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Browsing Category estate planning

The importance of a power of attorney

January 28, 2022 · by Pittsburgh Family Law Services, P.C.
Young woman walking with older woman

It’s very easy for an estate planning lawyer to tell everyone “make sure you have a power of attorney.” We talk about all the problems that can occur without one. You could be unable to pay your bills or make medical decisions. You could even require a guardianship if you cannot care for yourself. But lawyers do not often use real examples to emphasize the importance of a power of attorney. I want to take you through a cautionary tale involving my own family. Fortunately, this tale has a happy ending.

Our family’s story

Like many Pennsylvanians, I have elderly loved ones in my family. Very few of these family members have done any estate planning despite my nagging them! One day out of nowhere, one person asked to set up estate planning. We’ll call her Ginny. Ginny wanted someone to handle her finances and medical decisions if she were unable to do so. She was afraid to do this for a long time; her greatest fear was giving someone too much control, especially over her finances. Fortunately, this is easy to fix! We talked about what would suit her needs. For her finances, she wanted someone to pay her bills. She did not want them to sell her house unless she was in the hospital for a long time. She wanted someone to receive statements from her retirement account, but not be able to handle those funds.

Ginny didn’t think she could have these limits because she printed a form online that didn’t allow her to do so. After a long discussion, I told her this was incorrect. You can always limit an agent’s authority! Together, we created a document which gave her what she wanted. As a result, if she were in the hospital for surgery, someone could pay her bills for her. We signed the documents and forgot all about it, for approximately 1 week.

A very bad fall

Of course, life has a way of throwing unexpected curveballs. Ginny fell down her steps shortly after signing her documents. After that, she learned she needed surgery. Of course, this was not quick surgery. It required weeks of recovery in the hospital. Ginny could not go home after her surgery, because she couldn’t walk up steps. So, she had to go to a care facility.

It is no secret that nursing homes or any type of facility providing long-term care is expensive. Fortunately, Ginny’s agent was on the ball. She immediately spoke to the bank to get access to her accounts. Afterwards, she immediately started paying Ginny’s bills. She spoke directly with the nursing home to make sure they were paid and that everything was going well. She also made sure Ginny was progressing with treatment. Most importantly to Ginny, her agent kept her informed at every step of the way.

A long recovery

Unfortunately, Ginny did not have an easy recovery. Learning how to walk after a bad fall and major surgery is a long road. A few months after her accident, her agent realized Ginny may need to sell her house to pay for the nursing home. This could be a problem, because Ginny was not able to do the work required to list a home for sale. This is a time when attorneys like me are likely to get calls asking about a guardianship. However, Ginny’s agent did not do this. Ginny may not be able to actively be involved in a sale, but she can authorize someone to do so. So, her agent had a conversation about this. Ginny ultimately decided that she wanted to give her agent more control. Ginny is now comfortable and confident that her agent is caring for her best interest.

Key takeaways

There are a few lessons in this situation from my family. First, Ginny initially wanted to limit her agent’s control. Although she changed it later, her first document worked. Her agent immediately had authority to access her bank accounts and pay her bills. She changed the level of control when she realized her agent needed more.

Secondly, Ginny’s agent always kept in touch with her. Just because someone executes a power of attorney does not mean they are incompetent. The opposite is in fact true! Someone unable to communicate decisions is unable to designate such authority. That is why Pennsylvania law provides for guardianship of adults. Ginny’s agent was not required to get her permission before acting. But, by keeping her informed, Ginny trusted her agent was acting in her best interest. This ultimately solidified her decision to expand her agent’s authority.

Finally, Ginny got all of this in order before she needed it. The outcome could have been very different had she never designated anyone to act on her behalf. Somebody would have to guess at what medical treatment she wanted, and somebody would have needed to physically bring Ginny’s bills and checkbook to her. As I write this in 2022, this is not ideal given the conditions with Covid-19. Not only that, but Ginny needed to focus on recovery rather than paying bills. Authorizing someone to do this for her gave her the chance to do that.

I would be remiss in failing to mention the very real cost-savings for Ginny. Had Ginny needed a guardianship, it would have required a petition in court with all the court and attorney fees associated with that. Instead, she paid only for the drafting of her estate plan.

In the course of a given year, you are far more likely to need a power of attorney than need a Will. I understand the ease of saying it isn’t necessary to have one right now. For the most part, that’s true. But the purpose of estate planning is to prepare for the unexpected future. By planning for something she did not intend to use, Ginny enabled her family to protect her when she needed it. I hope this tale helps emphasize the importance of talking with your loved ones about estate planning and planning for the unexpected.

***Names and details have been changed to protect privacy. The content is published with permission of the affected family members.

The best times to update your estate plan

January 26, 2022 · by Pittsburgh Family Law Services, P.C.
Family sitting on bed together.

Having a well-crafted estate plan is the best way to protect your loved ones in the future. It allows you to set aside how your hard-earned assets will be distributed and gives your family protections they would not have otherwise. But planning for the future is not something you should only do once. Instead, you should occasionally update your estate plan. Life brings numerous changes; when those changes happen, it is good to consider whether your current estate plan reaches your goals. You can choose to look at your Will, Powers of Attorney, and trust documents at any point. There are no rules or requirements in place. However, there are certain times I recommend people revisit their estate planning documents. We will look at a few of these.

You get a divorce

If you recently divorced, you may have received property in equitable distribution. This property may include retirement distributions, proceeds from the sale of a house, or the former marital residence. Depending on what you received, these assets may become part of your estate. This is a good time to consider who will receive what.

Another reason to update your estate plan after a divorce is to revisit who the beneficiaries or fiduciaries will be. Sometimes, people leave part of their estate to their ex-spouse’s family members. While this may sound strange, it happens frequently where funds are left to a niece, nephew, or stepchild. You may feel differently about these family members receiving something after a divorce though. Sometimes family members take sides in a divorce or become estranged from each other. If you no longer wish to leave them anything, you can remove them entirely from your Will.

Along with your Will, you should consider your powers of attorney. If you let your former sister in law be your agent to make medical decisions, you may not wish her to do so after a divorce.

You remarry

Another time to update your estate plan is if you remarry. This is especially true if you have children. Many people write their Wills so that their spouse receives everything if they pass away. The hope is that the spouse who survives will distribute the estate to the children. This works well in many families! But it far from guaranteed in blended families. You simply have no way of knowing that your spouse will leave anything to his or her stepchildren. If you want to guarantee your children will inherit from you, it is equally important that you look at a prenuptial agreement. This will clearly define what will be “marital” property and what will simply belong to you.

Your beneficiary’s needs change

Most people in Pennsylvania leave their property to their families directly. But sometimes this may not be in a family member’s best interest. Your spouse may become disabled, or your child may develop a severe drug addiction. You may want to support these loved ones, but know that leaving them assets may not work well. That is when it is worth considering a trust so the funds will be managed properly.

Your personal values change

I focused this article on handling changes to your Will. But I cannot overlook changes to your financial and healthcare powers of attorney. With a healthcare power of attorney, someone else will make medical decisions for you when you cannot do so. This includes deciding types of treatment and making end of life decisions. As you go through life, your perspective on these issues may change. You may have not wanted life support in the past, but feel differently because you now have children. Or, you may have watched a loved one live in a vegetative state and decide you do not want to experience the same. There are no right or wrong feelings. But if your values and priorities changed, it is time to revisit your plan.

If you want to change your healthcare advance directive, you should also talk to you agent. Your agent may not support your new wishes. Updating your estate plan is the time to designate somebody else, if that happens.

Conclusion

As you can see, there are many times to revisit your estate plan. This is by far not an exhaustive list! But changes to your family, changes to your values, and changes to your finances are the ideal times to consider whether your original plan meets your goals. The purpose of an estate plan is to protect your family in the future. By periodically revisiting your wishes, you can ensure that they have these protections.

  • Attorney Tara L. Hutchinson is a family and divorce lawyer located in the east end of Pittsburgh, Pennsylvania, and serves clients throughout Southwestern Pennsylvania and the Pittsburgh area including the neighborhoods of Squirrel Hill, Shadyside, Monroeville, McKeesport, Edgewood, Penn Hills, Bethel Park, Mount Lebanon, Canonsburg, New Kensington, Greensburg, Murrysville, Turtle Creek, Swissvale, Churchill, Oakmont, Fox Chapel, and Sewickley.

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