A Durable Power of Attorney is a powerful estate planning tool used to ensure that someone may act on your behalf in the event of incapacitation – but how do you make sure that your financial institutions will honor it?

Many banks carefully scrutinize Power of Attorney documents, and rightfully so.  But there have been cases in which a bank refused to accept a Power of Attorney involving one of their customers.  In fact, a recent Florida ruling awarded a gentleman $64,000 after his father’s bank refused to release funds to him from a joint account of his father even though he had a valid Durable Power of Attorney document.  At that point, a friend of his father’s, who was also listed on the account, withdrew the funds from the account.  The bank was ordered to repay the funds to the gentleman as the jury found they should have honored the legal document.

Careful planning may have avoided this situation.  Banks are trying to protect their customers’ interests as well as their own.  They are concerned they may be sued if the Power of Attorney document is found to be invalid or fraudulent.  To prevent this situation, contact your financial institution when your Power of Attorney is executed and ask what is needed to ensure the document is accepted. 

To make sure your estate planning documents are legal, valid documents, work with an estate planning attorney to ensure that not only will they be acceptable when they are needed, but that they meet your needs and goals.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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With the use of up-to-date, durable power of attorney documents, you can make sure that your financial and medical needs are always met, even during incapacity.  Powers of attorney provide control over your affairs and makes it possible for you to get the assistance that you need.  Take a look at the following information, to better understand this planning need.  If you have any questions, or if you’d like to create your durable powers of attorney documents, contact an estate planning attorney.

Every adult needs both a durable power of attorney for healthcare and a financial durable power of attorney in the event you are not able to give informed consent or handle your financial affairs for a period of time.  You will select an agent who will have authority to make decisions on your behalf; your agent is mandated to act in your best interest, best ensuring that your needs are always met.

With these documents, you will be able to do the following:

• Have full control over who is handling your affairs, instead of letting the court decide through a guardianship proceeding
• Have the ability to revoke the documents at any time, as long as you have legal capacity
• Get the assistance that you need, when you’re unable to make your own decisions

Who will help make treatment decisions on your behalf?  Who pay your bills?  Who will make sure that you’re getting the best care possible?  Whoever you appointed in your powers of attorney will make these decisions, ensure your bills are paid, and guarantee that you’re getting the best care.

You can appoint the same person or different people to make health care decisions and financial decisions.  Be sure to ask their permission before appointing them and name back-up agents in case your primary agents are unable or unwilling to serve.

If you have any additional questions about the need for durable powers of attorney documents, consult with a qualified estate planning attorney.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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We recommend that almost every client establish a power of attorney.  A power of attorney lets your agent make decisions on your behalf if you are incapacitated or otherwise unable to act for yourself, helping you avoid the cost and delay involved in a guardianship hearing.

So far so good – but don’t make the mistake of thinking a power of attorney controls the assets in a Trust.  Your agent cannot control any assets owned by a Trust; only a trustee controls assets in the Trust.

Say you set up a power of attorney so your agent can pay bills and make certain financial decisions on your behalf.  That’s a great idea, but if certain investment accounts are held in Trust, your agent will not be able to control those assets if you are incapacitated.  If you are the trustee, your successor trustee will have to step in.  A few legal hurdles to be overcome before that can happen.

Powers of attorney are great estate planning tools, but they cannot cover every possible scenario. When you set up a Trust, think about the types of assets you place in that Trust.  We can help you create an estate plan that provides for the future as well as protecting your interests in the present.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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A Power of Attorney is a great way to ensure financial decisions can be made on your behalf if you are incapacitated or incompetent, whether temporarily or permanently.  But Powers of Attorney are also limited in two basic ways.

First, a Power of Attorney can be as broad or as limited, in terms of scope, as you like.  For example, a Durable Power of Attorney can limit your agent – the person you designate to step in on your behalf – to making decisions regarding some investments and not others.

A Power of Attorney is also limited in terms of time.  Once you pass away, the Power of Attorney is no longer valid.  Any authority you granted your agent expires.  (Of course, if a financial institution isn’t aware that you passed away they may still allow your agent to make certain transactions, but that could result in criminal charges or civil liability.)

If you are an agent, don’t take any actions if the principal – the person who signed the Power of Attorney – passes away.  And if you create Powers of Attorney, make sure the rest of your estate plan is designed to protect the interests of your family and beneficiaries.  Powers of Attorney are great legal and estate planning tools – but they do have limits.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Most people don’t understand the probate process.  It’s a legal process that identifies the assets of the deceased, establishes the validity of a Will (or if there is no Will, determines who are the legal heirs,) pays off creditors, and distributes the remainder of the estate to heirs.  Probate is expensive and time-consuming; that’s why we create estate plans to help you avoid it.

What we just described is typically known as “death probate,” but probate can also occur while you are still alive.  Called living probate, the process is designed to protect individuals who can no longer protect themselves due to illness or incapacity.  But living probate can also be expensive and time consuming.  When a person is declared mentally incapacitated or incompetent, the court appoints others to act on their behalf and make financial, legal, and healthcare related decisions.

How can you avoid living probate?  Set up appropriate powers of attorney.  And use revocable living Trusts that allow your trustee to manage your affairs if necessary, even while you are alive.

Probate should be avoided at all costs – both death probate and living probate.  Call us to schedule an appointment to ensure your estate plan avoids probate while protecting your interests – and the interests of your loved ones.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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The Health Insurance Portability and Accountability Act, or HIPAA, is legislation designed to create privacy and confidentiality in regards to health and health care information. If you know someone who is a doctor, a nurse, a dentist, or pharmacist – basically anyone involved in health care – how they do their jobs was greatly affected when HIPAA laws went into effect back in 2003.

More importantly, what happens if someone you love is injured or ill was also greatly affected.

HIPAA regulations require health care providers to limit information about health, prognosis, or care of to only the people who are authorized to receive that information. Health care information cannot be released to anyone who is not authorized. If your brother is hospitalized, you can’t call the hospital to ask how he is doing. (Well, you can, but they won’t give you any information.) You may not be able to get medical information for your spouse. Your agent may not be able to review medical records or understand your prognosis, even if that person is the individual you designated in your Health Care Power of Attorney or Living Trust.

Fortunately, it’s easy to comply with HIPAA regulations so others can get the information they need. If you know ahead of time you will receive medical care – like, say, for an elective procedure – you can let the physician know who is authorized to get information about your care.

But go one step farther. Create a HIPAA Power of Attorney so your loved ones – and agent – can get information about your care, especially if you are injured or fall ill unexpectedly and are incapacitated. If you are unable to tell your health care providers who is authorized to receive information about your care, they may not be able to make important decisions on your behalf.

It’s hard to make decisions without information – make sure your loved ones and agent have access to the information they need.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Asset value is asset value – except sometimes where estate tax calculations are concerned.  Then, step-up in basis could pay off for your heirs.

Here’s how a step-up in basis works.  Say you own shares of stock.  You paid $500,000 for those shares – that’s your basis.  Your investment worked out well, and today those shares are worth $1,000,000.  That’s the current value.

Well done!  But then you pass away.  What are those shares worth in estate tax terms?

The basis of your property at death is considered to be the market value of the property.  So even though you only paid $500,000, when you die, the basis “steps-up” to the current market value, or $1,000,000.  Therefore your estate would not owe capital gains taxes on that appreciation, even though you would have had you sold those shares before your death.

“Step-up” is therefore different from a “carry-over” basis, which is just what it sounds like:  The basis carries over.   When you make a gift during your lifetime you get carry-over basis.

During 2010, when there was no estate tax, the step-up rule went away as well.  Now it’s back – and could mean a major difference where estate tax calculations are concerned.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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The number of people diagnosed with Alzheimer’s continues to rise as our population ages. According to a report by the Alzheimer’s Association, 13% of people over the age of 65 today have Alzheimer’s. (Which means every seventy seconds or so someone develops Alzheimer’s.) Odds are many of us will need to help our parents with legal or financial matters, including filing tax returns – or worse, helping parents deal effectively with an audit.

The problem is the IRS cannot disclose information to anyone except the actual taxpayer – unless they file a simple form, that is.

IRS Form 56 is generally used for fiduciaries, like executors and trustees, but the form can also be used to specify children who may need to help their elderly parents with tax issues.

Here’s how it works. Visit the IRS website to get a copy of Form 56, Notice Concerning Fiduciary Relationship. Since, as a child, you are not automatically considered to be a fiduciary for a parent, you must also be named as their agent in a Durable Power of Attorney. So, when your parents file Form 56, they will need to file a copy of the Power of Attorney. (Yet another great reason to put a Durable Power of Attorney in place.)

Once your parents file the form and name you as their agent, you have the legal authority to receive information and assist with or handle IRS issues or tax filings on their behalf.

Keep in mind Form 56 must be signed while your parents – the taxpayers in question – are still competent.

And while you’re at it, talk to your parents about creating a Health Care Power of Attorney as well. Call us for help preparing you and your parents for the future, whatever that future may bring.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Most people read the words “estate planning” and automatically think about their retirement years. If your kids are heading off to college, some key components of an estate plan can play an important role in their lives – and in yours.

Say your daughter is 18 years old and is heading off to college. It makes sense to have her sign a Durable Power of Attorney, a Health Care Power of Attorney, a Living Will, and a HIPAA Authorization. While at her age she may not see the importance of signing those documents, but you will. For example, if she becomes ill or injured and cannot communicate, you will then have the power to talk with physicians, understand her prognosis, and if necessary make decisions on her behalf.

The same is true with a Durable Power of Attorney; if she owns a vehicle and is incapacitated, you can make decisions regarding that vehicle on her behalf.

Estate planning tools can be incredibly useful long before you start to think about retirement!

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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All I need is a Will. Nothing could be further from the truth. What if you reach a situation where you are alive but are unable to take decisions on several crucial matters, such as your health care preferences and finances? Since all Wills only become effective at the time of death, this is where estate planning comes to your rescue. So, let’s see what can happen if you only have a Will and have not planned for disability and you become medically unfit to make important decisions.

Case I: You become mentally incapacitated before you make a disability plan The state has guardianship or conservatorship laws for citizens who have become mentally unfit to make important decisions. Through these laws, the state appoints a legal guardian for the person who serves as the conservator to the citizen’s property. The guardian is also responsible for crucial decisions on various matters, such as healthcare, on behalf of the disabled person.

What is unfortunate about these guardianship or conservatorship laws is that it would be the state and not your loved ones who would decide how you are cared for and how your property is managed.

Now let’s look at how much better things turn out with a disability plan in place.

Case II: You already have a disability plan in place when disability hits

When you make a disability plan, you specify your wishes through

• An Advance Medical Directive, which is also called a Durable Healthcare Power of Attorney or Health Care Proxy: Through this document, you can specify a trusted family member or friend to make medical and personal decisions when you are incapacitated.
• A Financial Durable Power of Attorney: Through this document, you assign a person who will manage your finances for you.

With all the responsibilities already assigned to the people you have selected, the state will not need to intervene. In the event of a mishap resulting in disability, your healthcare and property will be taken care of by the people you felt could do justice to the tasks.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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