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How Can Power of Attorney & Guardianship Help Me Care for My Elderly Parent?

What is the difference between Power of Attorney and Guardianship?

Transcript:

A client approached me today regarding issues he's having with his mother who was recently admitted to the hospital. She had mounting medical bills that needed to be paid. He was wondering if there was a way that he could get access to her bank account, her brokerage account, in order to pay those bills. There's 2 different ways that you can do it. One is by power of attorney.

Now fortunately this individual did have a power of attorney document prepared prior to her going into the hospital, being admitted to the hospital, and that's essentially mentally incapacitated. The power of attorney document allows the individual to access her account, allows them to use that money for her best interest, to pay those medical bills.

Now power of attorney documents need to be prepared prior to an individual becoming mentally incapacitated. Usually they'll be done when an individual knows who they want designated as their potential power of attorney, who they want designated as the agent, as well as potentially who they want designated as their guardian.

The documents are very simple and straightforward. Some people get a little intimidated by them because they are a legal document. However they're very simple and straightforward to prepare. If you were to come into our office we would be able to do them fairly quickly at a minimal expense for you.

They're great to set up now while you have your mental capacity, in order to have them valid when you do become mentally incapacitated. However, if this individual, if he didn't have the power of attorney document set up prior to his mother going to the hospital and becoming mentally incapacitated, he would have had to go through a longer and relatively more expensive process in guardianship.

Guardianship is where you petition the court to have the court appoint you or whoever it may be, another family member, as the guardian of the individual's estate and person. To be appointed as a guardian of the individual's estate means that you are now responsible for her finances, for her bank accounts, her home, making all her payments, whether it be for house payment or medical payments, medical bills that are due at the time.

To go through that process it takes considerable amount of time as well. It could take between 3 to 6 months in order to get yourself appointed to get that appointment from the court, the order allowing you to go into her accounts to do that. To become the guardian of her person means that you are now able to make her medical decisions, what type of treatment, or whether to essentially end her life if for some reason she was on life-sustaining support at the time.

Now all these decisions can be done prior in a power of attorney document. You get a durable power of attorney for financial decisions, as well as a power of attorney for health care decisions. These will all lay out exactly what the individual wants if they fall into that state, if they become mentally incapacitated, or if the health care, if they are on life support and need decisions of what they like to do if they want to essentially pull the plug.

Those are issues that are dealt with prior to them getting into that situation, so you know exactly what the person wants and there's no guessing. These are all items that we do here, whether it be power of attorney documents which can be done fairly quickly and inexpensively, or in the case if someone wasn't able to plan ahead and it was essentially an unforeseen event, they become incapacitated, they'd have the power of attorney documents and we need to set up a guardianship. That's also something we can take care of here.

mental capacity, undue influence, ernie banks, Baseball Field

Mr. Cub’s Legacy, Mental Capacity, and Undue Influence

Hall of Famer Ernie Banks, “Mr. Cub,” played 19 seasons with the Chicago Cubs, averaging more than 30 home runs and 100 RBI per season. He played from 1953 to 1971 with the Chicago Cubs. Banks captured the National League MVP in 1958 and 1959. He was inducted into the National Baseball Hall of Fame in 1977 and named to Major League Baseball All-Century Team in 1999.

Ernie Banks was a world class athlete and regarded by many as one of the greatest baseball players of all time. A statue of Ernie Banks currently stands at the entrance of Wrigley Field.

His physical and mental strength is obvious from his many accomplishments. Unfortunately, his health deteriorated quickly at the end of his life. He was diagnosed with moderate to severe dementia and later died by a heart attack in January 2015. Yet his death was not accompanied by mourning and celebration of his lifelong accomplishments, but was entangled with a potential legal battle regarding his testamentary wishes.

Court records show that in 2008, Mr. Banks prepared a will and trust to distribute his assets or estate to his wife and three children. He also requested that his ashes to be scattered at Wrigley Field “when the wind is blowing out.” However, the source of controversy is predicated on a second will and trust that was prepared in 2014 that disinherits his wife and children and bequeaths the entire estate to his then caretaker, Regina Rice. According to Ms. Rice, Mr. Banks entrusted her to carry out his wishes and wanted to make sure his estranged wife did not share in his estate after he passed.

An individual has the right to bequeath his or her legally owned property to anyone he or she wishes. However, each state in the US has certain requirements that must be met in order for any testamentary document, such as a Last Will and Testament or a Trust, to validly transfer property from the decedent to the beneficiaries or heirs after passing. There are two issues that highlight the disputes between Ms. Rice and Mr. Bank’s family:

Did Mr. Banks have the mental capacity to change or alter his Testamentary documents in 2014?
Was Mr. Banks unduly influenced by his caregiver to change his documents for her benefit?

Mental Capacity

An individual must have his or her legal mental capacity in order for the testamentary documents to be valid after his or her passing. In Nevada, courts have held that for a person to be of sound mind while executing a will, a person must:

Know what a will does;
Know generally who are his heirs;
Have a general understanding of his assets; and
Decide how he wishes to distribute those assets after his death.

In this case, court filings indicated that Mr. Banks meet with a neuropsychologist at the University of Illinois Medical Center on October 14, 2014 and the evaluation “specified that Ernie exhibited significant cognitive impairment that indicated a presence of dementia of moderate to severe degree.” In the petition to contest the validity of Mr. Bank’s 2014 will, his family presented evidence that Mr. Banks' health, both physically and mentally, was deteriorating rapidly. In October, just prior to his visit to the University of Illinois, he fell at his home and was lying on the floor for several hours. He was taken to the hospital and later released to Ms. Rice under orders that he be constantly supervised.

However, the two witnesses to the will, employees of the attorney’s office that prepared the will, have indicated that Mr. Banks was lucid and was able to communicate his desires without assistance.

If Mr. Banks family can convince the court that the mental examination only weeks before the execution of the will is valid and performed under normal circumstances, Mr. Banks family will have a strong case to have the 2014 will deemed invalid.

Undue Influence

A will can likewise be declared invalid if the individual was influenced by someone who occupies a position of trust¹⁾Caregiver or housekeeper for example that manipulates the vulnerable person to change his testamentary documents to benefit the caregiver or housekeeper. In Nevada, when a will devises property to a person’s caregiver those transfers are presumed void. The basis is that a vulnerable person, elderly or mental incapacitated, relied on the caregiver and the caregiver used her position to coerce the vulnerable person into naming her as the beneficiary contrary to his true wishes. The caregiver must rebut this presumption with clear and convincing evidence that the gift of the property through the will was truly the wishes of the vulnerable person and not the product of undue influence.

Mr. Banks’ family has evidence to show that Mr. Banks was vulnerable to his then caregiver and that through her influence and position, she was able to coerce him into changing his will for her benefit. As the case stands, the caregiver has not presented any evidence to show anything to the contrary.

Mental diseases can occur at any time, regardless of age. If you believe your loved one has been unduly influenced or you simply want to ensure your estate planning is handled before it is too late, please do not hesitate to contact Clear Counsel Law Group for a free consultation.

Footnotes[+]

Footnotes
↑1	Caregiver or housekeeper for example

Estate Planning / Probate - 09/15/2015

How Long Does It Take an Inherited Home to Go Through Probate?

How much time will my inherited home be in probate?

Transcript:

I recently had a client come to my office and ask if they were able to take possession of the property right after their friend had passed away. In their will, he was giving them the property. There's a few little tricks that need to be completed prior to an individual being able to take possession of a property of which their family or a friend wills them or gives them a property after their death. In order to receive a property and actually transfer the title from the person that passed away, the [deceased 00:38], to the now beneficiary, you have to go through the probate process. In order to begin a probate process, an executor or a personal representative needs to be appointed by the court. That allows the executor or the personal representative, it gives them the authority to collect the assets and be able to speak and get the authorization from the court. In order to do this, you have to begin a probate process. During the probate process, there's a few steps you're going to have to go through in order to actually have that transferred over to you.

During that time, there's not a whole lot that a beneficiary is entitled to do or needs to do, unless they are the executor or the personal representative. It's essentially just a waiting game. It usually takes between 4 and 6 months to actually have that property transferred over from the deceased to you now as the beneficiary. During that time, unless you're living in the property or have the authority from the executor or the personal representative to live and reside in that property, you don't have the authority to go in and request that from them. You don't have the authority to go to the court and say, "Look, I'm supposed to get this property. I need to live in it. Allow me to live in it right now," because there might be other people out there that might have issues with it. They may feel like they're entitled to it. The court needs to work that out prior to you actually moving in to the house. Once the probate process has been completed, the court has authorized the executor or the personal representative to distribute that property or to transfer that deed from the deceased now to you as the beneficiary or heir of the estate. Once that happens then the property comes into your possession. You're now the legal owner and have the right to actually live in the property.

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Probate / Probate Videos - 09/04/2015

undue influence, probate, estate planning, parents, elderly, mother and daughter

Top 10 Ways to Protect Yourself Against Claims of Undue Influence

If you are taking care of your elderly mother or father, especially if your parent is living in your house with you, pay attention: Your siblings will claim that you exerted undue influence on your parent. I am probably being a little overly cynical, but claims of undue influence, both before and after mom or dad have passed away, happen all the time and keep many lawyers in business with tens of thousands of dollars in legal fees paid pursuing and defending against claims of undue influence.

Unfortunately, the elderly in our society are susceptible to influence. In general, the elderly want to be liked and do not want to upset their children by disagreeing with something that the child proposes, particularly if the elderly parent is living with or dependent upon the child. Even when the child has no bad intentions, suggesting a course of action that the parent would not agree with is a type of influencing of the parent. And, even when the child has no bad intent at all, a suspicious or jealous sibling will do everything in his power to make those actions look as nefarious as possible.

If you are the primary caregiver for your parent or if your elderly parent lives with you, here, then, is the top 10 list¹⁾Given the limitations of this medium, you will just need to imagine me throwing a note card/the crashing glass sound upon completion of each point of things that you absolutely must do to protect yourself from the inevitable claims that you have unduly influenced your parent²⁾"Paul, hit the music!" and stay tuned next week for a our new segment "Will this legal concept float?".

The Top 10 Ways to Avoid an Undue Influence Claim Against You

#1: Be Transparent

Undue influence and particularly the suspicion of undue influence, grow in the shadows. Your siblings will become more and more suspicious if they have no idea what is happening with your parent’s health care and financial situations. Share financial statements and medical information with your siblings. “But wait a minute,” you say. “This is none of their business. What Mom and I do with her money is her business. I don’t have to tell my brother what we are doing.” You may feel this way and you may be right. However, if you choose to keep your siblings in the dark about mom’s health care and finances because it is not their “business,” just know that an eager lawyer will make it their business soon enough.

#2: Have a Written Agreement

You might think this is silly and overly formal, but make a written agreement with your parent about your arrangement with him/her. If Mom is going to contribute $200 per week for the joint household expenses, write it in an agreement. If Dad is going to pay you $1,000 per month for your caregiver services, write it in an agreement. If Mom and Dad are paying you back for expenses you incurred, write it in an agreement. When your brother sues you for undue influence (and he will) and the only thing that he sees is a check coming out of Mom or Dad’s checkbook written to you, he will naturally assume you were just cashing in at Mom or Dad’s expense. You might be able to convince the judge, eventually, that the arrangement with Mom and Dad was always on the up-and-up, but it will cost you much more in legal fees to do so than Mom or Dad ever paid to you. Write it down, have everyone sign it, and preferably have an independent third party (someone outside the family) be a witness to the agreement.

#3: Keep a Paper Trail

Receipts, receipts, receipts. Keep a receipt for every penny of your mom’s money that is spent. If Mom likes to pay with cash only, make sure you get a receipt for every cash purchase. If checks are written, make sure there is written documentation of the purpose of the check, especially if the check is to you³⁾see #2 above, your spouse, or to another person that would not be obvious what the check is for.

#4: Do Not Use Cash

Many elderly people like to operate only in cash. Trust me: cash causes problems. The only thing that your sister sees when she claims to everyone on Facebook that you are exploiting Mom is a bank account statement showing hundreds or thousands of dollars in ATM cash withdrawals every month. Sister is also likely to claim that you were the one using Mom’s debit card to make the withdrawals (which is probably true). It looks bad for you even if you did nothing wrong and even if you really did give all of the cash to Mom. Strongly encourage Mom to use a debit card or write checks⁴⁾I know, I’m old fashioned. A debit card purchase will at least show the payee on the bank statement if you forget my advice in #3 to keep receipts. If Mom insists on using cash, remember to keep receipts for every penny.

#5 Document Gifts or Avoid Gifts Altogether

Just as cash causes problems, so too do gifts. Mom may want to give you a couple hundred dollars here or there to thank you for your hard work. Or, Mom may give you an item of jewelry (usually the coveted diamond wedding ring). It is best to avoid gifts prior to death altogether, but if Mom insists on giving you something (whether it has a lot of value or just sentimental value) you need to protect yourself because Sister is not going to be happy when you claim that Mom gave you the diamond ring. Make written documentation of the gift and have Mom sign it. Document what the item is, when Mom gave it to you, and, in the best case scenario, a statement of why she is giving you the gift. More importantly, have an independent third party (someone outside the family, like an attorney, and preferably not one of your friends) also sign a statement about the gift. It would be most effective if the third party witness talked with Mom outside of your presence about the gift and could sign a statement explaining why Mom is making the gift. The more documentation you have, the better it will be for you when Sister sues you for taking Mom’s jewelry or stealing Mom’s cash.

#6: No Joint Bank Accounts

If Dad suggests that he wants to add your name to his bank account, urge him not to do so. When a bank account is held in joint ownership and one of the joint owners dies, the law presumes that the surviving joint owner is the 100% legal owner of the bank account and has no legal obligation to share the account with anyone else. Brother will claim that you wrongfully convinced Dad to put your name on the bank account so that you could claim surviving ownership of the account when that is not what Dad intended. Instead of joint bank accounts, Dad should consider adding your name to the account as a power-of-attorney⁵⁾but remember that all authority as power of attorney terminates upon Dad’s death, or Dad may consider creating a revocable living trust and placing the account in the trust with you as a trustee. Which brings me to …

#7: Proper Estate Planning

Hopefully, far in advance of you taking care of Mom full time or having Mom live with you, Mom established a relationship with a good estate planning attorney and has signed power of attorney documents and possibly, created a revocable living trust. If Mom has not yet done so, Mom should do so as soon as possible. WARNING: This is a sticky process. If you find the attorney for Mom, set up the appointment with the attorney, drive Mom to the appointment, or sit in with Mom and the attorney in the consultation and signing appointments, these facts will be used as evidence that you unduly influenced Mom to make the power of attorney, will, and/or trust that benefits you. Be helpful, but not overreaching. If Mom does need help getting to the attorney’s office for the meeting, do not sit in any meeting with Mom and the attorney. If Mom disinherits any of your siblings after she has started to live with you or after you are her caregiver, just know that you will be sued for undue influence even if you had nothing to do with the decision or process of your Mom disinheriting your sibling. I repeat, if Mom disinherits one of your siblings, you will be sued. In any event, even with potential problems, it is far better for Mom to have met independently with a good estate planning attorney who can do an independent analysis of Mom’s situation and assist her in making her wishes known.

#8: Do Not Use Fill in the Blank Estate Planning Forms

Dad probably does not want to pay for an expensive attorney to do estate planning for him (see #7). You cannot make him do so. But, please do not make the situation worse by buying Dad the fill-in-the-blank forms that are available at office supply stores. More often than not, these forms are completed incorrectly or signed, notarized, or witnessed incorrectly, both of which could cause the forms to be invalid. In any event, Sister will claim that you unduly influenced Dad to sign these forms, especially when everything is filled in in your handwriting, not Dad’s.

#9: Do Not Isolate Your Parents

It is crucial that you allow your siblings access to your parent, including phone access, email access, and in-person access. Even if you cannot stand to see your brother’s face, if he feels like you are preventing him from seeing Mom, he will sue you for undue influence. Be overly accommodating and go out of your way to make time for Mom to spend time with your siblings or to speak with them on the phone. To protect yourself even further, keep a log if your mother’s visits with her other children and keep track of the phone records that show calls to and from Mom with her other children.

#10 Repair Relationships

This may be the most difficult advice to give and for you to receive. If you are reading this blog post, and you are concerned about what your siblings will claim about you and your relationship with your parents, then you might have a dysfunctional relationship with your siblings. These could be deep-rooted issues and you may not like each other as much as you used to. As much as we all dislike minor children being a pawn in a divorce proceeding, it is equally bad when an elderly parent is used as a pawn in a power struggle between feuding adult siblings⁶⁾who often times are not acting very much like adults. This is a great opportunity to heal with your siblings and bring everyone around to supporting Mom or Dad in their later years. Swallow the bitter pill, be the better person, and make that most difficult first phone call to bury the hatchet⁷⁾It seems so much worse in theory than in practice. If you think your relationship with your siblings is bad before Mom or Dad pass away, just wait until Mom or Dad have died and you are sued for undue influence to see how much worse it can get.

Unfortunately, most people who care for their parents as a primary caregiver, or who have their parents living with them, are unaware of the undue influence risk. Relying on the well-worn statement of “I didn’t put a gun to her head” is not a very effective defense when your siblings – or rather your siblings’ attorney – come calling to claim that you exerted undue influence on your parent. The last person you will want to see while grieving your loss is a process server.

Footnotes[+]

Footnotes
↑1	Given the limitations of this medium, you will just need to imagine me throwing a note card/the crashing glass sound upon completion of each point
↑2	"Paul, hit the music!" and stay tuned next week for a our new segment "Will this legal concept float?"
↑3	see #2 above
↑4	I know, I’m old fashioned
↑5	but remember that all authority as power of attorney terminates upon Dad’s death
↑6	who often times are not acting very much like adults
↑7	It seems so much worse in theory than in practice

Estate Planning / General Interest / Probate - 09/02/2015

digital property, computer files, probate, estate planning

What Happens to Your Digital Property After You Die?

Our digital worlds (and digital property) are ever expanding. From Facebook, Twitter, and Instagram to downloaded music and movies, many people have a considerable amount of information stored online that needs to be accounted for after death. May these accounts, music or movies be passed to your surviving heirs or beneficiary? The answer depends upon the digital property in question.

Most of the information and accounts on social networking sites such as Facebook, Twitter and Instagram is not owned by the individual but licensed for his or her use. The license is not transferable, and thus, may not be willed or transferred upon death. Each site has different regulations on how it handles the license upon the death of a user. Facebook for example, will allow for the account to go into “memorial” status and allow others to view the account for some time after your passing.

For all social media accounts and emails, list all the accounts, users name, and passwords in your testamentary document or on a separate document, in order for your executor or administrator to have easy access to the accounts. You can instruct your executor or administrator to notify your followers of your death and possibly have your executor post your obituary or final words to the social network site.

Digital Property like Music, Movies and Photos

Music and Movies are increasingly purchased on the internet and downloaded to a computer or a cloud-based service. Some collections can be quiet extensive and worth a considerable amount of money. You want to be sure to make these collections available to your heirs and beneficiaries. For content that is downloaded and stored on your computer or external hard drive, those items will be easily transferable to your beneficiaries. Your testamentary documents can specifically list albums or movies to be distributed or just generally as percentage to your beneficiaries. For the content stored in cloud based services, it is important that you list the account name and password in the testamentary document or separate document for easy access and distribution to your beneficiaries.

Financial Accounts and Utilities

A very difficult part of initiating a probate proceeding is gathering the valuation of the assets of the estate. In this day and age, there are few individuals that receive in the mail a paper statement from the bank each month detailing the account balance and activities. Statements are now delivered via email or an email notification is sent that the statement is now available online. In order to initiate a probate proceeding, the executor or the administrator will need to prove to the court the value of the estate assets. Banks have implemented very strict privacy regulations that make it very difficult to receive any account information unless you are listed on the account. Therefore, in order to help your executor or administrator, it would be extremely helpful to document each account with accompanying user name and password for easy access. Your executor would then be able to print off a statement of the account to prove to the court the value of the accounts and potentially save your estate further probate expense.

With the ever changing internet landscape, it is important to have a well-drafted will or trust to assist your executor on distributing your digital property in the manner you desire. If you feel that you need direction or assistance with creating a testamentary document to help facilitate the distribution of your internet content, please contact us for a free consultation.

Estate Planning / Probate - 08/24/2015

Help! My Trustee has Gone Rogue

What is a rogue trustee and how can s/he be stopped? A rogue trustee is someone who stops following the instructions set forth in the trust documents¹⁾Contrary to popular belief, a rogue trustee is not necessarily from Alaska. In legal terms, the failure to follow the trust is termed a “breach of fiduciary duties.” In such cases, the beneficiaries of the trust are responsible for holding the rogue trustee responsible. If the trustee refuses to admit and correct the breach, this process will require the Court’s intervention. The following brief article provides some background on trusts that I hope will protect you from the actions of a rogue trustee.

A rogue trustee: what to do next

After reviewing their options, the majority of my estate planning clients choose to prepare a revocable living trust as a means of distributing their property upon their passing. A trust is the best estate planning vehicle for many folks because it does not require probate for the estate to be distributed, and because it is more flexible than other estate planning options. Trusts are flexible, in part, because they allow for the appointment of a successor trustee; an individual who will administer the trust upon the passing of the clients if the primary is unable or unwilling to do so. A trust empowers a trustee to exercise his or her discretion to achieve the objectives of the trust. However, generally, a trustee may not simply decide what s/he would like to do and disregard the instructions of the trust entirely. A trustee who has substituted his or her own wishes in place of the instructions of the trust is a rogue trustee.

Our firm once represented a beneficiary of a trust who was the victim of a rogue trustee. Shortly after our client’s mother passed away, the trustee sent out a letter stating that she was in charge and that she could decide who got how much money and the conditions from which the listed beneficiaries would receive the gifts. The trustee withheld money from our client and our client’s daughter because the trustee felt like the beneficiaries were ungrateful, and because they refused to do exactly what was demanded of them. The problem was, of course, the trustee's actions were contrary to the language contained in the trust²⁾The trust contained no language requiring our client-beneficiaries to make the trustee feel appreciated. As to if this type of condition is legally legitimate is another matter. To make matters worse, the rogue trustee took money from the trust and purchased a property for herself. Immediately upon recognizing the problem, we filed a petition to the Court asking that she be removed as trustee and otherwise held accountable for her actions. The Court forced her to provide an accounting showing how she had managed the money. Once the Court saw the extent of her breaches of fiduciary duties, the Court also removed her as trustee and appointed our client in her place.

If you or anyone you know is the beneficiary of a trust, and you are concerned that the trustee is not doing as instructed by the trust's terms, please let us review the situation to ensure that a trustee has not gone rogue.

Footnotes[+]

Footnotes
↑1	Contrary to popular belief, a rogue trustee is not necessarily from Alaska
↑2	The trust contained no language requiring our client-beneficiaries to make the trustee feel appreciated. As to if this type of condition is legally legitimate is another matter

Estate Planning / Probate / Trusts - 07/28/2015

gay marriage, nevada, will, estate planning

Gay Marriage and the Need to Update Your Will

Prior to recent court decisions, including the most recent United States Supreme Court decision in Obergefell v. Hodges, in which the federal courts have legalized gay marriage across the United States, one prominent challenge facing gay couples was the problem of inheritance when one person passed away. Due to laws that prevented unmarried, gay partners from inheriting property from each other, the gay community was particularly conscious of the need to have valid wills and/or trusts in effect prior to death. Now that gay couples may legally marry, it is an important time to review and update any prior estate planning in light of the legal marriage of the couple.

How the gay marriage decision could affect your estate planning

However, the more interesting question will arise if a person had previously signed a valid will that does NOT provide for the now-legally married spouse. For instance, let us assume that in 2007, Jane wanted to make sure that whatever property she owned upon her death would be given to her nieces and nephews, and not to certain other family members with whom she had a falling out. Jane drafted a will to ensure that these wishes were known and signed the will in 2007. Later, Jane met Susan and they legally married in 2015. Let us continue our scenario by assuming that Jane completely forgets about the 2007 will and assumes that Susan will simply receive her property when she dies because they are now legally married. When Jane dies and the nieces and nephews come forward with the 2007 will claiming the entirety of Jane’s estate, is Susan left out in the cold to receive nothing from her deceased spouse’s estate?

Luckily for Susan, Nevada law has long provided a remedy for surviving spouses who marry after the deceased spouse had already signed a will. Nevada law provides, “If a person marries after making a will and the spouse survives the maker, the will is revoked as to the spouse.”¹⁾NRS 133.110. There are 3 exceptions to this general rule that would still prevent the surviving spouse from the benefit of this law, but those exceptions will not be discussed in this blog post.. But, what exactly does that mean? What would Susan receive from Jane’s estate and what would Jane’s nieces and nephews receive?

As to Susan, the law provides that she would receive from Jane’s estate the same thing she would receive had Jane died without a will.²⁾NRS 133.110(2)[a] If Susan had a community property interest in any property that was titled in Jane’s name only, Susan would automatically receive the first one-half of all such community property as the surviving spouse.³⁾Click here for more on community property The remaining one-half of the community property “is subject to the testamentary disposition of the decedent,”⁴⁾NRS 123.250[1] which means that the remaining one-half of the community property is distributed according to the terms of the will. The nieces and nephews win the remainder, right?

Wrong: Remember that the will is revoked as to the surviving spouse and the surviving spouse would inherit as if there was no will. This becomes crucial as to any community property. If a spouse dies with community property and no will, which is how the deceased spouse is treated when there is a marriage after a will is signed, all of the remaining community property goes to the surviving spouse. ⁵⁾NRS 123.250(1)(b)[1]. Thus, Susan would inherit the entirety of all community property and the nieces and nephews get none of the community property.

What happens to the nieces and nephews?

So, you ask, are the nieces and nephews completely left out? Not necessarily. If Jane had any separate property (generally any property that was acquired prior to the marriage and that was not transmuted into community property during the marriage), the nieces and nephews are going to receive a portion of the separate property. First, Susan will receive the share of the separate property that she would have received if Jane had died without a will. If Jane died with more than one child, Susan would receive one-third of the separate property⁶⁾NRS 134.040[2] and the remaining two-thirds of the separate property would pass to the nieces and nephews according to the terms of the will. If Jane died with only one child or with no children at all, Susan would receive one-half of the separate property⁷⁾NRS 134.040(1) and 134.050[1]-[2] and the remaining one-half of the separate property would pass to the nieces and nephews according to the terms of the will. Thus, the nieces and nephews will get either two-thirds or one-half, dependent on how many children Jane did or did not have.⁸⁾ A very LARGE caveat: children born after their parents sign a will are also included in the distribution in a similar fashion to the surviving spouse. Watch for a subsequent blog post about this issue. In any event, the short answer is that the nieces and nephews may actually receive nothing from Jane’s estate even though the 2007 will is entirely valid.

Phew! If you have made it this far in this blog post and not got lost, or even if you got this far and did get lost in those details, give yourself a gold star for perseverance. Then, realize that the main point of the entire blog post is that if you have gotten married and if you did a will prior to marriage, make sure that you come and talk to me about getting it all updated. Now that Jane and Susan have the benefit of legal marriage, it would be a shame to leave their estates in a mess after death due to their failure to revisit their estate planning after the marriage.

#Lovewins

Footnotes[+]

Footnotes
↑1	NRS 133.110. There are 3 exceptions to this general rule that would still prevent the surviving spouse from the benefit of this law, but those exceptions will not be discussed in this blog post.
↑2	NRS 133.110(2)[a]
↑3	Click here for more on community property
↑4	NRS 123.250[1]
↑5	NRS 123.250(1)(b)[1]
↑6	NRS 134.040[2]
↑7	NRS 134.040(1) and 134.050[1]-[2]
↑8	A very LARGE caveat: children born after their parents sign a will are also included in the distribution in a similar fashion to the surviving spouse. Watch for a subsequent blog post about this issue. In any event, the short answer is that the nieces and nephews may actually receive nothing from Jane’s estate even though the 2007 will is entirely valid.

Estate Planning / Nevada Law / Probate - 07/24/2015

trust, probate, revocable living trust, estate planning

A Trusted Way to Circumvent Probate

A trust is a legal document that provides for an individual’s testamentary wishes. There are many benefits to creating a trust, irrevocable or revocable, that will aid the family or beneficiaries of the Decedent. This post will highlight only the benefits of creating a revocable living trust.

The main purpose, and likely most popular reason for creating a trust, is that a trust will allow for the transfer of assets upon the death of an individual without the necessity of probate. Probate can be a dreaded word for some, and a trust circumvents the entire probate process. Probate can be time consuming and expensive, even with a trusted and experienced law firm such as Clear Counsel Law Group. A trust will facilitate the distribution and transfer of assets from a decedent’s estate to his designated beneficiaries without the hassle and expense of probate.

A trust illustration

For a more illustrative view of trusts, think of a trust as a large box. The language of the instrument dictates who is to be in charge after the death of the grantor or trustee, (the successor trustee), and who is to receive assets from the grantor’s trust, (the beneficiaries). However, the trust terms apply only to assets that are placed inside the box. Missing this step of actually placing the assets inside of the box can have disastrous consequences for the beneficiaries. An asset that is not placed inside the box will not be under the purview of the trust, and in order for the asset to be transferred to the designated beneficiary, a probate estate would be required in the county that the individual died.

Personal property, such as home furnishings, paintings, televisions, electronics and jewelry are easily transferred into the trust, or placed in the box, without any effort. However, bank accounts or brokerage accounts and real property¹⁾real estate require a bit more effort. In order to move these latter assets into the box, a change of title on the financial account and a change of ownership on the deed is necessary to transfer these assets into a trust. The grantor will have the same power and authority to transfer, mortgage, or sell the assets, but now the assets are owned by the grantor as trustee of the trust.

A properly funded trust will allow for grieving family and friends to fulfill the final wishes of the decedent without the cost and time of a probate.

If you would like to speak with an experienced estate planning attorney about establishing a trust, or if you set up a trust years ago and would like a review of the your trust documents, please do not hesitate to contact Clear Counsel Law Group for a free consultation.

Footnotes[+]

Footnotes
↑1	real estate

Estate Planning / Probate - 06/18/2015

What Are Probate Assets?

After a love one has passed away, one item that most people do not want to think about is probate, but undoubtedly it may be one of the first things on his or her mind.

One important question regarding probate is: what is a probate asset? Or, What assets are included in the probate estate?

Assets belonging to an individual when he or she dies can be titled in a variety of ways. The characterization of the assets will determine if the assets will need to be included in probate or if it will be excluded from probate administration.

Decedent’s Name in Probate

All assets that are titled in the name of the decedent only will be included as a probate asset. For example, if the decedent, Joe Smith, dies leaving a bank account that is titled as “Joe Smith” this account is an estate asset. In order for the bank to release the contents of the account to the heirs or beneficiaries of the estate, the bank will require an order signed by the court that specifically designates who has the authority to collect the funds.

The same rules apply for real property that is titled in the name of the decedent at the time of his passing. By way of example, if Joe Smith dies owning real property and the property is titled as “Joe Smith,” then the real property would be an asset of the estate and county recorder and assessor would need an order signed by the court that designates who is to receive the property or an order that authorizes the sale of the property.

Designated Beneficiaries

Most financial accounts allow for the owner of the account to list or designate a pay on death beneficiary (POD) or a transfer upon death beneficiary (TOD). If the designation is completed prior to the decedent’s death and while the decedent has his mental capacity¹⁾among other conditions, then the asset will pass to the beneficiaries listed and will not be subject to the probate estate or the court’s jurisdiction.

Joint Ownership

Jointly owed accounts will become the sole property of the surviving joint owner. Many financial accounts and real property are owned as joint tenants with the decedent’s significant other or a business partner. By operation of law, the survivor of the joint owners will have complete control and ownership of the asset at the time of the decedent’s death. The asset will pass to the survivor and would do so outside of the probate estate.

For example, if Joe Smith owned his home with his wife Jane Smith and the title of the home was Joe Smith and Jane Smith as joint tenants, then at the time of Joe Smith’s passing, Jane Smith would be the sole owner of the property. Joe Smith’s interest in the property would not be subject to the probate estate.

Footnotes[+]

Footnotes
↑1	among other conditions

Probate - 06/11/2015

Slayer Rule Part II: This Time for Keeps

Previously in Part I, we discussed what happens to the dispensation of an estate if a beneficiary happens to have killed the grantor. You may recall that the rule preventing the murdering-beneficiary from receiving any estate assets is called the “Slayer Rule.” Now that we know why and how the transfer of assets to the sinning beneficiary is prohibited, it may be a good time to discuss what happens if the killer transfers or sells the property to another party? Does the acquiring party have to give the asset back? Is the acquiring party liable to be sued for value of the asset that he or she has no legal right to? We will now unpack the rest of Chapter 41B of the Nevada Revised Statutes, and find out how the slayer rule applies.

So you bought property from a killer, how will the slayer rule affect you?

So you have come across a hot deal for land, a home, or a valuable asset¹⁾please do not interpret this to mean that the assets we are discussing have to be worth a lot of money, and you did what most Americans do when offered such a deal, acted quickly and snatched it up. The next day you are sitting at home, reading the paper, and see a picture of the person you purchased the asset from on the front page. Turns out the seller happened to have murdered the person who granted him the property to sell. Because you are a loyal reader of the Clear Counsel law blog, your mind immediately thinks of the slayer rule. Now what happens? Let us take a look at the end of Chapter 41B of the NRS:

NRS 41B.400 Payor or other third person who pays or transfers forfeited property, interest or benefit. Except as otherwise provided by specific statute, if a payor or other third person, in good faith, pays or transfers any property, interest or benefit to a beneficiary in accordance with the provisions of a governing instrument, the payor or other third person is not liable to another person who alleges that the payment or transfer to the beneficiary violated the provisions of this chapter unless, before the payment or transfer, the payor or other third person had actual knowledge that the beneficiary was prohibited from acquiring or receiving the property, interest or benefit pursuant to the provisions of this chapter.

(Added to NRS by 1999, 1354)

NRS 41B.410 Person who acquires or receives forfeited property, interest or benefit without legal right or authorization.

1. Except as otherwise provided in subsection 2, if a person, without legal right or authorization, acquires or receives any property, interest or benefit forfeited by a killer pursuant to the provisions of this chapter, the person is required to transfer the property, interest or benefit to the beneficiary who is entitled to it pursuant to the provisions of this chapter, or the person is liable to such beneficiary for the value of the property, interest or benefit.

2. The provisions of subsection 1 do not apply to a person who:

(a) Acquired the property, interest or benefit for value and without notice; or

(b) Received the property, interest or benefit in full or partial satisfaction of a legally enforceable obligation and without notice.

(Added to NRS by 1999, 1354)

Ok, let us start here. A quick definition: a payor is “one who pays, or who is to make a payment; particularly the person who is to make payment of a bill or note.”²⁾Black’s Law Dictionary. If you are wondering why a distinction needs to be made between someone who pays, and someone who “acquires or receives,” remember that a person may be a payor for a third party.

Neither a payor or receiver of the property in question is liable to the rightful owner³⁾the proper beneficiary of the gift now that the killer no longer has legal rights to the property if:

The acquisition is done in good faith
The purchaser/receiver does not know that the property in question may not be sold or transferred by the killer
He or she pays more than a nominal amount for the property

Whew, that is good to know. Carry yourself above board, and everything should be alright.

Does the slayer rule protect the beneficiaries?

But what about the poor beneficiaries left in the will that have lost a valuable asset that they should have been entitled to. What recourse do they have?

NRS 41B.420 Killer who transfers forfeited property, interest or benefit to third person; effect of preemption by federal law.

1. If a killer, for value or otherwise, transfers to a third person any property, interest or benefit forfeited by the killer pursuant to the provisions of this chapter, the killer is required to recover and transfer the property, interest or benefit to the beneficiary who is entitled to it pursuant to the provisions of this chapter, or the killer is liable to such beneficiary for the value of the property, interest or benefit.

It is always nice when the law is just. The killer is liable for the value of the forfeited property, meaning he or she can reacquire the property and transfer it to the rightful owner or be sued for the value by the asset by the remaining, legitimate beneficiaries.

Crime continues not to pay, at least here in Nevada.

Footnotes[+]

Footnotes
↑1	please do not interpret this to mean that the assets we are discussing have to be worth a lot of money
↑2	Black’s Law Dictionary
↑3	the proper beneficiary of the gift now that the killer no longer has legal rights to the property

Probate - 06/03/2015

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