My brother and I are interviewing a few attorneys to handle Mom's financial situation (setting up a trust, etc.). What are the questions that I should be asking?
I would imagine the attorney, a good one, will know exactly what to ask. But I would write down anything you can think of to ask. You could probably go online & google it.
Thanks. My question is really about what we should ask the attorney as we speak with a few of them, so that we can have comparison points in order to choose which one to go with.
Sorry for the length of this, but without knowing exactly what you are trying to accomplish, here's some wide-ranging thoughts on the process. Some of this is copied from a post I did shortly after we completed revision of my MIL's trust and creation of our own. Some of these issues pertain to a two-person trust; legalities are simpler if only one person is the original Trustor.
First of all, there are many different kinds of trusts. Do you know exactly what you want to accomplish? A good estate attorney will ask a lot of questions, because it may turn out that a simple Revocable Trust will be fine, or it end up being something much more complicated and custom.
Like remodeling, there are different ways to achieve a set of goals. It's up to a good attorney to point out pitfalls or potential problems ahead every legal decision has consequences, sometimes good and sometimes bad. YouÂre trying to predict the future, which is always uncertain. It's up to you (and your family) to choose the best alternative for handling various theoretical future scenarios.
A good attorney will spend time with you. In our case, we redid my MIL's trust and created a Trust for my DH and I. Both were NOT standard documents. The price was the same, but our attorney was willing to spend considerable time (e.g., numerous meetings) to ensure all three of us were kept informed on the legal consequences of our decisions.
In a one-person trust; e.g., with only a single Trustor, the trust will end at their death when the Trustee distributes all the assets per the terms of the trust. So it is much simpler, legally.
Do be aware that standard Revocable Trust language (for a 2-person Trust) generally does not allow the surviving spouse to access principal on the deceased spouse's portion of the estate, which will become Irrevocable (the survivor's portion of course, remains Revocable).
Restrictions are common on the Deceased principal, so it is up to you to decide: do you want the Survivor to have full use of the principal or only partial use? If partial, under what circumstances may the Survivor use the dividends and/or interest? The standard allowed is health, education and maintenance - this means gifts, travel or entertainment must come from the Survivor's own estate, not the Deceased. You can change this to allow full access, even though this is unusual - we did this.
It is imperative in any Trust that the trustee and beneficiary list be kept up to date, including the successors/contingents. We needed have very intensive discussions with an estate attorney over my MIL's trust because she and her deceased husband had never updated their trust since making it 25 yrs prior. The successor trustees and contingent beneficiary list was woefully out of date and would not have served her best interests.
Do not automatically assume the people you like best will be adequate trustees, especially in a sibling situation. Sometimes the best person to pick is someone who is not only honest but neutral.
Be aware that unless you specifically request language that a trustee can be reimbursed for time at current professional rates, a trustee does NOT normally get paid for the considerable amount of time they will spend overseeing your wishes. Expenses are always paid by or reimbursed from the estate, however.
When it's your spouse that's not a big deal, but in our case it is a relative by marriage - she would have to take off work on her own vacation time or unpaid to deal with our estate, which we felt was not fair. I have settled estates and it takes a LOT of time, at a period when you are grieving yourself. I would be happy never to do it again, believe me; it is a burden, never a joy.
You may wish to be very specific about the handling of real estate property once both Trustors pass away. Probably more disputes have occurred over RE than anything else. Heirs can get into a sentimental mindset and act in illogical ways which often irreparably damage sibling relations.
As an old saying goes, "Never say you know anyone until you have split an inheritance with them!" It is unfortunately all too often true.
Make sure the package includes pour-over wills, power of attorney, durable healthcare power of attorney INCLUDING the HIPAA releases. It is up to you to copy your doctors with the healthcare POA. The attorney may or may not transfer your home title to the trust; ours included it in the set fee but YMMV depending on where you live.
Be aware that anytime you go see a health specialist or get admitted to a hospital, you or your spouse should bring a copy of the appropriate health POA along. The HIPAA regulations are woefully vague and each doctor, specialist and hospital has their own way of interpreting how to obtain permission to discuss someone's medical records. In an medical emergency, this can be very important.
This is also why whoever is your primary successor Trustee after the surviving spouse, should be kept up to date and know where all these documents can be found. And they need ACCESS to a copy of these documents in an emergency without having to go to a judge to obtain legal approval. They need to know the name and phone number of your lawyer as well as where you bank (which branch you have your safety deposit box in, for instance).
All these documents should be checked over any time there is a life-changing event: divorce, sale of a home, death of a family member.
There was an article today in the WSJ regarding the use of Power of Attorney. Sadly, most difficulties arise because family members dispute with one another over the estate assets. The POA can be misused and is often a source of conflict.
Here are some of their tips:
To further protect yourself, you can require that your agent provide family members, or a third party, such as a lawyer or accountant, with regular accounting statements. Another strategy is to name co-agents. While that can be a burden -- many transactions, for instance, would need two signatures -- it can also create a system of checks and balances. In some cases, lawyers appoint an additional safeguard: a "protector," who has the power to replace the agent if there is wrongdoing.
Another key point: Make sure to carefully lay out exactly what powers you want your agent to have. For instance, you can limit the agent's power to make gifts of your property, so they can't just give money to themselves. Spell out under what conditions gifts can be made, how much and to whom.
Frank Johns, an elder-law specialist at Booth Harrington & Johns of NC PLLC, in Charlotte and Greensboro, N.C., often asks his clients and their agents to sign "interpersonal agreements," documents that have no legal meaning but which might lay out in simple terms the importance of what's expected. "Signing that document can be a very powerful event," Mr. Johns says. "Usually, I know right away that the agent is going to live by the agreement."
Power-of-attorney laws differ from state to state, so make sure your lawyer is familiar with what your state allows. Rules also can vary by financial institution. Lawyers say banks are increasingly scrutinizing power-of-attorney documents or are reluctant to honor them, because they fear being subject to suits alleging they unwittingly helped an account be drained by an improper agent.
Here are some steps you can take to help safeguard your financial power-of attorney document:
Â Require that your agent provide family members or a third party with regular accounting statements.
Â Name co-agents, who can provide checks and balances, or an overseer who has the power to remove an agent.
Â Make sure to carefully lay out exactly what powers you want your agent to have. You can also limit the agent's power to make gifts of your property.
Â If using a "springing" power-of-attorney document, which goes into effect only when you are declared incapacitated, carefully specify how you are to be deemed incapacitated. You can require, for instance, that your agent get a second opinion.
Â Be aware that rules regarding powers of attorney can vary by state and by financial institution.
Â Create a so-called living trust. You can transfer your assets into the trust and designate a trustee to manage trust property if you become incapacitated.
Â For more information, or to locate a lawyer who can help draft the documents, contact AARP (www.aarp.org), American Bar Association Commission on Law and Aging (www.abanet.org/aging), American College of Trust and Estate Counsel (www.actec.org) or the National Academy of Elder Law Attorneys (www.naela.org).
Note: There are two main kinds of power-of-attorney documents. If you're using a "springing" power-of-attorney document, which goes into effect only when you are declared incapacitated, make sure to carefully specify how you are to be deemed incapacitated. You can ask, for instance, that your agent get a second opinion to make sure you really are unable to handle your own affairs.
A non-springing power-of-attorney document, meanwhile, goes into effect immediately upon signing. That can be useful in a case where an agent wants to immediately take control to stop, say, abuse by a neighbor or caregiver, without waiting for a doctor's declaration of incapacity. "You can go in and start safeguarding the assets right away," says John Pankauski, a West Palm Beach, Fla., lawyer who specializes in lawsuits involving power-of-attorney abuses. He adds that you really need to trust your agent to do a non-springing power of attorney. Mr. Krooks suggests using a non-springing document, but not handing it over to your kids. "Tell them where it is," he says, and once you lose your capacity, they can use it.
Another option is to use a so-called revocable living trust. These trusts go into effect while you're still alive, and you can name another person as trustee to manage property in the trust once you become incapacitated. Many people name institutions, such as banks or trust companies, as trustees, if they're worried a family member might loot their money. However, you should still name an agent as power of attorney to handle assets not in the trust.
There is some recourse if your agent is accused of financial impropriety. Another loved one can petition a court to name a protective guardian or conservator. Typically, court-appointed guardians can be another family member or a third party, such as a lawyer, a bank, a social worker or a specially trained professional guardian. Note that court-appointed guardians are always paid on an hourly basis by the estate, at rates set by the state.
Lots of information to sift through. Just be sure the attorneys you're interviewing are skilled in estate planning. Laws vary from state to state, so consult with an attorney who is knowledgeable in estate and assets management - not just any lawyer who can crank out boilerplate wills, documents, etc.
My parents each established Self-Directed Revocable Living Trusts, making each of them own trustee; in both cases my brother was named as successor trustee. In my father's case, he was able to manage his own affairs right up until the time he died. And although my mother was his sole beneficiary, his trust was retitled as a Family Trust with my brother as trustee. And although this family trust did not pour into my mother's trust (because it was wise not to combine the two to trigger estate taxes down the line), the principle, interest, dividends, and all assets contained therein were completely at her discretion and for her maintenance and well being - she could buy and sell, wheel and deal, make money, lose money, give $12k to any number of recipients per year, etc. At her death, both the Family Trust and mother's revocable living trust were dissolved and distributed between my brother and me. The dissolution was so incredibly simple it was almost alarming, one short visit with the lawyer and that was it. The Trusts both included unrecorded warranty deeds for the house; mother's copy went to the court house to be recorded in my name and that was that.
Question to ask: what is the customary maintenance fee charged by law offices or financial institutions for managing an estate?. Think long and hard before naming a financial institution trustee unless it's absolutely necessary - should they charge an annual fee of 1 or 2% it might not sound like much, but if the estate is, lets say, 500k, at "only" 1% per year we're already talking 5k. That's a lot of interest, dividends and possibly principle going out the window.
Question: Can a "Disincentive Clause" be written into my trust? If a beneficiary complains or contests the terms of the trust, he/she can be disinherited. In some families where there are estrangements and rivalries, etc. this might well be an addition to consider if there's any hint a death is going to bring out the worst in people. This type of clause should match wording in a will, also.
As you're talking to a lawyer certain information should trigger questions from you - do not be afraid to ask anything! These are your loved one's documents and should contain any and all wanted and needed specifications.
Oh my - just checked back after a couple of weeks (had the interviews) and am so gratified to see the extent to which you've answered my question. Thank yo uso mch! We've chosen an attorney and I'm meeting with her to get the ball rolling on Friday.
These questions and points that you've made will still be incredibly valuable, and I thank you so much for the time you took to respond.
I hope you got an estate attorney. I had an attorney tell me that I wouldn't be left with anything except my social security, no house or car..... if my husband went to a care home. When I related this to my friends, they told me he was wrong and he was.
I concur with nearly everything posted above. We hired an attorney skilled in "elder law" to sift through the morass that was Mum's "estate" when her health crashed and she came to live with me. It was a nightmare to get it all ironed out.
Like most "seniors", her assests were limited, and we worked with the attorney to isolate some of her (more sentimental) holdings while making others readily and EASILY available for her maintenance in "long term care". I have been very blunt about the necessity of doing this sort of thing. Many have descended on me like Harpies, assailing me relentlessly with harangues about "raiding" my mother's estate, etc., without making the time to understand the subtleties of our family's circumstances.
Frankly, I winced at such criticisms, but I also bristled and reminded myself that USING THE LAW TO YOUR ADVANTAGE is YOUR RIGHT as a citizen of this country! So harangues about "raiding" are generally from those who've ALREADY DONE IT (or balm their guilty consciences by saying their parents DID IT) or are too late/ignorant to have done what needed to be done. Remember this!
I took care of my mother IN MY HOME, at my expense, and on my own time for 3 1/2 yrs.. And it wasn't easy! She required a lot of very skilled and specialized care; all things I took it upon myself to master, render and the responsibility of which I assumed for the time she was with me. When she wasn't with me she was with my brother, who shouldered the same responsibility. I am so sick of people questioning our "motives" with nary a cursory thought to the all the hard work required on our part.
Lawyrers ROCK! hire a good one and don't allow yourself to get greedy. Avarice is one of the "Seven Deadly Sins", I believe...
Paul, sorry but laws vary from state to state. your question is far too specific, and you need to ask an attorney in the state where you are (or where the case is.)