Category: Estate Planning

When I was a child, I enjoyed watching the television program, The Golden Girls, with my grandmother. The show portrayed retirement to be active: full of fun escapades, late-night problem-solving chats over cheesecake with your best friends, and lots of laughter. Indeed, the adventures of Dorothy, Rose, Blanche, and Sophia challenged the stereotypical image of retirement as nothing more than sitting in a rocking chair and playing bingo (not that there’s anything wrong with that). But, as ground-breaking as the sitcom was, it did not go as far as portraying retirees competing in marathons and triathlons.
 
My dad has taken the term, “active retirement,” to a whole new level. Although he did not start running marathons until he was in his 40s, he has spent the past 30 years competing in a variety of events, including almost every Big Sur Marathon, seven Boston Marathons, multiple Pike’s Peak Marathons, as well as the Pacific Grove Triathlon and many other events. People ask me if I run like my dad. My standard response is: “I run, but not like my dad.”
 
When I was in my final year of law school, my dad decided to enter the Catalina Marathon, one of the hardest marathons in the world. As the California Bar Exam began to weigh on my mind, I got the idea that studying for the Bar Exam is akin to training for a marathon. I proclaimed in front of my dad and my wife that I would enter the Catalina Marathon with my dad. I figured that if I finished the marathon, I was destined to pass the Bar Exam.
 
My dad provided me with information on how to train for a marathon. I kept procrastinating on my training. As I sat on the couch eating peanut butter cups, my wife inquired as to when my training would commence. “Soon,” I kept responding. Although I went for runs during study breaks, I never ran long-distance. As the marathon was rapidly approaching, I had an epiphany: maybe studying for the Bar Exam had nothing to do with training for a marathon! I realized that I was not prepared to run 26.2 miles, especially through the difficult elevation of the Catalina Marathon. I opted instead for the 10K which was arduous enough!
 
Later that year, I passed the Bar Exam on my first try, demonstrating that running a marathon was actually not a prerequisite to getting a license to practice law.
 
As the years went by, my dad continued to compete in events. My wife and I often would cheer for him along the way and meet him at the finish line, but I never seriously thought about competing myself. Then one day, as I was on a very short run home from my son’s school, I realized how special it is that my dad, in his retirement is still able to be so active. I wanted to be able to experience an event together. From my Catalina experience, I decided that running a full marathon was out of the question. A half marathon seemed more achievable.
 
Similar to the Catalina Marathon years before, I proclaimed in front of my dad and my wife that I would compete in the Monterey Bay Half Marathon. Again, my wife asked me when I was going to start training. I did a few runs, some on my own and some with my dad. As the event approached, I had no idea whether I would be able to finish the event in time.
 
On the day of the race, my dad picked me up at 5:00 am and we drove to downtown Monterey. When we parked, my dad informed me that he likes to do a “warm-up run.” We ran about a mile through Monterey. I had mentally prepared myself to run 13.1 miles and now he’s telling me that it’s 14.1 miles! Nevertheless, I was up for the challenge.
 
The course is absolutely beautiful, running from downtown Monterey, through the tunnel, along Foam Street, Cannery Row, past the American Tin Cannery, down Lighthouse Avenue in Pacific Grove, around Lover’s Point, to the Fishwife Restaurant, and back. My dad ran at my pace and we finished in 2:52, crossing the finish line together. (He would have finished about an hour earlier if he hadn’t slowed his pace for me.)
 
It was truly special for both of us that a father and son at our respective ages could run a half marathon together on a beautiful course in our beloved hometown. Although I’m glad that I never have to take the Bar Exam again, I am ready to run next year’s half-marathon again as long as I have the same great company!
 
KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.

Traditional revocable living trusts provide that upon the death of the trust-maker, the assets of the trust are to be distributed outright and free of trust to the beneficiaries, provided that the beneficiaries are old enough to manage their inheritance.  However, this popular method of estate planning overlooks a key planning opportunity: the ability to provide the beneficiaries with a significant degree of divorce protection and creditor protection.  In order to provide such protections, the trust could instead be drafted to distribute each beneficiary’s share in a separate “beneficiary controlled trust.”  The idea is to keep the inheritance in a trust that can be completely controlled by the beneficiary but can also feature divorce and creditor protection.

In order to give the beneficiaries complete control over their beneficiary controlled trusts, it is often advisable to give the beneficiary a testamentary “power of appointment.”  Such a power of appointment allows the beneficiary to direct how the balance of the inheritance is to be distributed upon the beneficiary’s death.  There are two categories of testamentary power of appointments: a “general” power of appointment and a “limited” power of appointment.  The different categories of power of appointments have different tax consequences.

A “general” power of appointment allows the beneficiary to direct the remaining balance of the beneficiary controlled trust to anyone in the world, without limitation.  This would include the beneficiary’s creditors and the beneficiary’s estate.  If the trust provides a general power of appointment, the assets of the trust will be included in the beneficiary’s estate.  This means that the inheritance might be subject to estate tax upon the beneficiary’s death if the value of the inheritance plus the value of the beneficiary’s own assets exceeds the beneficiary’s estate tax exemption.  On the other hand, assets held in the trust will receive a “basis adjustment” (often referred to as a “step-up” in basis) for capital gains tax purposes upon the beneficiary’s death, which could eliminate capital gains tax for future heirs.

A “limited” power of appointment prevents the beneficiary from directing the remaining balance of the beneficiary controlled trust to the beneficiary’s creditors or to the beneficiary’s estate.  If the trust provides a limited power of appointment, the assets of the trust will not be included in the beneficiary’s estate.  This means that the inheritance will be exempt from estate tax upon the beneficiary’s death.  On the other hand, assets held in the trust will not receive a “basis adjustment” upon the death of the beneficiary, which might lead to significant capital gains tax for future heirs.

As a result, the choice of whether to include a “general” power of appointment or a “limited” power of appointment is the choice of whether to subject the beneficiary’s estate to estate tax or capital gains tax.

Because beneficiary controlled trusts are designed to last the lifetime of the beneficiary and beyond, it can be challenging to determine whether the application of the estate tax or the capital gains tax would be preferred.  It is almost impossible to know how the beneficiary’s estate will be affected by changing circumstances in the future (such as a change in the size of the estate and a change in the tax laws).

In order to navigate these issues and to give the beneficiaries as many options as possible, the best approach is to choose one type of power of appointment when drafting the trust but to also include “trust protector” provisions that allow the type of power of appointment to be changed after the death of the original trust-maker in order to delay the ultimate decision of which tax would be most beneficial until circumstances are clearer.  A comprehensive trust that provides as many options as possible can be a valuable tool for families trying to navigate the complex tax rules that are in constant flux.

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting upon any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.  
 

I am honored to have been awarded the 2017 “Golden Pine Cone” from The Golden Pine Cone as “Best Estate Planning Attorney.”  Below is the text from the paper:

“Best Estate Planning Attorney

Kyle Krasa — 704-D Forest Ave., Pacific Grove – Call for an appointment – (831) 920-0205 – krasalaw.com

Talk about local roots! Kyle Krasa’s grandfather, Karel A. Krasa, taught Czech at the Defense Language Institute while his grandmother, Zdena, worked at a Monterey cannery. His mother, Joan, taught for nearly 30 years at Bay View Elementary in Monterey, and his father, Peter, was an elementary school administrator and principal. As a student at UC Davis School of Law, Kyle already had his heart set on a career in estate planning, elder law/Medicaid planning, probate/estate administration, and asset protection. He brings a passion for those specialties to a practice that clearly is appreciated by his clientele. Outside the office, Krasa leads an active life that includes playing ice hockey, hiking, cycling, swimming, golf, classic cars, and rooting for the Green Bay Packers, of whom he is a proud shareholder.”

I want to thank my family, colleagues, and clients for this wonderful honor!

To read about all of the 2017 “Golden Pine Cone” winners, please click on this link: http://www.pineconearchive.com/gpc2017.html

As identify theft has increased over the past decade, most people know to carefully guard personal information, especially Social Security Numbers.  People don’t give their Social Security Numbers out to third parties without caution and careful deliberation and Social Security cards are stored in safe locations rather than carried around in wallets.  Parents are even starting to monitor the credit scores of their minor children as identify thieves target Social Security Numbers that are issued at birth but whose credit is not reviewed until adulthood.  

With the recent security breach of Equifax, people might want to consider taking the extra step of “freezing” their credit reports if they have no need to use their credit in the foreseeable future.  To freeze one’s credit, all three of the credit reporting agencies – Equifax, Experian, and TransUnion – must be contacted individually.  The agencies often charge fees to freeze credit and it should be kept in mind that every time a person wants to temporarily “un-freeze” his or her credit in order to get a loan, additional fees might apply.  Freezing a credit report is not foolproof but might be a reasonable step to add a degree of security.

While these precautions are all advisable, most people do not think about protecting a decedent’s identity.

Although during life people are very careful about keeping Social Security Numbers private, a decedent’s Social Security Number is reported on the Death Certificate.  The Death Certificate is sent to financial institutions, often recorded at the County Recorder, and often filed with the Courts as a public record.  As such, decedents’ Social Security Numbers become public knowledge and are therefore easy for identify thieves to steal.  Thieves will then use the Social Security Numbers to incur debt in the decedent’s name and sometimes even fraudulently file the decedent’s tax return in order to collect refunds.  Such a situation can be a mess for loved ones of decedents to address.  Fortunately, there are steps that loved ones can take to protect a decedent’s identity.

First, the Social Security Administration should be notified of a decedent’s death as soon as possible.  Most mortuaries automatically provide such notification.

Second, obituaries should omit personal information that could be of interest to identify thieves such as the decedent’s birthdate and mother’s maiden name.

Third, loved ones should give notice and instruction to the three credit reporting agencies – Equifax, Experian, and TransUnion – as follows: (1) notification of the decedent’s death; (2) instruct the agencies to place a “Deceased – Do Not Issue Credit” alert on the decedent’s credit report; (3) request a copy of the decedent’s credit report; and (4) request a notification to the executor if a new application for credit is made in the decedent’s name.  All three agencies accept a standard form entitled, “Credit Report Request for the Deceased,” which can be used for this purpose.  

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting upon any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.

Estate planning seems simple on the surface.  You sign a series of documents naming a responsible party to manage your assets in the event of your incapacity and directing how your assets should be distributed upon your death.  However, once you start to really think carefully about all the issues that are involved in the transfer and stewardship of your hard-earned assets, you begin to realize that an estate plan should be comprehensive and should address a multitude of detailed considerations.  One important but often overlooked consideration is which state governs your trust?

With the exception of federal tax considerations, estate planning is mostly governed by state law.  Each state has its own unique rules regarding the administration and interpretation of trust provisions.  Typically the state in which your trust was drafted and where you reside will govern the terms of your trust.  However, there are occasions when it might be prudent to allow for a change in the governing law.  A provision allowing the change of the governing law of your trust is often referred to as a “flight clause.”  Below are a few examples of how including a “flight clause” in your trust can be beneficial to your overall estate plan.

1.  Roaming Beneficiaries

In today’s society, it is rare for people to spend their entire lives in the same hometown.  People often move to different states for schooling, career opportunities, and adventure.  It is likely that you might move to a different state after establishing your trust or that your beneficiaries might move to a different state after your death.  Although your trust will be recognized in all 50 states, it might be practical or more convenient to have the governing law of your trust match the state in which the beneficiaries reside.

2.  Keeping the Trust Current

Your basic living trust remains revocable during your lifetime.  However, upon your death, your trust becomes irrevocable.  A good comprehensive estate plan will often continue the trust for the lives of your beneficiaries in order to provide them with a degree of creditor protection and divorce protection.  However, circumstances can change and it might be beneficial or necessary to modify the terms of the trust even after it has technically become irrevocable.  Some states, such as California, require court involvement in limited circumstances in order to modify an otherwise irrevocable trust after the Trust-maker is deceased.  Other states allow for the beneficiaries to agree to a modification without court involvement.  If an irrevocable trust needs to be modified, a “flight clause” allowing the governing law of the trust to be moved to a state that allows for modification of the trust without court involvement could be very helpful.

3.  Extending the Life of the Trust

Most states have a “Rule Against Perpetuities,” or a “RAP,” which limits the period of time in which a trust can last.  Other states have greatly extended their RAP or have entirely eliminated their RAP.  Sometimes you might want your trust to last for generations, such as to provide funding for the education of your grandchildren, great-grandchildren, and great-great-grandchildren.  A “flight clause” could allow a trust governed under a state with a short RAP to be moved to a state with a longer RAP in order to allow the trust to continue for a much longer period of time.

4.  Better Creditor Protection

State laws vary greatly on whether or not a trust can provide the beneficiaries with creditor protection.  The most favorable states are typically Nevada, Delaware, Wyoming, and Alaska among others.  If a trust is formed and governed under the laws of a less favorable jurisdiction, a “flight clause” might allow the trust to be moved to a more favorable state to provide the beneficiary with better creditor protection.

Conclusion:

Although all of these planning opportunities involve their own nuances and are often dependent upon the particular facts and circumstances of the situation, the presence of a “flight clause” can provide flexibility in a variety of circumstances.  The traditional method of setting the governing law of a trust in stone has its limitations and can often frustrate the purpose or limit the benefits of the trust.  

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting on any of the information provided in this article, it is important that you consult a competent attorney who is licensed to practice law in your community.          

The Department of Motor Vehicles (“DMV”) has a reputation for layers of bureaucracy.  Indeed, many people might consider waiting in line at the DMV without an appointment as a “fate worse than death.”  As challenging as it can be to deal with certain aspects of the DMV, handling the transfer of a decedent’s vehicles in California can be surprisingly efficient.

If the decedent did not have a living trust and had other assets necessitating a probate, then the decedent’s vehicles will be subject to probate which will generally be a time-consuming and costly process.  However, if the decedent had a living trust, then the process of dealing with the DMV to transfer the vehicles to the beneficiaries can be painless.

Section 13050(b)(1) of the California Probate Code specifically states that vehicles registered with the California DMV cannot by themselves necessitate a probate.  Therefore, if the decedent’s other assets are either titled to a revocable living trust at the time of death or designate payment on death beneficiaries, the transfer of the decedent’s vehicles can be accomplished without court involvement.  

In such a case, the decedent’s successor trustee can fill out a California DMV form entitled, “Affidavit for Transfer Without Probate California Titled Vehicle or Vessels Only (REG 5),” which can be downloaded from the DMV website.  The successor trustee would take the form along with a certified copy of the decedent’s death certificate to the local DMV office to complete the transfer.  The rules specifically require a waiting period of 40 days after the death of the decedent.  

Although the transfer of a decedent’s vehicles is straightforward and simple when the decedent’s estate is not otherwise subject to probate, it is prudent for a trust-maker to transfer vehicles into a living trust as an extra measure to make sure that the successor trustee does not encounter any unexpected problems in transferring vehicles after death.  Vehicles can be transferred into a living trust either by assignment or by formal registration.

An “assignment” is a written document that transfers property.  An assignment of a vehicle can simply state: “I hereby transfer and assign all right, title, and interest presently owned and hereafter acquired in my 1953 Chevrolet Bel Air to John Smith, Trustee of the John Smith Living Trust, dated January 1, 2008.”  The assignment should be signed, dated, and sometimes notarized.  

Often items of tangible personal property that do not traditionally have titled ownership such as jewelry, clothing, household furniture, works of art, electronic equipment, and sporting goods are transferred to a revocable living trust through a “general assignment of personal property.”  In addition to listing the items of tangible personal property that do not have titled ownership, it is prudent to also include “vehicles” in the general assignment.   

Finally, including a list of vehicles on the trust’s schedule of assets (often referred to as a “Schedule A”) can be helpful.  Some comprehensive trusts might also include a “magic wand provision” that expresses the general intent to transfer all assets of any kind (which would include vehicles) into the trust.  

In addition, the California DMV allows vehicles to be formally registered to living trusts.  To complete the formal registration, the vehicle owner must sign the title over to the trust, fill out a “Statement of Facts (REG 256)” form, and bring both documents to the DMV.  A smog check might be required in order to complete the transfer.  Furthermore, for all vehicles that are formally registered to the living trust, the vehicles’ insurance policies should add the trust as an additional insured.

Because the transfer of vehicles upon death is relatively simple provided that none of the decedent’s other assets are subject to probate, and because technical transfer of vehicles to the trust through assignment is effective, it might not be worth the time, effort, and expense to formally register vehicles with the DMV as long as all other assets are either properly titled to the trust or have up-to-date beneficiary designations.    

While the DMV can be a frustrating maze during life, there might be some comfort in knowing that the rules for transfers of vehicles upon death can be painless if basic estate planning principles are followed.

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting upon any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.    

Often estate planning focuses upon the settlement of one’s estate upon death and the subsequent transfer of assets to the beneficiaries.  However, an often overlooked – and perhaps more important – aspect of estate planning centers upon incapacity.  In the event that you have a medical emergency that makes it impossible for you to make financial or personal decisions, does your estate plan provide an effective system for allowing a trusted individual to manage your assets?  Below is a summary of the options for addressing incapacity planning.

Choosing an Agent

The first consideration is choosing an agent to make decisions for you in the event of incapacity.  Choosing carefully is key to ensuring that your assets are managed for your benefit in an prudent and efficient manner.  Factors to consider in choosing your agent include the proposed agent’s trustworthiness, age, health, financial literacy, and availability.  As difficult as it is to find an agent with all of the qualities, it is important to think of two or three alternate agents in case the first person is for any reason unable or unwilling to accept the appointment when needed.

Immediate v. Springing

Another important consideration is whether or not you want your agent to have immediate authority to manage your finances or whether your agent’s ability to manage your assets only “springs” into action upon your incapacity.  

Advantages to immediate authority include the ability of your agent to help you with your finances while you still have capacity if such aid would be helpful and the immediate ability of your agent to take over in the event of your incapacity.  

A significant disadvantage of immediate authority is that your agent has direct access to all of your finances when it might not be necessary.  Often, if you are currently capable of managing your own assets, you likely will prefer to only grant authority to your agent in the event of your incapacity.

Determination of Incapacity

If you choose to condition the grant of authority to your agent upon your incapacity, the method for determining your incapacity should be articulated with precision.  First, there should be an explicit definition of “incapacity” in your trust and power of attorney.  For example, a definition of incapacity might be expressed as follows: “I will be determined to be incapacitated if I am unable to make financial or personal decisions due to age, illness, dependence on substances, or some other cause.”

Second, there are several options for demonstrating that your current condition meets your definition of “incapacity.”  The two most common methods are (1) a physician’s test; and (2) a disability panel.

With regard to a physician’s test, your estate planning documents would state that your incapacity shall be determined by a letter written by a licensed physician.  Because the prospect of taking away your basic civil right of managing your assets and giving that right to a third party is a significant action, you might prefer to stipulate that letters from two physicians should be required to demonstrate your incapacity to make certain that you are really unable to make financial decisions.

A disability panel is an alternate approach to a physician’s test. The concept of a disability panel is to appoint a group of individuals who will collectively determine whether or not you have lost the mental capacity to make financial or personal decisions.  Your disability panel may consist of friends and relatives as well as a physician or other professional.  

If you decide to use a disability panel, you will need to decide whether the entire disability panel must act unanimously or whether a majority of the members may determine whether you have lost your capacity.

Because disability is not necessarily a permanent condition, a comprehensive estate plan should also include provisions for subsequently determining that you have regained your capacity and are able to resume your management of your assets.

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only. Reading this article does not establish an attorney-client relationship. Before acting upon any of the information contained within this article, you should consult a competent attorney who is licensed to practice law in your community.

This week on the Monterey Peninsula is commonly referred to as “Car Week.” What started in the early 1950’s with the Pebble Beach Concours d’Elegance and the Pebble Beach Sports Car Road Race has blossomed into perhaps the largest concentration of car events in the world. Locals who are not car enthusiasts often understandably do not look forward to the additional traffic. However, for self-proclaimed “car nuts” like my dad and me, it’s one of the most enjoyable weeks of the year. Car shows, car rallies, car displays, car discussions, car auctions, car test-drives, and historic car races have kept us busy and entertained for years. We are currently grooming my seven-year-old son to develop the same passion with a little too much success.  

One morning, with my son in the backseat ready to head out for the day, I was warming up my 1953 Chevy Bel Air (“Maybellene” – named after the Chuck Berry song).  Without provocation, he asked me: “Dada, when you die, I’m getting this car, right?” The question was jarring and I quickly realized that my little buddy had a clear understanding of estate planning! Car collections – as well as collections of any personal property – should be carefully considered when engaged in estate planning as they can present unique issues.

One of the first issues to consider is whether or not there is any desire to keep the car collection intact after death. Personal property of any kind is indeed “personal.” What can be very important to one person is of no interest to another person. It is important to inquire whether intended beneficiaries will value the collection as much as you do. If so, is it realistic that they will be able to keep it together? Issues of estate tax, maintenance, storage, and insurance must be carefully considered and addressed.

If your beneficiaries do not wish to keep your car collection and plan to liquidate, will they understand the value of each car in the collection? Are there experts and auction houses whom they can trust? Conversely, are there companies in the car industry that are untrustworthy and should be avoided? The timing of the liquidation could be important as well.  How do they know when the market is ripe for selling? Furthermore, understanding the capital gains tax implications of selling highly appreciated cars is also critical. Assembling a team of car experts and tax professionals who could be appointed to serve in an advisory capacity might be a prudent idea in some circumstances.   

Once you have established a carefully crafted estate plan that adequately addresses all of the unique issues related to your car collection, make sure that you assign or title each car to your trust in order to eschew probate and ensure the efficient management of your car collection in the event of your incapacity or death.

Taking the time to follow these steps will ensure that your beloved car collection will not become a nightmare for your loved ones after you are no longer able to directly care for your car collection.

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950, and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only. Reading this article does not establish an attorney-client relationship. Before acting on any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.

When contemplating the creation of an estate plan, it is a common desire for clients to want “simple” documents.  The thought of too much complexity and the fear that long and complicated “legal jargon” will be difficult to understand makes a lot of people uneasy.  This feeling is understandable, especially since the overall goal of an estate plan is to make things as simple and as efficient as possible for loved ones who acting as “fiduciaries” and are tasked with administering an incapacitated or deceased person’s estate.  

However, once a person becomes incapacitated or passes away, all that is left to rely upon is the four corners of the estate planning documents.  “Simple” documents that do not provide precise detail can actually create problems for fiduciaries in their attempt to establish authority and administer an estate.  Financial institutions are known to squabble over the definition of certain terms, such as whether the power to “engage in banking and other financial institution transactions” includes the power to access a bank’s safe deposit box.  As a result, detail is of paramount importance in effecting the intent of any estate plan: to make things easy for fiduciaries.    

The following is an overview of some fiduciary powers that are often lacking in basic estate plans but can be critical in the administration of an estate.  

Power to Fund:

A trust-based estate plan cannot be effective unless assets are properly titled to the trust.  One of the biggest problems encountered during a trust administration process is the failure of the trust-maker to transfer assets into the trust.  This issue might not be discovered until after the trust-maker loses capacity.  A detailed power of attorney document should include the specific power for the fiduciary to transfer assets into the trust-maker’s living trust.

Power to Manage Digital Assets:

Although most estate planning documents include the power to manage real property and personal property, few estate planning documents also include the specific power to manage “digital assets” such as email accounts, digital music, digital photographs, digital videos, software licenses, blogs, tax-preparation service accounts, online stores and auction sites, online accounts, social media accounts, and devices such as cell phones, computers, and storage devices.  

Power Regarding Governmental Benefits:

The power to deal with governmental benefits including Supplemental Security Income (SSI), Medicaid/Medi-Cal, Medicare, and Social Security Disability Insurance (SSDI) is critical.  In addition, a comprehensive estate plan should include specific powers that allow the fiduciary to make gifts in order to qualify for governmental benefits such as Medicaid/Medi-Cal.

Power Regarding Retirement Plans and Other Employee Benefits:

Having access to retirement plans, being able to make contributions to retirement plans, withdrawing a required minimum distribution from an IRA, make elections and exercise options on retirement plans, and convert retirement plans to a Roth IRA are all powers that a fiduciary commonly needs but basic, “simple,” estate plans fail to address.  Including these powers will help the fiduciary effectively manage a critical category of assets.

Power Regarding Safe-Deposit Boxes:

As referenced above, the typical power to manage bank accounts might not be sufficient to also manage safe-deposit boxes.  Including the specific power to access a safe-deposit box and to remove contents from a safe-deposit box will alleviate this common problem.

Power Regarding Taxes:

Incapacity does not excuse the filing of a person’s income tax returns.  A fiduciary should have the express authority to prepare, sign, and file all federal, state, and local tax returns as well as engage a tax preparer, accept refunds, and request an extension.

Power Regarding Mail:

It would be difficult for a fiduciary to pay bills and manage a person’s finances without having access to that person’s mail.  A fiduciary therefore should be expressly permitted to open, read, respond to, and redirect mail.  

Power for Care and Control:

In addition to specific powers regarding assets and other financial needs, a fiduciary should also have the power to care and control an incapacitated person.  These powers would include the power to provide domestic help, clothing, transportation, food, medicine, recreation, travel, spiritual needs, and companionship.  

Conclusion:

Although the thought of long and detailed legal documents can seem overwhelming, precise terms actually make things simpler in the end.  Your loved ones will be thankful for the giant estate planning document with hundreds of pages!

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting upon any of the information presented in this article, it is critical that you consult a competent attorney who is licensed to practice law in your community.   

You probably take for granted the fact that you have the basic civil rights to make personal and health care decisions for yourself: where you are going to living, with whom to associate, what kind of health care you will receive, and what courses of medical treatment you will endure.  What happens when you are no longer able to have direct control of these decisions due to mental incapacity?  How do you maintain a degree of control over your wishes?  The following documents can help ensure that your health care wishes and preferences are carried out by trusted individuals in the event of your incapacity.

Advance Health Care Directive

Sometimes also referred to as a “health care power of attorney,” an Advance Health Care Directive (“AHCD”) serves two main purposes.  First, an AHCD allows you to designate an agent to make health care decisions for you in the event of your incapacity.  It is prudent to name at least two or three alternate health care agents in the event that the first person you name is for any reason unable or unwilling to serve in that role.  

Second, the AHCD allows you to generally express your wishes as to how your agent should make decisions on your behalf.  This expression of your health care wishes is sometimes referred to as a “living will.”  Most AHCD’s provide general guidelines such as whether or not to withhold artificial life support under specified conditions, whether or not to provide treatment for pain or discomfort even if the treatment hastens your death, and whether or not you want to be an organ donor.  

The AHCD specifically gives direction to your agent to make decisions on your behalf in accordance not only with the wishes that you express in the AHCD, but also in accordance with the wishes you might express in a separate document or verbally.

With regard to the disposition of your remains, it is important for the AHCD to specifically authorize your agent to make such post-death decisions. Without the express authorization, health care providers might consider the agent’s authority to expire upon your death.

A good AHCD will also list the name and contact information of your primary physician in case your medical records are needed during an emergency.

HIPAA Waiver

HIPAA, the “Health Insurance Portability and Accountability Act,” protects your medial privacy.  The rule provides strict provisions against health care providers from improperly sharing your private health information.  While the intent of this law is noble, it can become a problem in the estate planning context.  How will your health care agent be able to make an informed decision on your behalf without full access to your health information?  By signing a HIPAA Waiver while you still have mental capacity, you can specifically authorize your health care agent and other interested parties access to your otherwise protected health information.  While a HIPAA Waiver is a simple document, it can be invaluable during a medical emergency.  While some AHCD’s might include HIPAA language, a separate, stand-alone HIPAA Waiver that covers all of your health information maintained by all health care providers is the best approach to this issue.

POLST Form

A POLST (“Physician Order for Life Sustaining Treatment”) form is an additional document that supplements your AHCD.  It is a standardized physician order that is recognized throughout the health care system that enables you to choose which specific medical treatments you want to receive and which specific medical treatments you do not want to receive.  Examples include whether or not to sign a “Do Not Resuscitate Order” (“DNR”), whether or not to receive feeding tubes, and generally what degree of treatment you prefer from “full treatment,” to “selective treatment,” to “comfort-focused treatment.”  

A POLST must be signed by a physician, nurse practitioner, or physician assistant in order to be effective.

While almost everybody should sign an AHCD and a HIPAA Waiver, POLST forms are usually most appropriate for individuals who have an advanced chronic illness or frailty and who are near the end of life.  While an AHCD is about treatment in the future, a POLST form is usually about treatment in the present.

Communication

Once you have taken the time to execute an AHCD, a HIPAA Waiver, and possibly a POLST form, the question is how do you ensure that in case of emergency your health care providers will be able to access this information?  While it is prudent to give a copy of your documents to your doctor and possibly the hospital, what happens if you are traveling out of the area?

The California Secretary of State has a registry system for your AHCD.  By filling out an application and paying a $10 fee, the Secretary of State will keep a copy of your AHCD and issue you a plastic card to keep in your wallet stating that you have registered your AHCD with the Secretary of State.

California is also experimenting with an eRegistry for POLST forms.
Alternatively, there are many private companies, such as LegalVault, Docubank, and Legal Directives, that store all of your health information – your AHCD, your HIPAA Waiver, your POLST form, and other related health information – in the cloud.  These companies also issue plastic cards to keep in your wallet that will grant access to this information 24/7.  It is prudent to keep these cards near your health insurance card or I.D.

Additionally, many smartphones have applications that allow you to store emergency contact information.  For example, Apple’s iPhone has a “Medical ID” feature that allows you to store emergency contact information.  This information is accessible without the need to input your passcode in the event that you are unconscious and emergency personnel find your phone.  It is definitely worth the short amount of time to take advantage of this feature.

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney/client relationship.  Before acting on any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.