported on the take-a-way yesterday. 

Then Miller took over beginning with what he called “The Farm Family Wish List”:

  • Don’t disqualify for USDA subsidy payments and other government benefits,
  • Keep the court system of of the family business,
  • Keep the farm in the family forever,
  • Treat non-farming family members fairly,
  • Avoid the need to liquidate the farm in order to pay for the cost of long-term care, and
  • Avoid estate tax.

To that list, I would add “Avoid capital gains tax on appreciated property.”

Does Stan’s list mirror yours? What would you add to it or subtract from it?

More importantly, what have you done to make sure your wish list becomes a reality?

Quote for the Day

“Serving as an executor or trustee is neither an honor, nor a game for beginners to play. Acting as an executor or trustee requires technical skills, experience, and an ability to deal with the family members involved. Nevertheless, clients often choose an executor and the trustee without fairly evaluating the needs of the estate or trust against the named fiduciary’s abilities to meet those needs.”

Schlesinger, Edward, Fifty-Two Questions to Ask Before Choosing Your Executor and Trustee, Successful Estate Planning Ideas and Method Service (1986).

Farm Service Agency (FSA) Subsidy Programs: When 1 + 1 = 1

I’ll be brief, and in being brief, I’ll gloss over some details. But here’s the low down. A husband and wife farming couple can receive up to $250,000 annually in FSA program subsidies if they grow corn, soybeans, cotton, rice, and the like AND if they are actively engaged in farming AND if they are at risk of loss. Yes, that’s up to $250,000, but only so long as they are not considered “one entity.” (Yes, I realize that most couples don’t qualify for the maximum and that most receive much less, but this is a brief discussion, remember.)

The FSA treats joint trusts–essentially one trust for two spouses–corporations, and LLCs as one entity. Thus farm couples who fit the bill described in the first paragraph DO NOT want the enter into joint trusts, or they could stand to lose up to $125,000–per year. So if your estate planning attorney suggests a joint trust to you. think twice: will you lose out on farm subsidy payments if you go with a joint trust? If you would, then say no.

Quote for the Day

Regarding the benefits of so-called gun or NFA trusts:

In gun trust planning, it’s in some ways less important to know who owns an NFA firearm and more important to consider who has the right of possession. Access equals possession. A spouse or other family member with access to an NFA firearm registered solely to one family member could be considered in technical violation of the law.

 C. Dennis Brislawn, attorney

 

 

Quote for the Day

“It’s easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date.”  

Roger von Oech

Two-Year-Old Granddaughters and Estate Planning

My entire immediate family was in town for the last five days. My three children, my son-in-law, and my one grandchild–a two-year-old girl with lots to say and not enough words to say it.

Now actually, what I just wrote is true and not true at the same time. What I just described is that part of my immediate family that has my blood flowing through its veins (no, my son-in-law, doesn’t, but you get my point). I also have four sons by marriage, three daughters-in-law, and four more grandchildren, plus two very much on the way. I love them all and treat them as my own. That part of my family–colloquially known as my stepfamily–presents estate planning issues, issues I’ve discussed elsewhere and which I’ll return to in the future.

But today it’s that two-year old. She’s sparked some thoughts on the nature of estate planning. Sure it’s about the immediate future. I want my wife taken care of should I die. I want to pass something on to my children. I was to avoid taxes if possible. And on and on. But what about the two-year old? What do I do about her, if anything?

My daughter, her mother, turns 40 a month from tomorrow. Forty years old. Her little girl won’t be 40 for 38 more years. Will my estate plan be durable and well-thought-out enough to have an impact on her life? I most likely won’t be around then to make it happen. So what can I do?

Two thoughts come to mind: trusts and life insurance. Both tools have more permanence than I do. If set up and funded properly, both can be there when I can’t to make sure my hopes and dreams for my granddaughter are fulfilled. Yes, I could rely on her parents–and I might–but if I absolutely, positively want my hopes for her fulfilled, trusts and life insurance are the tools of choice.

How are you going to insure that your dreams for your family come true?

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