By Associate Attorney Danielle Nodar
There are plenty of things new parents need to tackle on their to-do list to provide the best environment and future for their child. However, one big thing that often gets overlooked is planning for the unexpected with estate planning. Some of the factors new parents should keep in mind when considering estate planning are:
1) Naming a Guardian for Minors
One of the most important considerations a parent can make is naming a legal guardian for their minor children. A guardian is the person who will assume responsibility for all aspects of your child’s care if they are under eighteen when you pass away. This person will make all medical decisions, educational decisions, and step into the role of the parent in the eyes of the law.
In North Carolina, the only way a parent can designate a guardian is through their Last Will and Testament. A guardian named in a will is usually appointed by a court unless the person is unfit or incapable. Without a named guardian in a will, a court chooses the guardian based on its determination of what is in the best interest of your child. This may result in loved ones arguing over your children or the guardian being someone you would not have chosen.
2) Managing Inheritance for Minors with Trusts
If you leave assets outright to a minor child, those assets will be kept in a custodial account to be managed by a surviving parent or legal guardian. The adult in charge will manage the money for the child’s benefit until the child turns eighteen or twenty-one and inherits the remaining assets outright. Even when a child reaches the age of majority, many parents worry about a child’s ability to manage finances on their own, especially if it is a large amount of money being inherited. To have more control over your child’s inheritance, many parents set up a trust for the benefit of their children. Parents can create a trust with either 1) a revocable living trust, which is a separate trust agreement that is funded by the parent with their assets during their lifetime or 2) a testamentary trust, which is created in a will and only goes into effect at the death of the parent.
Both types of trusts allow the parents to name a Trustee to manage any inherited assets for children until the child inherits outright at a later age, such as twenty-five, for example. The Trustee will manage the assets and make distributions of the funds for your children’s health, education, maintenance, and support according to the terms of the trust. You can determine how much discretion you give the Trustee is managing the trust, and you can also provide them with clear guidelines of what are permissible expenses.
3) Updating Beneficiaries on Financial Accounts
If you have accounts that allow you to name a beneficiary, such as life insurance, retirement, or investment accounts, those funds will automatically go to the named beneficiary, even if your will names different beneficiaries. If you are creating or updating your will to include children, it is important to review your beneficiary designations to make sure that those assets will go where you want them to and that your plan works with both your will and beneficiary designations.
4) Updating Your Living Documents
Another key part of estate planning is naming who would make legal or medical decisions for you in an emergency where you cannot make those decisions for yourself. By naming agents under a healthcare power of attorney and durable power of attorney, you can ensure that if you become incapacitated, someone you trust can access your funds to care for you and your child and make medical decisions for you until you recover.
5) Considering Life Insurance
Many new parents consider life insurance to ensure funds are available for your children’s needs if they pass away while their children are still young. There are many factors to consider when looking into life insurance but finding a trusted insurance professional to assess your family’s specific needs is the first step in the process. Finally, if you do create a trust for your child, you can name the trust as a beneficiary of the life insurance policy, which would allow those funds to be used by the Trustee for your child’s benefit according to the trust’s terms.
If you have questions about how to create or update your estate plan to best protect your family, please call Jesson & Rains!
By Associate Attorney Danielle Nodar
Do you have a child getting ready to start college or already away at school? While going through the college essentials checklist, make sure to consider what your child may need in the event of an emergency, including legal powers of attorney allowing you to make healthcare, financial, or legal decisions for them in event of an emergency. Once a child turns eighteen, the child is considered an adult in the eyes of the law. This means that parents are no longer given access to their child’s financial, health, and educational records without the consent of their adult child. For this reason, it is essential for parents and young adults to discuss the importance of healthcare powers of attorney and durable powers of attorney before a child heads off to college.
A healthcare power of attorney allows a person to name an agent to make healthcare decisions on their behalf in the event that the person is unable to communicate their wishes to their medical providers. This document contains authorizations allowing the health care agent to access private health information while they are acting as agent. Without these authorizations, medical providers are legally prohibited from releasing such information. No parent should be put in the position of being in a different state from their child and being told that their child has been hospitalized, but the hospital is unauthorized to release any other information about the child’s condition or care. A properly executed healthcare power of attorney can avoid this situation and allow parents to easily step in and access medical information during an emergency. This document also allows your child to include instructions relating to their healthcare, including
wishes related to organ donation or wishes relating to religious or cultural practices. The student can keep these documents on file with their university or medical provider so that it can be easily accessed if needed.
A durable power of attorney allows a person to name an agent to make legal, financial, and business decisions on their behalf if the person becomes incapacitated (unable to handle their affairs). The power of attorney can be used to allow parents to help pay a child’s bills, access the young adult’s personal bank account or education records, or manage the child’s finances or legal decisions in the event of an emergency. Without a durable power of attorney, you would not be able to manage your child’s financial and legal affairs during an emergency without petitioning a court to be appointed the child’s legal guardian.
If a child is going to college outside of North Carolina and does not have these legal documents in place, the laws of that state will control who may be able to make decisions on behalf of the child if they are incapacitated. For example, in North Carolina, if an adult does not have a health care power of attorney and is unmarried, the majority of the child’s parents can make healthcare decisions if the child is unable to. This means that parents will be joint decision-makers and must agree on all actions taken by doctors. In North Carolina and most states, there is no default decisionmaker for legal and financial decisions, so a parent must seek to be appointed the child’s legal guardian by the courts. This process is more costly, stressful, and time-consuming than having documents in place before the need for them arises. If your child resides in North Carolina but is going to school out of state, these documents will allow you to act on behalf of
your child in an emergency regardless of the other’s state’s rules on default decisionmakers as North Carolina documents will be valid in another state.
During this exciting time where a young adult is gaining more independence, they may be reluctant to give their parents decision-making power over health or finances. However, they can be assured that these documents only go into effect after doctors certify that they cannot make their own decisions. During normal circumstances, the young adult still maintains their privacy and autonomy over their healthcare and financial decisions; these documents only assist in the event of an emergency. Finally, now that your child has turned eighteen and is getting ready to enter adulthood, it may be a good time for you to review your estate plan to make sure that it still meets all of your needs and goals. Please call Jesson & Rains if you have questions about these documents or want to learn more about protecting you and your child’s interests through estate planning.
- By Jesson & Rains Associate Attorney, Danielle Nodar
The beginning of a new year lends itself to reflecting on the year that has passed and setting goals for the future. Come January, we are bombarded with information about New Year’s resolutions and implementing plans to help us transform our resolutions from lofty dreams to our reality. From health goals relating to diet and fitness, financial goals such as saving for retirement or paying off longstanding debt, even decluttering our homes--there is no shortage of information about what we can do to improve our present and plan for our future.
However, one area of planning that many people seem to put off is creating an estate plan. Estate planning involves meeting with an attorney to discuss things like your assets and debts and how they could impact your estate plan; how you want your property distributed at your passing; who will administer the probate of your estate; who will handle your financial affairs and medical decisions if your become incapacitated and are no longer able to make those decisions on your own; and other important decisions that could make a lasting impact on your loved ones.
Even if you have an estate plan in place, you should meet with your estate planning attorney every three to five years to review any life changes or changes in the law. Some reasons to update an estate plan are:
If you have had any major life changes or just want to ensure that your estate plan is in order, make it a goal for 2019 to plan for your future and the future of your loved ones with estate planning. We can help you to ensure that your property is distributed how and to whom you want it to be distributed and to ensure that you are leaving your family unburdened.
In honor of that day, we thought we would provide an overview of the healthcare-related documents we draft for our clients in addition to the standard wills and trusts that most people realize are part of jobs. Additionally, though, estate planning attorneys draft documents that deal with the potential for incapacity during their clients’ lifetimes. These documents cease to have any effect after the client has passed away, so they are not true estate planning documents if you consider that definition to include only documents that deal with property distribution. Estate planning attorneys help their clients plan for possible incapacity with the following documents:
(1) Durable power of attorney. In this document, you would name an agent to act in your place as to financial, business, and legal decisions, if you were incapacitated (unable to handle your affairs).
(2) Health care power of attorney. In this document, you would name an agent to make medical decisions for you in the event you cannot speak for yourself. It is not necessarily an end-of-life document. You could be going in for a routine surgery and under anesthesia, for example.
(3) Living Will. This is an end-of-life document. You will state under what conditions and terms you do not want to be kept on life support. If you do want life support (or if you want to leave it up to your healthcare agent), you do not complete this document.
In order to sign these documents, you must have capacity to know what you’re doing. Waiting until someone is incapacitated to handle this means that you have waited too long. These documents must be completed in advance of any medical issues. If you would like more information, please give Jesson & Rains a call.
Parents living longer than ever. The first generation of baby boomers have turned 70. Cases of Alzheimer’s and dementia are on the rise. Health care costs are increasing.
We oftentimes get calls from adult children who want to hire us to “get power of attorney over their parent” to help them with bills and medical care. Unfortunately, that is not the way a power of attorney works. While the adult child can certainly schedule the appointment with us and even pay for the legal document, it is the parent’s document, and the parent is the client. Attorneys are confined to the parent’s wishes.
If the elderly parent already lacks the capacity to enter into a contract or make legal decisions, or if the parent does not understand the effect of the power of attorney document, it is too late for the adult child to be named as their parent’s agent under a power of attorney. If the elderly parent lacks capacity and needs help handling his or her affairs, the adult child may need to become legal guardian.
What the differences between Power of Attorney & Guardianship?
With a power of attorney, the principal names an agent to act on the principal’s behalf in the event of incapacity. It enables the agent to handle the principal’s business and financial affairs. A health care power of attorney is a separate document that names an agent to act on behalf of the principal for medical decisions. The agent’s powers are very broad unless expressly limited by the documents. However, there is nothing preventing the principal himself from conducting business on his own.
With guardianship, a court makes a finding that the principal lacks capacity and removes that individual’s authority to make decisions. The court appoints a guardian to make those decisions from then on out. Once an institution, like a bank, learns of the guardianship, it would not be permitted to listen to the principal’s instructions – only the guardian’s. The court’s order is permanent until the principal regains capacity and a subsequent hearing is held to restore his or her rights. Guardians have to file reports and/or yearly accountings with the court.
As you can see, guardianship is not to be taken lightly. A court’s adjudication of incompetency essentially strips away a person’s rights, which is why we recommend getting power of attorney documents in place before capacity becomes an issue. It is also more work on the guardian’s part due to the court proceedings and reporting requirements. Readers should not only get their documents in place but talk to their parents or other elderly loved ones and encourage them to visit with an attorney before incapacity becomes an issue.
 There are three types of guardians: guardian of the estate (authority over property), guardian of the person, or general guardian (both estate and person).
 Unless the court orders a limited guardianship allowing the principal to retain certain legal rights and privileges to which the ward was entitled before the ward was adjudged incompetent.
It is important for newlyweds to have wills drafted for several reasons. First, most of the property that you each own is going to be separately owned in the beginning. Under the laws of North Carolina, if you pass away without a will, your surviving spouse is not always entitled to 100% of your property. If you want to guarantee that your spouse is going to inherit everything, you’re going to need a will. Also, for singularly-owned property, your spouse will not be able to handle your affairs in the event of your unavailability or incapacity without a durable power of attorney, and an estate planning attorney can assist you with that as well.
Once married couples start consolidating bank accounts or buying real estate together, this is less of a concern. For jointly owned property, when one person passes, the other person automatically owns the property without there being any need for a will.
Secondly, some important clauses included in a will can ease the burden on your spouse in the event you do pass away. For example, you can draft a will that waives the bond requirement. That is a huge burden lifted – your spouse will not have to pass a credit check and pay a bond premium to administer your estate. Your will can include provisions allowing your spouse to sell your property without court approval; again, your spouse will benefit from not having to pay an attorney to get a court order.
Third, if you are blending families, the only way to leave property to someone not related by blood or a step-child is to gift it to them in a will.
Another benefit to seeing an attorney to discuss your estate plan after you’ve recently been married is to ensure that your beneficiary designations are all up to date. You’ll want to change your beneficiary on life insurance policies and retirement plans, for example, to your new spouse.
Finally, a discussion with an attorney about probate and the benefit to owning joint property cannot be understated if you’re bringing a lot of debt into the relationship. While your spouse is not responsible for your student loan debt, for example, your estate will be – there may need to be some planning involved to pass along property to your spouse instead of your creditors. You may also be able to plan your estate so that probate could be avoided entirely!
If you’re newly married and want to ensure your spouse is protected in the future, the attorneys at Jesson & Rains can help you.
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