Practical Concerns of Estate Planning

March 3, 2017

Having an estate plan in place for both finances and health care is essential to ensure that your assets are protected during either mental or physical incapacity or upon your passing. Of particular importance are Wills and/or Trusts and Powers of Attorney. As discussed in other articles, this is especially important with closely-held corporations where the owner(s) is involved with the operation of the business and the owner’s disability or death could potentially be a key component of value and operation.

A recent personal situation has reminded me there are also some practical considerations when a loved one becomes mentally or physically disabled. I recently was involved in a situation where the location of an elderly couple was not known. A missing person’s report had to be filed in order to find out where the couple was. Questions asked by the police of the family drew blank looks, and telephone calls to the lawyer could not produce anything other than estate planning documents. The questions were:

  • What is the license plate number and the vehicle identification number of the car that they normally use?
  • Who are the couple’s doctors and what medications are they on?
  • What hospitals have they used?

Since the couple in question lived out-of-state and independently, the family had no idea how to answer these very simple questions. Luckily, the story has a happy ending as the couple was found at a nearby hospital, and their car was parked at an emergency clinic and easily recovered. However, it shows the gap in estate planning from a technical standpoint that can occur if both health and financial data are not included in the documentation that is given to potential attorneys-in-fact or family members.

These issues can be particularly difficult if a family member or family members are very private and personal with their information. Oftentimes, the elderly are used to being competent and have been competent for many years in handling their personal, financial and medical issues. But as we all age, mental capacity to handle multiple issues becomes much more difficult. It is especially true with a married couple wherein one of the spouses might be a personal caregiver.

My experience with personal caregivers is that over time their ability to function at a high level cognitively becomes eroded by the pressure of handling the personal and medical needs of a spouse or companion who is not as competent. I am, therefore, encouraging all of my clients going forward to accumulate and give the following information to their health care powers of attorney and financial powers of attorney and any other family members who may be involved in the decision making process:

  • List of all doctors’ names, addresses and phone numbers.
  • List of all medicines being taken and the frequency of ingestion.
  • All medical and long-term care insurance policies, Medicare information, and Social Security numbers. (These obviously should be secured in both their paper forms and electronically.)
  • List of all licenses, both professional and personal, along with license numbers.
  • List of all vehicles, registration information, license information, and vehicle identification numbers.
  • All other insurances and agent information with regard to home and auto insurance.
  • All personal and financial information including, bank accounts, investment accounts, IRAs, 401(k)s, any individual stocks held either in street accounts, through financial advisors or individuals, and the names of all financial advisors, addresses and phone numbers.
  • A power of attorney should be placed of record in the safe deposit box and any main checking accounts or savings accounts the principals use for daily expenses and living.

This is not a complete laundry list, and each situation is different. For instance, a business owner should also, on at least an annual basis, list and publish to his/her attorney-in-fact all balance sheets and income statements for the year and both business and personal tax returns so that the attorney-in-fact will know what, if any, actions to take if a principal should become disabled or die. Personally, I do a yearly letter to my family advising them of my finances and any pending personal business transactions. That way, they are aware of what I would like done with those transactions or assets if I am not around to manage them.

Net worth statements should be done on an annual basis. If the business and principals are already involved with bank financing, that is a requirement for continued financing, so it should be easily found and delivered to an attorney-in-fact.

In closing, although each situation is different, estate planning does not stop with the execution of Wills, Trusts and Powers of Attorney. It is also the process of informing and educating principals’ attorneys-in-fact for both health and finances so that they can get at the information necessary to make financial or health decisions on your behalf. This is particularly difficult for extraordinarily private individuals. However, in order to properly serve family members as an attorney-in-fact or power of attorney, it is necessary that they have direction from the principals when they are competent and healthy and not when a crisis occurs.

For more information about "Practical Concerns of Estate Planning," contact Donald J. Murn at dmurn@axley.com or 262.409.2277.