Category Archives: Probate Law
It is important to acknowledge that a probate court serves an important role during life and after death. During life, a probate court (i) protects the financial assets of an individual needing protection (through a conservator) and (ii) oversees the medical and personal care needs of an incapacitated individual (through a guardian). After death, the probate court supervises the collection and application of assets that were titled in the deceased individual’s name alone (meaning assets with no surviving joint owner or no surviving beneficiary). In both situations, the probate court may provide valuable oversight and accountability. Sometimes the court is needed to resolve disagreements over wills, trusts and powers of attorney, as well as to decide family inheritance feuds.
Regardless of the important role and value of probate court, some individuals prefer to stay away from the probate process if at all possible. There are several legal tools that may be used to side-step probate court:
Powers of attorney – Powers of attorney, both medical and financial, are the two most important documents required in order to stay out of probate court during life. A general, durable power of attorney for finances (GDPOA) nominates a trusted individual (known as the “agent” or “attorney-in-fact”) to manage legal and financial affairs for the person signing the document (the “principal”). Medical decisions can be delegated to a patient advocate. This is done with a durable power of attorney for health care, known in Michigan as a patient advocate designation (PAD). It is important to note that the principal does not give up any rights or freedom by signing a power of attorney document. The agent and patient advocate are fiduciaries who must act in the principal’s best interest and at the principal’s direction.
With a GDPOA that includes the proper language, the agent will have authority to handle real estate, financial accounts, retirement accounts, business interests, mail, motor vehicles, debts and other legal matters. If a GDPOA is in place and provides the authority needed, it will not be necessary to ask the probate court to appoint a conservator to manage financial and legal affairs in the event of the principal’s physical or mental incapacity.
With a PAD, the named patient advocate may be authorized to make medical decisions on behalf of an individual who cannot make those decisions himself or herself. This document also serves as a durable power of attorney for health care and for care, custody and medical treatment decisions. This document and the powers in it are sometimes called a “living will” or an “advance directive for health care.” The patient advocate has the authority to make a broad range of medical decisions, including decisions regarding life support, as provided in this document and in accordance with the individual’s wishes.
Trusts – Trusts are usually thought of as a type of will. Unlike a will, however, a revocable trust operates both during life and after death. Also unlike a will, a trust does not require probate. The trust maker (“settlor”) sets up a document that designates an individual (“trustee”) to manage assets titled in the trust for the settlor during the settlor’s lifetime (if incapacitated). Upon the settlor’s death, the trustee follows the trust’s instructions on distributing the trust’s assets to named beneficiaries. As the trustee has legal authority over trust assets, the probate court is not needed to manage and distribute the assets of the trust. This makes a trust a key tool to avoid probate during life and after death.
Beneficiary designations – Beneficiary designations may be used to transfer bank, investment and retirement accounts to specific individuals and charities upon death. In some instances, a special kind of deed may work to transfer real estate on death. The benefit of beneficiary forms is avoidance of probate upon the death of the account holder or real estate owner. On the other hand, there are several disadvantages with these forms as they frequently (i) are not updated after divorces or deaths of family members, (ii) are not reviewed regularly, (iii) are filled out incorrectly, and (iv) do not coordinate with other estate plan documents.
Joint ownership – Accounts and real estate with multiple joint owners will transfer probate-free to the surviving joint owners. Joint ownership is usually appropriate for married couples, unless it is a second, or more, marriage. Joint ownership is not usually advisable between parents and children or other persons as this may cause tax, legal and inheritance problems.
Some things to remember:
- Powers of attorney (medical and financial), trusts, wills and beneficiary documents should be reviewed frequently and updated as needed;
- Each tool described above has a limited purpose and should be coordinated with other tools; and
- It is risky to utilize these tools without consulting an attorney, CPA or financial advisor.
Norman E. Richards (Gene) is an attorney at the law firm of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law. He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs. He may be reached at (734) 261-2400 or firstname.lastname@example.org.
Curt Benson, an attorney in our Grand Rapids office, hosts a popular syndicated radio program, The Lawyers, which airs on Newsradio WOOD 1300 and 106.9 FM. On the program, Mr. Benson interviews professors, judges, lawyers and lawmakers on legal issues in the news. He recently sat down with Gene Richards, a partner in our Livonia office, to discuss a variety of estate planning and elder law issues, legal updates, and cost-effective solutions. Please click here to listen to the informative radio program.
Mr. Richards helps clients safely navigate life’s transitions through the skillful, practical, and compassionate application of comprehensive elder law and estate planning services. He guides senior clients in planning for their future care needs, including maximizing financial resources to pay for the cost of long-term care. He takes the time to understand his clients’ needs and goals and designs practical, customized solutions for them.
It’s a travesty when the court process designed to protect seniors is manipulated by unscrupulous professionals for personal profit. Without immediate, aggressive advocacy a person can be stripped of all legal rights in less than 30 minutes at a court hearing. Admittedly, it is appropriate for a judge to appoint a conservator or guardian if an individual cannot make decisions or needs to be protected, but it should only happen when absolutely necessary. Please click on the link below to read an article regarding an extreme case of systemic abuse of the probate process.
Be an effective advocate for your spouse or parent by:
- Evaluating other options before petitioning to appoint a guardian or conservator
- Hiring a lawyer immediately
- Speaking to the court appointed investigator
- Attending all hearings
- Working out differences with family members – before going to court
- Encouraging your parent(s) to designate in advance who they want as guardian or conservator (In Michigan, this can be done in a durable power of attorney.)
The elder law and probate attorneys at Cummings, McClorey, Davis & Acho, P.L.C. are available to counsel on the pros and cons of pursuing (or defending against) appointment of a guardian or conservator in the Michigan probate courts. We also go to court on behalf our clients and advocate aggressively for the right results. Contact our office for a consultation about your situation at (734) 261-2400 or email@example.com.
Jim Schuster is a Certified Elder Law Attorney and a colleague of the CMDA Elder Law team. He is a welcome guest contributor to our elder law blog.
Everybody knows of the problems of aging adults, however few give it the serious attention it needs. The failure to address these issues appropriately can result in serious financial distress and/or a loss of independence. I have outlined five common mistakes made by aging adults and tips on how to avoid making them.
First Mistake: Doing nothing
If you do nothing to deal with aging you have a good chance of lifetime probate. That means the probate court must appoint a guardian or conservator to handle your affairs. One study found that the number one cause of probate guardianship was the need for emergency medical treatment when the patient cannot give consent.
The cost of probate over your lifetime can be enormous and you lose control over your life. It’s like being a child again.
Second Mistake: Only planning for death
Many people think they are “all set” if they have a will. A will is only effective at death. We are talking about lifetime issues, not what happens after we die. For example, in a hospital or a nursing home an empowered advocate can mean the difference between life and death.
Third Mistake: Joint property with children
Many seniors think they are all set if they have a daughter or son on their bank accounts with them. The thinking goes “that way they can pay the bills if I cannot.” There are many problems with joint accounts.
The first is that it solves only one problem of aging: paying bills. Joint accounts give the child no ability to help the parent in any other way. If the child calls the insurance company they will ask “Are you the insured?” The child will say “No. But, I’m joint on the bank account.” That goes nowhere.
The more serious problem is the risk of loss of life savings to a child who has financial bad luck. The same can go for the house. If a child is a joint owner, then if the child is sued, divorced or goes in bankruptcy so does your property.
And finally, joint accounts can be the source of probate battles after the death. What if a parent makes an account joint with one child? After the parent dies, will the child share it with the other children? What if the parent’s will says to share equally? Unfortunately there are no absolute legal rules and questions like these are often answered after a bitter battle in probate court.
Fourth Mistake: Paying employees under the table
People who perform personal services in the home are “employees.” The recipient of the services is the employer, who is responsible for collecting and paying income, social security, Medicare, and unemployment taxes.
Let’s make it personal. Suppose the lady falls down the stairs carrying laundry. She can file for workers’ compensation and have her medical bills and her wage loss paid by the employer – you. If you “let her go” because daughter can now do it, the lady could file for unemployment. And then you start hearing about back taxes, interest, and penalties
Fifth Mistake: Not getting legal advice for “means tested” government benefits
Veterans “Aid and Attendance” and Medicaid nursing home benefits are very valuable to elders. But, they are “means tested.” They have asset and income limits. Few people know that these programs allow some common sense solutions to losing all your life savings before you get your earned benefits. Like the income tax you need to know what “deductions, credits and exemptions” the programs allow. When it comes to these government benefits get legal advice.
Conclusion: It is really easy to do it right
For the average person a “life care” plan is no more difficult than preparing for “death and taxes.” All you have to do is identify your trusted assistants and give them legal authority to do what they will need to do – everything. And then make sure they know when to get professional advice. Do that and you are 99% there to having aging go as smoothly as it can be.
Jim Schuster, a Certified Elder Law attorney, is an Of Counsel attorney at the law firm of Cummings, McClorey, Davis & Acho, P.L.C. He has been licensed to practice law since 1978 and practices entirely in the area of Elder Law. Mr. Schuster helps elders stay independent and in control and helps children of aging parents with the advice and legal documents they need to carry out their parents’ wishes and take care of their needs. Additionally, he assists clients with the complex Nursing Home Medicaid application process.
Attorneys in the Estate Planning and Elder Law practice group at Cummings, McClorey, Davis & Acho, P.L.C. are available to answer any questions about the five common mistakes outlined above. We offer compassionate, common sense solutions for seniors worried about the future. Contact us at (734) 261-2400 or www.cmda-law.com.
Advocacy is an important need of older adults as they strive to preserve their independence and protect their interests. For example, strong advocacy is needed to: protect life savings, deal with incapacity, find quality long-term care (whether at home, in assisted living or a nursing home), and qualify for government benefits to pay for long-term care (such as Medicaid and VA benefits). Elder Law attorneys use specialized legal tools and strategies to augment the “advocacy power” of older adults facing these situations. Read more