Aaron Charles Gregg

Does Estate Planning Vary by State?

“Whether you've recently moved to Florida or are a ‘snowbird’ with Florida residency, there are important reasons to consider updating your estate plan.”

Estate planning laws vary greatly from state to state and understanding the difference could have a significant impact on whether your estate plan is valid. It is best to get this straight shortly after moving, says The National Law Review in the recent article “Updating Your Estate Plan: What Michigan Residents Need to Know When Moving to Florida.”

It's not just people from Michigan who move to Florida who need to have their estate plans reviewed, if they are snowbirds or making a full-time move—it’s anyone who moves to another state, from any state. However, Florida’s popularity makes it a good example to use.

Florida restricts who is permitted to serve as a Personal Representatives under a will. The personal representative, also known as an executor, must be a descendent or ancestor of the decedent, a spouse, brother, sister, aunt, uncle, nephew, niece or descendant or ancestor of any such person or a Florida resident.

Florida doesn’t recognize “no contest” clauses in trusts or wills. It also does not recognize unwitnessed testamentary documents, which are handwritten documents even if they are in your own handwriting. Michigan may accept them, but Florida courts do not.

Florida also has a special set of laws, known as the Homestead laws, designed to protect a decedent’s surviving spouse and children. You may have had other plans for your Florida home, but they may not be passed to the people you have designated in your non-Florida will, if they don’t follow the Sunshine State’s guidelines.

Power of Attorney laws differ from state to state, and this can create huge headaches for families. In Michigan, the Durable Power of Attorney can be “springing,” that is, it is effective only upon incapacity. In Florida, once a Durable Power of Attorney is signed, it is effective. Florida may accept a DPA from another state, but Florida law will be applied to the agent’s actions, and restrictions will be based on Florida law, not that of another state.

As for estate planning documents concerning medical and financial decisions while you are living, these are also different. A living will names a person, known as a “Patient Advocate” in Michigan or a “Health Care Surrogate” in Florida, who is authorized to make decisions regarding end of life care, including providing, withholding, or withdrawing life-sustaining treatment. In Michigan, you need two doctors to certify a patient’s incapacity for non-life-or-death decisions. In Florida, only one doctor is needed.

Whether you are traveling north for a cooler summer or planning to leave a northern home before the winter arrives, meet with your estate planning attorney to understand how any and all of your estate planning documents will work—or not—when you are in another state.

Reference: The National Law Review (June 30, 2021) “Updating Your Estate Plan: What Michigan Residents Need to Know When Moving to Florida”

Powers of Attorney and Advance Directives

“Some people think that, because their assets are jointly owned with a spouse or are in a trust, they do not need a Power of Attorney, or that if they become incapacitated, their spouse automatically has the authority to make medical decisions on their behalf.”

A medical crisis only gets worse, when you learn you don’t have legal authority to make medical decisions for a loved one, or find out after a loved one is incapacitated that you can’t gain access to assets in their trust. You need to have certain estate planning legal documents already in place, according to the article “Tips you should know for Powers of Attorney and Advance Directives” from seacoastonline.com.

Power of Attorney. The power of attorney (POA) allows one person, the “principal” to appoint another person as their “agent” (also known as an “attorney in fact”). The agent has the authority to act on behalf of the principal, depending on the powers described in the document. Each state has its own laws about who can be an agent, if more than one person can be appointed as agent and if there are any limits to what power can be given to an agent. Your estate planning attorney will be able to create a POA to suit your situation.

A POA can be created to give extremely broad powers to an agent. This is sometimes called a “general” POA, where agents can do everything that you would do, from accessing and managing bank accounts, applying for Social Security, to filing tax returns. A POA can also be limited in scope, known as “limited” POA. You could permit an agent to only sign a tax return or conduct a specific transaction.

In most estate planning scenarios, the POA is “durable,” meaning the named agent can continue to have authority to act, even if the principal is incapacitated after the documents have been executed. This makes sense: a durable POA generally avoids having to go to court and have a guardian appointed. The person you have selected will be the POA, not a court-appointed person.

Advance Directive. The advance directive allows a person to appoint another person to make medical decisions on their behalf if incapacitated. In some states, this is called a durable power of attorney for health care, and in others it is referred to as a health care proxy.

In most cases, the advance directive becomes effective when one or more treating physicians determine the person no longer has capacity to make or communicate health care decisions. Having this document in place avoids having to go to court to have a guardian appointed. If time is of the essence, any delay in decision-making could lead to a poor outcome. If there is no advance directive and physicians have decided you are unable to make these decisions, they go by a hierarchy of relatives to make the decisions for you. If you have an estranged adult child, for instance, but they are your next-of-kin, they could be the one making decisions for you.

If you have children who recently became legal adults (usually age 18), these documents will protect them as well, since just being their parent does not provide you with the right to make these decisions.

Reference: Seacoastonline.com (June 27, 2021) “Tips you should know for Powers of Attorney and Advance Directives”

Can You Amend a Power of Attorney?

“If the durable power of attorney can't be transferred, what needs to be done to establish a new durable power of attorney for my aunt despite her mental incapacity?”

The situation facing one family is all too common. An aunt is now incapacitated with severe Alzheimer’s disease. Her brother has been her agent with a durable power of attorney in place for many years. In the course of preparing his own estate plan, he decided it’s time for one of his own children to take on the responsibility for his sister, in addition to naming his son as executor of his estate. The aunt has no spouse or children of her own.

The answers, as explained in a recent article “Changing the agent under a durable power of attorney” from My San Antonio Life, all hinge on the language used in the aunt’s current durable power of attorney. If she used a form from the internet, the document is probably not going to make the transfer of agency easy. If she worked with an experienced estate planning attorney, chances are better the document includes language that addresses this common situation.

If the durable power of attorney included naming successor agents, then an attorney can prepare a resignation document that is attached to the durable power of attorney. The power of attorney document might read like this: “I appoint my brother Charles as agent. If Charles dies or is incapacitated or resigns, I hereby appoint my nephew, Phillip, to serve as a successor agent.”

If the aunt would make her wishes clear in the actual signed durable power of attorney, the nephew could relatively easily assume authority, when the father resigns the responsibility because the aunt pre-selected him for the role.

If there is a clause that appointed a successor agent, but the successor agent was not the nephew, the nephew does not become the agent and the aunt’s brother can’t transfer the POA. If there is no clause at all, the nephew and the father can’t make any changes.

In September 2017, there was a change to the law that required durable power of attorney documents to specifically grant such power to delegate the role to someone else. The law varies from state to state, so a local estate planning attorney needs to be asked about this issue.

If there is no provision allowing an agent to name a successor agent, the nephew and father cannot make the change.

Another avenue to consider: did the aunt’s estate planning attorney include a provision that allows the durable power of attorney to establish a living trust to benefit the aunt and to transfer assets into the trust? Part of creating a trust is determining who will serve as a trustee, or manager, of the trust. If such a clause exists in the durable power of attorney and the father uses it to establish and fund a trust, he can then name his son, the nephew, as the trustee.

Taking this step would place all of the aunt’s assets under the nephew’s control. He would still not be the aunt’s agent under her power of attorney. Responsibility for certain tasks, like filing the aunt’s income taxes, will still be the responsibility of the durable power of attorney.

If her durable power of attorney does not include establishing a living trust, the most likely course is the father will need to resign as agent and the nephew will need to file in court to become the aunt’s guardian. This is a time-consuming and slow-paced process, where the court will become heavily involved with supervision and regular reporting. It is the worst possible option, but it may also be the only option.

If your family is facing this type of situation, begin by speaking with an experienced estate planning attorney to find out what options exist in your state, and it might be resolved.

Reference: My San Antonio Life (Jan. 25, 2021) “Changing the agent under a durable power of attorney”

The Wrong Power of Attorney Could Lead to a Bad Outcome

“When do you need your estate plan to ‘go to work’ for you? While you may think the right answer is ‘after I die,’ the actual answer is ‘if I lose the ability to manage my own affairs.’”

There are two different types of advance directives, and they have very different purposes, as explained in the article that asks “Does your estate plan use the right type of Power of Attorney for you?” from Next Avenue. Less than a third of retirees have a financial power of attorney, according to a study done by the Transamerica Center for Retirement Studies. Most people don’t even understand what these documents do, which is critically important, especially during this Covid-19 pandemic.

Two types of Durable Power of Attorney for Finance. The power of attorney for finance can be “springing” or “immediate.” The Durable POA refers to the fact that this POA will endure after you have lost mental or physical capacity, whether the condition is permanent or temporary. It lists when the powers are to be granted to the person of your choosing and the power ends upon your death.

The “immediate” Durable POA is effective the moment you sign the document. The “springing” Durable POA does not become effective, unless two physicians examine you and both determine that you cannot manage independently anymore. In the case of the “springing” POA, the person you name cannot do anything on your behalf without two doctors providing letters saying you lack legal capacity.

You might prefer the springing document because you are concerned that the person you have named to be your agent might take advantage of you. They could legally go to your bank and add their name to your accounts without your permission or even awareness. Some people decide to name their spouse as their immediate agent, and if anything happens to the spouse, the successor agents are the ones who need to get doctors’ letters. If you need doctors’ letters before the person you name can help you, ask your estate planning attorney for guidance.

The type of impairment that requires the use of a POA for finance can happen unexpectedly. It could include you and your spouse at the same time. If you were both exposed to Covid-19 and became sick, or if you were both in a serious car accident, this kind of planning would be helpful for your family.

It’s also important to choose the right person to be your POA. Ask yourself this question: If you gave this person your checkbook and asked them to pay your bills on time for a few months, would you expect that they would be able to do the job without any issues? If you feel any sense of incompetence or even mistrust, you should consider another person to be your representative.

If you should recover from your incapacity, your POA is required to turn everything back to you when you ask. If you are concerned this person won’t do this, you need to consider another person.

Broad powers are granted by a Durable POA. They allow your representative to buy property on your behalf and sell your property, including your home, manage your debt and Social Security benefits, file tax returns and handle any assets not named in a trust, such as your retirement accounts.

The executor of your will, your trustee, and Durable POA are often the same person. They have the responsibility to manage all of your assets, so they need to know where all of your important records can be found. They need to know that you have given them this role and you need to be sure they are prepared and willing to accept the responsibilities involved.

Your advance directive documents are only as good as the individuals you name to implement them. Family members or trusted friends who have no experience managing money or assets may not be the right choice. Your estate planning attorney will be able to guide you to make a good decision.

Reference: Market Watch (Oct. 5, 2020) “Does your estate plan use the right type of Power of Attorney for you?”

Do Unmarried Couples Need Estate Planning?

“Experts say that creating a plan for what happens to your estate — regardless of how meager or massive your assets — is key for unmarried couples who want their commitment to each other protected in the event of death.”

A couple that has no intention of ever getting married should know that they won’t get the automatic rights and protections that legally wed spouses get, particularly when it comes to death. Therefore, unmarried couples must make a concerted effort to cover all the bases, says CNBC’s recent article entitled “Here’s what happens to your partner if you’re not married and you die.”

The number of unmarried couples who live together reached 18 million in 2016, a 29% increase from 14 million in 2007, according to the Pew Research Center. Among adults age 50 and older, the increase was 75% with roughly 4 million cohabiting in 2016, compared to 2.3 million in 2007.

These couples still face some key differences from their married counterparts. For example, there’s no filing federal taxes as a couple, and if an employer allows health insurance for a partner, the amount the company contributes is taxable to the employee, rather than being tax-free for a spouse.

End-of-life considerations also need attention. Unmarried couples can sign some legal documents that will dictate what happens, if one of them either becomes incapacitated or passes away, which is a type of estate plan.

If you die without a will or intestate, the state probate court will decide how your assets are distributed. A will by itself also won’t address everything. If you want to make sure your tax-advantaged retirement accounts — like your Roth IRA and 401(k) plans — go to your partner, make sure that individual is the designated beneficiary on those accounts. Even if your will says otherwise, whoever’s listed as the beneficiaries on those accounts will get the money. It’s the same for insurance policies and annuities.

If both partner’s names are on checking, savings or investment accounts, the account will pass directly to the surviving partner. However, for an account with only one partner’s name on it, ask the bank about the appropriate form to be completed, so the money is left directly to the surviving partner. This is what’s called a transfer-on-death or payable-on-death designation. Without this designation, the assets will end up in probate and distributed either in accordance with the will or intestacy state laws.

Regardless of how the mortgage is paid or whose name is on the loan, the person named on the deed is the owner. If the house in one partner’s name, it won’t automatically pass to the partner, as it would with a married couple (via joint tenancy with rights of survivorship). It would become part of the probate estate. To remedy this, you can retitle the home, so that both partners are listed as joint owners on the deed, “with rights of survivorship.” Each partner then equally owns the house and is entitled to assume full ownership upon the death of the other. Note that there could be other factors to consider before adding a partner’s name to an existing deed, such as expenses, tax implications and protection from potential creditors. Ask your estate planning or probate attorney before you make a change. A partner owning the house, could leave it to the surviving partner in the will. Remember, though, any asset passing via the will is subject to probate, which may lead to unforeseen issues.

In addition, a partner has no legal say in his or her partner’s medical treatment, if he or she is in a situation where they can’t make decisions for themselves. To give the partner that right, partners can grant each other a durable power of attorney over health care. This allows the partner to make important health-care decisions, if the one in the hospital is unable to do so. This is different from a living will, which states a person’s wishes if they are on life support or suffer from a terminal condition. This document helps guide the agent’s decision-making. If no one is named, medical personnel must follow the instructions in that document.

Likewise, partners may want to give each other durable power of attorney for finances. This would let them handle one another’s money, including accessing accounts as necessary, if the incapacitated partner could not do so. If the partners have dependents, name a guardian for them in the will. Otherwise, that decision will be left to the courts.

Reference: CNBC (Dec. 16, 2019) “Here’s what happens to your partner if you’re not married and you die”

What Are My Estate Planning “Must Have’s”?

“Estate planning is not only for the wealthy—everybody can benefit from ensuring their assets and finances are properly taken care of after their death.”
Many people think that having an estate plan just means drafting a will or a trust. However, there’s much more to include in your estate planning to be sure all of your assets are transferred directly to your heirs at your death. A successful estate plan also includes provisions allowing your family members to access or control your assets, if you become incapacitated.
Investopedia’s recent article, “6 Estate Planning Must-Haves,” provides us with a list of items every estate plan should include:
• A will and/or a trust;
• Powers of attorney;
• Beneficiary designations;
• A letter of intent; and
• Guardianship designations.
In addition to these documents and designations, a thorough estate plan also should consider the purchase of insurance, like long-term care insurance, a lifetime annuity to generate some level of income until death and life insurance to pass money to beneficiaries without probate.
Let's look at each item on this checklist to make sure you haven't left any decisions to chance.
Wills and Trusts. A will or trust should be one of the primary parts of your estate plan, even if you don't have a lot of assets. Wills make certain that your assets are distributed according to your instructions. Some trusts also help limit estate taxes or legal challenges. Talk to an experienced estate planning attorney about wills and trusts.
Power Of Attorney. A durable power of attorney (POA) allows an agent or a person you assign to act on your behalf, if you’re unable to do so yourself. A healthcare power of attorney (HCPA) designates another person to make critical healthcare decisions on your behalf in the event of incapacity.
Beneficiary Designations. Some of your assets will pass to your heirs without being mentioned in your will, such as 401(k) plan assets. Therefore, maintain a beneficiary and a contingent beneficiary on these types of accounts. Likewise, insurance plans should have a beneficiary and a contingent beneficiary, because they also pass outside of a will. Your beneficiaries should be over 21 and mentally competent.
Letter of Intent. This is simply a document for your executor or a beneficiary to define what you want done with a particular asset after your death or incapacitation. Some letters of intent also contain funeral details and other special requests. A letter of intent isn’t legally binding. It helps inform a probate judge of your intentions and may help in the distribution of your assets, if the will is declared invalid for some reason.
Guardians. If you have minor children or are considering having kids, naming a guardian is very important. Be sure the person(s) shares your views, is financially sound and willing to raise your children. You should also name a backup or contingent guardian.
Without these designations, a court could order your children to live with a family member you wouldn't have selected, or in some instances, the court could instruct that your children become wards of the state.
A will is a great place to start, but it's only the starting point.
Reference: Investopedia (July 16, 2019) “6 Estate Planning Must-Haves”

When Do I Need a Power of Attorney?

“In the absence of a durable power of attorney, who has the right to sign for an incapacitated person?”
Without a valid durable power of attorney, the answer really depends on what documents need to be signed.
A power of attorney is a legal document signed by the “Principal,” granting the authority to another individual to make decisions on the Principal’s behalf. This document is only in effect during the lifetime of the Principal.
nj.com’s recent article on this topic asks “Who can sign for an incapacitated person if there’s no power of attorney?” The article noted that to have the authority to conduct financial transactions concerning the assets solely owned by the incapacitated person who failed to execute a power of attorney, a guardian will have to be appointed by the court.
A guardianship is a legal relationship established by the court, in which an individual is given legal authority over another when that person is unable to make safe and sound decisions regarding his or her person, or property.
For example, in New Jersey, an application will have to be filed in the probate part of the Superior Court, in the county where the incapacitated person resides.
If it’s not an emergency, a guardian also will need to be appointed to make medical decisions for an incapacitated person who hasn’t signed a health care proxy. This is a legal document that gives an agent the authority to make health care decisions for an incapacitated person. It will take effect, if the person is incapacitated or unable to communicate. The agent will make decisions that reflect the wishes of the incapacitated individual.
It’s typically not necessary to be appointed as an agent under a power of attorney or health care proxy or legal guardian for another person to sign an assisted living or nursing home admissions contract or a Medicaid application.
However, prior to signing another person’s admissions contract, read the fine print to be certain that you don’t become responsible for the bills!
Reference: nj.com (July 22, 2019) “Who can sign for an incapacitated person if there’s no power of attorney?”

Here's a Checklist of Things College Kids Shouldn’t Leave Home Without

“Here are 10 things your student shouldn't leave for college without.”

College takes a lot of planning for students and their families, and there’s also a lot to worry about. nj.com has a list of 10 things that your student shouldn’t go to college without. The article, “Don't let your kid go to college without these 10 things,” offers these items:

1. Health Insurance Information. Most colleges offer some free health services to students. However, that might not be enough for most healthcare needs, especially for emergencies. Even if the student is on your plan, the coverage may not be enough, if the student goes to college in a different state. The possible need for out-of-network care could get very pricy. Ask your insurance company to calculate how the student’s bills would be covered. You should also take a look at any insurance offered by the school.
2. A Local Providers List. An out-of-state student can get an annual check-up when she’s home for the summer, but some medical needs may not conform to the times when they’re home. Before students get to campus, prepare a list of local care providers who take your insurance.
3. Durable Power of Attorney and Healthcare Proxy. When your student was a minor child, as the parent, you had the right to receive information about his medical care, and you were authorized to make medical decisions on his behalf. Remember that, when your child reaches the age of majority, you lose those rights. That’s why it’s critical for your student to sign durable power of attorney and healthcare proxy documents. These two documents will authorize you to make financial and healthcare decisions for your student, and to get information about his care. Ask an estate planning attorney to create these documents for you. It’s well worth it.
4. A Budget. Aside from how to pay tuition, students need to have a plan for other expenses, like textbooks, pizza, and toothpaste. Create an estimated budget with all possible expenses and examine discretionary costs.
5. A Money Back-Up Plan. You know that even with a great prepared budget, there may be times when Sonny calls home asking for money. A slick way to transfer funds to your student is to have a linked bank account. You can easily transfer money from your account to his.
6. A Credit Card. Credit cards in college take some discipline. Help your student find one credit card with a low available balance. She can use the card for a few regular expenses each month, which are accounted for in your budget. Stress the importance of paying on time, every time. That will help to build a strong credit score. With a solid credit history, after graduation it will help her get an apartment or a car loan.
7. Renter's Insurance. Ask your homeowner’s insurance company about how and if your student’s possessions will be covered by your policy, when she moves into a college dorm. Most policies will give coverage but be sure it’s not limited. If it’s not as comprehensive as you’d like, you should consider purchasing an additional renter’s policy, especially if the student is living in an apartment instead of a dorm.
8. An Emergency List. Create a shared online document that has all the student’s essential information, so you can both easily access it. It should include the student’s bank and credit card account numbers and how to contact the bank, if the cards are lost or stolen. It should also have college contact information, like a student ID number and account information for financial aid and student loans.
9. A Local Buddy. If your kid’s going to college far from home, see if you can find a friendly face for her near the college. It could be a Facebook friend from high school who lives near campus. Maybe your sister’s college roommate has a relative there. It’s reassuring to have another responsible adult as an emergency contact, particularly if the parents are many hours away from campus. Introduce your student to this person, even if it’s only over email, and make sure they have each other’s numbers—just in case. Your student may even get a couple of free home-cooked dinners from it. You should also be sure that you have a phone number for your student's roommates or friends—just in case you urgently need to contact your student, but he is not answering your texts.
10. Absentee Ballot. When your student turns 18, she’s a prospective voter. Make sure your student applies for an absentee ballot and exercises her new right!

Reference: nj.com (August 13, 2018) “Don't let your kid go to college without these 10 things”