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Powers of Attorney

Tuesday, November 1, 2016

Top 10 Estate Planning Mistakes


We’ve all heard at least one estate planning horror story.  Or we’ve seen one on TV.  The surprise mistress that is given a large cut, the one child that has been written out of a will or feuding family factions each producing a different copy of the will.  It all makes for great TV and great drama, but chances are, you aren’t leaving your estate to a secret lover and you don’t want your estate plan to create a lot of undue stress.  But despite your best intentions, there are mistakes you could be making – unknowingly – that could produce a lot of drama after you’re gone.


Read more . . .


Thursday, July 9, 2015

Procrastinating & Estate Planning

Many people feel guilty about procrastinating about their estate plan. But procrastination is normal. Frankly, not many people want to consider their own demise. But you can't wait until it's too late to start your estate planning. Remember that it's not just about you, but it's about your family and legacy. The younger you are, the more options we have to protect your estate and the easier it is to plan.

Make sure you have valid Powers of Attorney, a will and/or a trust, and any other estate planning tools that your attorney deems necessary.

Estate planning is not just about tax planning. Today, it's about a few more things:

  1. Your legacy -- in this complex world, a poorly written estate plan can tear a family apart forever.

  2. Your long-term care plan -- we are living longer, and long-term care is expensive. How will you protect your family while paying for your long-term care?

  3. Asset protection for your loved ones -- no one wants their hard earned savings to be part of their heir's divorce settlement, lawsuit judgment or creditor claim.

Now is the best time to plan or review your existing plan. Call our office today at (215) 706-0200 to schedule your complimentary telephone consultation at a time convenient for you.


Monday, April 6, 2015

10 Questions: Powers of Attorney

In this blog, we explore 10 common questions about Powers of Attorney in Pennsylvania. Powers of Attorney are a fundamental part of your estate plan, so make sure you see an estate planning attorney to discuss your Powers of Attorney. 

  1. Why do I need a Power of Attorney? A Power of Attorney (POA) is important in case you become incapacitated, or you are incompetent and cannot manage your own affairs. An “agent” (the person you appoint as Power of Attorney) steps into your shoes to take over all of the activities and responsibilities that you can no longer handle. Because life expectancy continues to increase, there is more of a chance that any of us becomes incapacitated during our lifetime.

  2. Who should be my Power of Attorney? Choose a person that you trust wholeheartedly. I always tell people to choose your agent based on your gut feeling. If you have reservations about the person you chose, then it’s the wrong person. Try to choose someone who is local, responsible, competent, and typically younger than you.

  3. What happens if I become incapacitated and do not have a Power of Attorney? Guardianship proceedings may be needed if you do not have a POA at the time of incapacity. Guardianship is granted through the courts, and is burdensome for all parties involved. Worse, you have no say in who your guardian is. If several people try to become your guardian, then there are contested guardianship proceedings, which can drain your assets and leave you with a guardian who you don’t even know.

  4. If I am appointed as someone’s Power of Attorney, what are my responsibilities? You have a fiduciary responsibility to act in the person’s best interests. You must handle their money carefully, pay all bills, preserve assets, and be able to account for all of the funds. In essence, you step into the person’s shoes.

  5. How can I trust the person I appoint? There is no easy answer to this, but continuing to review your Power of Attorney document every few years will get you into a good habit of making sure the person appointed is still the person you would trust if something happened to you. Again, go with your gut feeling—if you’re questioning whether the person is trustworthy, they’re probably not.

  6. Is a Power of Attorney separate from my Last Will & Testament? They are very different. The purpose of a Last Will & Testament is to settle the estate when one passes away. A Power of Attorney is for incapacity/incompetency while you’re still alive. These two documents are always separate.

  7. Do Powers of Attorney expire? No. However, you should review your POA every few years. Banks and financial institutions may create extra legal hurdles if presented with an old Power of Attorney. My advice is to re-execute your POA’s every 5-8 years even if no changes have occurred.

  8. Can I appoint Co-Agents? Yes. However, Co-Agents can create logistical nightmares, and conflicts can occur easily. Think of your agent like a CEO. You need one person you trust to be able to take decisive action when necessary. I always recommend having at least two backup agents in case the primary agent is unavailable to serve.

  9. Why are there ‘Gifting’ powers in my Power of Attorney? Gifting powers are often used to take advantage of any Medicaid laws that favor spending down your estate if you need long-term care in order to preserve assets for your family. The gifting powers should be carefully written to comply with state law, and also to protect your estate from unscrupulous spending. In Pennsylvania, the laws on Powers of Attorney changed in 2015 regarding gifting laws. Check with your attorney.

  10. What is the difference between a Springing Power of Attorney and Immediate Power of Attorney? With a Springing Power of Attorney, two doctors must certify incapacity before the POA takes effect. This can lead to delay and problems. An immediate Power of Attorney does not require the doctors certification; the agent can take over at the time you can no longer handle your own affairs. Again, if you trust your agent, this won’t be a problem.

If you need assistance with Powers of Attorney or Estate Planning, call The Law Offices of Jeremy A. Wechsler today at (215) 706-0200.


Sunday, February 15, 2015

Do You Need a WILL or ESTATE PLAN?

It's not uncommon to hear people confuse a will and an estate plan. A will can be part of an estate plan, but is not a complete estate plan.

The question is, what is a "complete" family estate plan? Here's my definition broken down into bullet points:

  1. Provides a legacy that your loved ones will be proud of for years to come;
  2. Ensures your property passes to whom you wish it to pass;
  3. Protects the inheritance from outside forces, such as creditors, divorces and lawsuits;
  4. Addresses incapacity and long-term illness planning; and
  5. Saves your heirs every tax dollar possible, and saves them from making mistakes when inheriting your estate.
 
A Last Will & Testament only helps with one of the five items, item #2.  Item 2 is important, but aren't the other four equally important? 

I could make a case that each one of the five are the most important items on the list, but the truth is, they're all important. One remarkable but little-known truth of estate planning is that in the modern estate, typically only half of the estate passes through the will. The other half passes by beneficiary form. Think about your IRA's, life insurance policies and annuities: They all have beneficiary designation forms. IRA's in particular offer great rewards, but great dangers to your heirs if they inherit them without knowing what to do. 

The best advice (perhaps biased advice) that I can give you is to design your entire estate plan with an estate planning attorney. He or she can walk you through all of the steps, and discuss all of the points above. Every plan is different. The plan really depends on your goals, the types of assets you own, your family and more. 

Don't get a false sense of security if you have a simple will. If you haven't visited with an estate planning attorney, take the initiative to do so. If nothing else, you'll learn a lot!

Tuesday, January 27, 2015

Caution: Plan For Long-Term Care Now!

The New York Times published an article two days ago entitled “To Collect Debts, Nursing Homes Are Seizing Control Over Patients.” As I began to read thearticle, two colleagues and a friend sent me a link to the story. We were all stunned.

In essence, author Nina Bernstein paints the picture of a nursing home taking control of a patient by going to court and attempting to get guardianship over her, even though the patient had valid powers of attorney (her husband was power of attorney). There was a billing dispute that led the nursing home to take such action. Read the article in full—it’s an eye opener. Article Link

I have not yet heard of a case yet in Pennsylvania where a nursing home has attempted to get guardianship over a patient, but it’s plausible that it could happen in the future. Imagine discovering that you have to go to court and spend thousands of dollars to fight for control of a close family member. Of course, there have been a couple cases in Pennsylvania under the filial responsibility law where the nursing home has sued a family member for recovery of medical costs.

Cases like these are few and far between, but still give us all pause. The situations are always extremely unfortunate, mostly for the family but also for our long-term care system in general. The question as a society we must confront is how to deal with the costly combination of skyrocketing long-term care costs and greater life expectancies.

Place yourself in the following situation that I have seen happen plenty of times in my practice: You have a sizable estate that you expect to pass to your children, and all of the sudden, you need long-term care and the estate is eaten up by the nursing home costs. It’s quite a dilemma. On one hand, you have a responsibility to pay for your care if you have the means to do so. On the other hand, you expected to leave your loved ones at least some of your life savings. This is more than just a financial issue, but a moral and ethical issue that is not easy to square.

Having said that, the best advice I can give is this: Do not wait until it's too late to plan.

While you’re in good health (typically, 50’s and 60’s are appropriate ages), try to put a plan in place in case you need long-term care in the future. Financial planning is important, but so is protecting your dignity and legacy. As one well-known advisor put it to me years ago, “Do you really want your children to take care of you? Or would you rather have a professional handle your care, and allow your children to enjoy their visits with you?”

Some ideas for planning:

  • There may be some property that you can put into a Medicaid Asset Protection Trust so that it’s properly protected from ever being spent on your long-term care. This trust is appropriate for only certain assets and a portion of your estate, not your entire estate.
  • Consider insurance policies, either traditional long-term care or a “hybrid” life insurance policy that contains a long-term care rider.

In my office, we assist clients regularly with both strategies.

Planning for long-term care is difficult in general. Waiting until you actually need nursing care can cause intense stress on the family, and put your back against the wall. The earlier you plan, the more options you will have.


Tuesday, January 6, 2015

Dangers of Writing Your Will Online

 The saying goes, "there's an app for that" and sure enough, there are plenty of applications, websites and software packages today that allow you to "create an estate plan" by yourself. I put the previous phrase in quotes because I believe it is akin to false advertising.  An estate plan is much more than just a document—an effective plan requires knowledge, application of proven strategies, and an attorney with experience. Experience matters, because an estate plan that initially appears to be simple may have dangers lurking in the background, and only an experienced estate planning attorney can preemptively address and correct those issues.

Before you consider do-it-yourself planning, consider these five true stories of DIY planning gone wrong:

  1. The Suze Orman Trust: Suze Orman has a great reputation for no-nonsense talk on financial matters. A couple of years ago, a couple visited me and showed me the trust they wrote with Suze Orman’s Living Trust kit. The couple lived in Pennsylvania, but they had a California trust. California and Pennsylvania laws are significantly different, including property ownership laws, probate laws and more. Therefore, the trust they had was not appropriate for Pennsylvania and would have done more harm than good. Suze Orman talks a lot about avoiding probate, which is a valid concern in California, but generally not in Pennsylvania. Here, we had a case of over-planning and improper planning. Not everyone needs a living trust, including this couple.

  2. Honey, I Deleted You From My Trust: A gentleman made an appointment with me last year, and he wrote his living trust online. He was married with three children. He wrote the trust so that if he passed away, everything went directly to his three children. When I showed him and his wife the error, she was not happy… at all. Thankfully, we fixed this plan—and as it happened, this couple did not need a living trust either, so we were able to simplify their plan and get it right.

  3. Powerless Power of Attorney: I met with a couple who drafted their powers of attorney online. They were very proud that they had powers of attorney for virtually no cost. The problem? They left out key provisions, such as the ability to make gifts strategically if long-term care was needed. They had no backup power of attorney. Finally, they failed to execute the documents properly, meaning the plan would have been useless in a time of need. By the way, they also had no will, which they claimed wasn’t important because all of their assets were jointly held. A will is still vital in this case, because you still need to appoint an Executor.

  4. Special Problem: Recently, a couple retained me after they drafted their wills online. They have one child, and figured their plan must be simple. The problem is that their child is special needs, and their will left everything outright to their child. If this plan were executed, the child would be disqualified from receiving any public benefits. We drafted a special needs trust for this family so that their child's inheritance would be protected and he would still qualify for public benefits.

  5. Where There’s a Will, It Won’t Help Your IRA: A widowed woman’s computer-savvy nephew drafted her estate plan online after her husband passed. She has two children, rents an apartment, and has most of her money in IRA’s and annuities. When I sat down with her about estate plan, we uncovered the fact that only about 10% of her assets would pass through her will. Also, after reviewing her beneficiary designation forms for her IRA’s and annuities, we realized her only beneficiary was her deceased husband. There were no contingent beneficiaries listed! Her will was a good start, but not what she needed. We setup a Retirement Asset Protection Trust for her IRA’s, so that they would stay in the bloodlines and her children would get the stretch-out benefits of the inherited IRA.

 

These stories and situations are common, and illustrate the dangers of do-it-yourself estate planning. Consider hiring an estate planning attorney as you make your own estate plan. A qualified attorney understands the right questions to ask, all of the strategies available, and the dangers lurking beneath the surface.


Tuesday, November 18, 2014

"Simple Will"

Is a simple will really so simple? Jeremy Wechsler shares with you his thoughts about what a simple will really means, and why it is a disservice for you and your family. Read more in this blog post.


Read more . . .


Tuesday, August 26, 2014

Joint Accounts with Children = Poor Estate Plan

Three Reasons Joint Accounts May Be a Poor Estate Plan

By Jeremy A. Wechsler, Esq.
Your Estate Planning & Asset Protection Attorney

Many people see joint ownership of investments, bank accounts and real estate as an inexpensive way to avoid probate since joint property passes automatically to the joint owner upon death. Joint ownership can also be an easy way to plan for incapacity since the joint owner of accounts can pay bills and manage investments if the primary owner falls ill or suffers from dementia. These are all legitimate benefits of joint ownership, but three potential drawbacks exist as well described below. Please note that I am discussing joint ownership with your children or other loved ones, excluding your spouse. Jointly owning property with a spouse is normal and makes complete sense. 

Drawbacks to Joint Accounts:

  1. Risk: Joint owners of accounts have complete, unconditional access and the ability to use the funds for their own purposes. I have seen children who are caring for their parents take money without first making sure the amount is accepted by all the children. In addition, joint assets are available in the case of divorce, creditor claims, bankruptcy, lawsuits and more. Joint assets could be considered as belonging to all joint owners if applying for public benefits or financial aid.

  2. Inequity. If you have one or more children on certain accounts, but not all children, at your death some children may end up inheriting more than the others. While you may expect that all of the children will share equally (“they will do the right thing”), it is far from a guarantee. If you have several children, you can maintain accounts with each, but you will have to constantly work to make sure the accounts are all at the same level, and there is little guarantee that this plan will actually work. This type of planning will only create discord and conflict in the family later on.

  3. The Unexpected. A plan based on joint accounts can truly fail if a child passes away before the parent. Then it may be necessary to seek guardianship to manage the funds or they may ultimately pass to the surviving siblings with nothing or only a small portion going to the deceased child's family. For example, a mother put her house in joint ownership with her son to avoid probate and Medicaid’s estate recovery claim. When the son died unexpectedly, the daughter-in-law was left high and dry despite having devoted the prior six years to caring for her husband's mother.

If you are concerned about incapacity, instead of joint accounts, consider using a power of attorney. It is much safer and does not give the appointed agent personal rights over your funds (unlike as a joint owner). The agent has a fiduciary responsibility to you and your beneficiaries.

Regarding probate and ease of administration, joint accounts are convenient but as described above, it presents risks. In Pennsylvania, probate is not a difficult or burdensome process. Also, property passing to children is taxed at a 4.5% inheritance tax rate, which is a relatively low rate compared to historical federal estate tax rates. With a well written will and trust, you can have peace of mind knowing your plan will work just the way you intend it to work, free of conflict and problems. Joint accounts may seem like an easy answer, but often create more headaches. Please review your estate plan to ensure that it will work as you intend for it to work. 

 


Monday, July 7, 2014

Pennsylvania Power of Attorney Law Changing

Pennsylvania just made major changes to their Power of Attorney law. Are you prepared for the new changes?


Read more . . .


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The Law Offices of Jeremy A. Wechsler assist clients with Estate Planning matters in Willow Grove, PA as well as Abington, Hatboro, Dresher, Horsham, Bryn Athyn, Huntingdon Valley, Fort Washington, Jenkintown, Glenside, Oreland, Warminister, Wyncote, Ambler, Elkins Park, Flourtown, Philadelphia, Warrington, Cheltenham, Gwynedd Valley, Jamison, Feasterville Trevose, Richboro, North Wales, Blue Bell, Lafayette Hill, King of Prussia, Collegeville, Oaks, Phoenixville, Oxford Valley, Langhorne, Penndel, Bristol, Fairless Hills, Bensalem, Plymouth Meeting, Furlong, Philadelphia County, Bucks County and Montgomery County.

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