Tag Archives: trust planning

Where should I keep my Estate Plan documents?

Your estate plan documents should be kept in a safe place as the originals may be necessary. A copy of a Will can often be probated, but it is not without its costs and headaches. Preserving the original documents is very important.

A common recommendation is to keep your estate planning documents in a safe deposit box. This is an excellent place to keep you documents; however, you need to be very careful that someone will have access to the safe deposit box in the event of your death or incapacity. The Will will be necessary for your personal representative to be appointed after your death and your financial and medical powers of attorney will be necessary if you become incapacitated.

By having a third party as signatory on the safe deposit box, you can ensure that your estate plan documents will be accessible before they are needed. Choosing a signatory is very important because they will have access to all the contents of the safe deposit box. A good rule of thumb is that if you trust someone to be your financial power of attorney, they should probably also be trusted as a signatory of your safe deposit box – the fact is that they will have virtually unfettered access to your finances upon your incapacity anyways, so if there is any doubt as to their credibility you should reconsider their nomination in the first place. The same could be true for the person you appoint as personal representative of your estate.

If you do not have a safe deposit box for you estate planning documents, you should find a secure place in your home. The best alternative would be a safe that is attached to the structure of the house. Smaller, unsecured safes provide little protection from burglaries and thefts as they are targets of any thieves looking for valuables.

Another alternative may be to simply have your attorney hold on to your estate plan documents. Attorneys may provide this service for free or a nominal storage fee. However, keep in mind that an attorney may have the same fire and vandalism issues in their office. Most importantly, an attorney may have a set file retention policy that requires files to be returned or destroyed after a certain amount of time. A verbal agreement made with the attorney may not be remembered in 5-10 years when the attorney cleans out the old files and either a) attempts but cannot locate the client or b) simply destroys the documents.

Regardless of how the estate plan documents are stored, always make sure that someone knows where they are and/or who to contact to access the documents. If documents are unknown to your friends and loved ones, your entire estate may be distributed according to the laws of intestacy, which are typically substantially different that the intent of the decedent.

Patrick Curnalia is an estate and tax planning attorney with Curnalia Law, LLC. Patrick has worked with many clients to help the machieve their planning goals. Our firm services the entire Denver area and is located near the Denver Tech Center. Find out more about how our firm can help you by visiting our website at www.curnalialaw.com.

Disability planning for financial matters

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Disability planning is essential for everyone. There are several techniques that range from relatively simple to complex, depending on the types of assets and protection required by the client. Each of the techniques will work to some degree, but also have some inherent shortcomings in certain situations. It is best to consult your attorney before implementing any of the following techniques.

First, lets identify what happens when no planning has been done and a person becomes incapacitated. Focusing just on the financial aspect, the incapacitated person will need a conservator appointed for them. The conservator is a fiduciary required to act in the incapacitated person’s best interest. The conservator may be required to report to the court on a periodic basis regarding the assets of the incapacitated person if there is any doubt as to the conservator’s intentions and legitimacy of his or her actions. The conservatorship can be costly and time consuming to set up. A conservatorship is also not ideal for emergency situations where quick actions are necessary.

A common situation is the incapacity of one spouse – leaving the other spouse to care for him or her. The easiest and most cost-effective way to prepare for this situation is the retitling of property into joint tenancy. Obviously, this will only work for property that can be titled jointly such as real property, bank accounts and vehicles, but it does work in a pinch and can be a saving grace when no other planning has been completed.

Another planning technique is to execute a Financial Durable Power of Attorney (or Financial POA) naming an agent to act on the incapacitated person’s behalf. The Financial Durable Power of Attorney is limited to financial matters so that a different person can be nominated as the incapacitated person’s Medical Power of Attorney to make medical decisions. Some clients prefer to have one person making financial decisions and another making medical decisions. The Financial Durable Power of Attorney is durable because it remains in effect even after the person executing the document has become incapacitated. Not to long ago, Colorado and other states had laws that nullified a person’s Financial Power of Attorney as soon as that person became incapacitated – completely defeating the purpose of the document. An estate planning lawyer can draft a Financial Durable Power of Attorney and should include this document in any estate plan drafted. If requested by itself, the document is fairly straightforward and should not cost very much to have drafted.

The most complicated disability plan will include a trust of some sort. Typically, revocable living trusts will be utilized because they allow the person who created the trust (the “Settlor”) to retain control of the assets during the Settlor’s lifetime. Property can go in and out of the trust at the Settlor’s discretion. However, once the Settlor becomes incapacitated, all of the property in the trust then comes under the control of the successor trustee of the trust. The trustee must follow the terms of the trust as written by the Settlor, but otherwise has the authority to care for all of the trust assets. A trust is a legal document that can be enforced and must be followed by the trustee. The terms of the trust can, and typically do, identify exactly how the property inside the trust is to be administered for the benefit of the Settlor and/or any other beneficiary of the trust. Each of the above options have their own advantages and disadvantages from cost to levels of protection. As with many things in life there is no one best answer, and client’s typically find that a combination of disability planning tools is necessary to meet their needs and adequately cover as many contingencies as possible.

Patrick Curnalia is an estate and tax planning attorney with Curnalia Law, LLC. Patrick has worked with many clients to help them achieve their planning goals. Our firm services the entire Denver area and is located near the Denver Tech Center. Find out more about how our firm can help you by visiting our website at www.curnalialaw.com.

What is “pauper planning”?

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Pauper planning is more than just a catchy name for an estate planning blog – it is the idea that a person need not be of the wealthiest 1% of America to benefit from estate planning. Everyone, from the wealthiest of people to the young professional just starting out in life, can benefit from a properly crafted estate plan. I have found that most clients benefit from a discussion about the estate planning process and the documents involved. I think that is a fitting way to start this blog – by identifying some of the pieces of the typical estate plan and showing how they affect the typical family.

The basic documents that should be in every plan include a Will, Financial Power of Attorney, Medical Power of Attorney and Living Will. Trusts are common planning tools but their utility really depends on the types and location of assets and the ultimate goals of the client. The Will is the most common and known document of the bunch. This document identifies how property is to be passed and who is responsible for making this happen.

If someone dies without a Will, the laws of the state of the decedent’s domicile or location of property will dictate how the property is passed. Letting the state determine how your property passes after your death is called intestate succession. The laws of each state are different, but needless to say, a client will typically have much different ideas of how their property should be distributed at their death. A person’s Will ensures that everything they have amassed during their lifetime will be distributed according to their wishes. Almost as important as how property is distributed is nominating the personal representative who will do the actual work. Property that passes via a Will will need to be probated. Probate can become very complicated if the wrong person is put in charge of the process. In addition to nominating a personal representative, the Will also allows the nomination of a guardian and conservator of any minor children. All of these decisions can be left to the discretion of a judge and interpretation of state law if no Will exists.

The Financial Power of Attorney is a document that grants another person the authority to make financial decisions on behalf someone who has become incapacitated. Without the grant of this authority, a person would need to be appointed conservator of the incapacitated person in order for any financial decisions to be made on the incapacitated person’s behalf. This authority becomes very important if medical bills needs to be paid, mortgage payments become due or, possibly, a special needs trust needs to be created to collect insurance funds on behalf of the incapacitated person. The cost of drafting and executing a simple Financial Power of Attorney is much less than the time and cost of a drawn-out battle between the spouse, parents and adult children from a previous marriage to be appointed conservator. The issues with inter-family squabbles are present with medical decisions as well.

A Medical Power of Attorney identifies who is supposed to make medical decisions for a person after he or she becomes incapacitated. Financial decisions can cause problems, but decisions regarding whether someone lives or dies are a completely different animal. The simplest way to prevent any issues is to appoint a medical proxy to make decisions on your behalf.

Unfortunately, many people are misinformed as to the rights of spouses in Colorado regarding medical decisions for an incapacitated spouse. According to Colorado law (C.R.S. 15-18.5-103), a spouse will be consulted by the attending physician when no advanced directive (more on that later) and no Medical Power of Attorney has been appointed. However, the physician is also required to consult with any other “interested person” the physician can find. For the sake of this consultation, “‘interested persons’ means the patient’s spouse, either parent of the patient, any adult child, sibling, or grandchild of the patient, or any close friend of the patient. C.R.S. 15-18.5-103(3). Not only do each of these people have a say, but the decision has to be unanimous regarding the election of the incapacitated person’s healthcare proxy and any decision that the healthcare proxy makes on your behalf. In other words, the person’s health care is essentially under mob rule. How is a stalemate broken? By the courts of course! Who better to make these decisions than a judge who has never met the incapacitated person. Anyone wishing to be appointed as the healthcare proxy can file for guardianship, and it is up to the court to determine who is the best person for the job. It is easy to see how this process could become drawn out with hearings and appeals only to leave the incapacitated person in limbo – remember Terri Schiavo in Florida?

The last document, the Living Will, is similar to the Medical Power of Attorney. However, this document is typically only concerned with the advanced directives concerning life-sustaining procedures when the incapacitated person has been diagnosed with a terminal condition or is in a persistent vegetative state. These decisions can be made by the Medical Power of Attorney, but clients often feel better make these decisions for their designated agent.

All of these documents are an important part of anybody’s estate plan, and none of them are contingent upon the amount of a person’s assets. The millionaires in the world may have more complex estates that require additional considerations, but here is the proof that even the paupers need to adequately plan. Estate planning for most Americans is deciding who takes care of you, your property and, most importantly, your family when you cannot. Asking the State of Colorado to make those decisions is often times inadequate and results in something contrary to what the decedent/incapacitated person would have wanted. Do not leave anything to chance! Paupers unite, and start your planning!

Patrick Curnalia is an estate and tax planning attorney with Curnalia Law, LLC. Patrick has worked with many clients to help them achieve their planning goals. Our firm services the entire Denver area and is located near the Denver Tech Center. Find out more about how our firm can help you by visiting our website at www.curnalialaw.com.