Demystifying Estate Law “Legalese”

Posted on January 15, 2019

Many people – even lawyers – have trouble understanding some of the vocabulary of trusts and estates law. The basic documents are these three:

  1. Will (sometimes called one’s “Last Will and Testament),
  2. Power of Attorney, and
  3. Advanced Health Care Directive.

A more complicated estate plan may include a Trust as well. Each of these documents has a “fiduciary” that the signer names: in the Will, you can nominate a Personal Representative (formerly known as an “Executor” or “Executrix”); in the Power of Attorney and Advanced Health Care Directive, you can name the “agent;” and in a Trust, you can appoint a Trustee. Very often, the person(s) named for each role in each document is actually the same. The fact that the agent under Power of Attorney (which only remains in effect during the signer’s lifetime) and Personal Representative named in a will is often the same person, people often get confused as to the proper term at any given time (and it can get even more confusing if the same person is named as a Trustee of a Trust).

The way I sort it out in my head is to think about what document contains what role. It is also helpful to think about what time period applies. For a Power of Attorney, the agent named in that document only has authority during the lifetime of the “principal” – the person who signed the document appointing the agent. For a Will, the Personal Representative nominated in the document only gains his or her authority upon being appointed by a Probate Court to administer the estate of someone who has died. For a Trust, the Trustee’s role starts once both the Trust Agreement has been signed by both the “Settlor” (the person establishing the Trust) and the Trustee. (To complicate things further, sometimes a Trust is “testamentary” – that is, established in a Will. The role of Trustee of a testamentary Trust only starts after the testator – the person who signed the Will – has died, and it is likely that the Trustee of a testamentary Trust would not have much to do until several months after the testator’s death, so that the probate estate can be administered.) (Complicating matters even further, if the person who died had minor children, the Probate Court may need to appoint a “Guardian” for them and a “Conservator” or “Custodian” to handle their inheritance. Many Wills include testamentary Trusts for the benefit of minor children; in which case, the need for a Conservator is less likely, as the Trustee of the Trust would likely be able to cover this role.)

Let’s review. In a Power of Attorney, you can name an “agent” who can help you with your finances during your lifetime. In a Will, you nominate a Personal Representative of your estate. In a Trust document, you name someone to serve as a Trustee. If you want further clarification of these roles, just let any of the attorneys at Levey, Wagley, Putman & Eccher, PA, know. We would be happy to help.

Guardianship Nightmare Unlikely in Maine

Posted on November 21, 2018

A recent issue of the AARP magazine included an article about guardianship abuse. It featured a story of a woman whose life was taken over by a professional guardian, who placed her in an institution and cut her off from her only family – a stepson. In her case, the process of unraveling the guardianship and getting her a more appropriate placement took years and depleted most of her savings. The article uses this worst-case scenario to make some valid points about the need for research, reform, and oversight of the guardianship system nationally, and in a few states in particular. A former law school professor of mine, Nina Kohn, now at Syracuse University, was quoted as saying, “[A] subset of guardians act in ways that violate the rights and insult the humanity of those they serve.”

I do not think that the nightmare scenario described in this article is likely to occur here in Maine. That’s not to say that it couldn’t happen – but it seems unlikely for a number of reasons. First, I don’t know of many professional “Guardians” in Maine; my impression is that the vast majority of guardians and conservators in the state of Maine are family members of the incapacitated person. Second, this nightmare scenario – where a distant family member is blocked from the process, a professional guardian seems more intent on lining his own wallet than in the welfare of the incapacitated individual, and a facility is at least incompetent, if not outright complicit in the scheme – seems to require a number of  factors coming together at the same time. Of the small number of professional guardians/conservators in the Maine, I dare say the vast majority of them are reputable and trustworthy.

Under Maine’s current guardianship and conservatorship statutes, most family members of an allegedly incapacitated person must be notified that a petition for guardianship/conservatorship has been filed with one of the county Probate Courts. All of the Probate  Court judges and Registers in the State of Maine are careful about being sure that all the people who must receive notice of a petition have, in fact, received notice, before granting even a temporary guardianship or conservatorship. Furthermore, the revision of the Probate Code that was passed by the Maine legislature last year and goes into effect in the summer of 2019 has more notice requirements than the current statute; that is, more people will be entitled to notice of a petition for guardianship under the soon-to-be implemented statute than under the current statute. For example, under the new version, a “person known to have routinely assisted the respondent with decision making within the 6 months before the filing of the petition” must be notified. (It is not clear from the AARP article whether the stepson would have fallen into this category, but it seems likely.)

Although the scenario in the article linked above seems unlikely to occur in Maine, you may want to consider preparing an Advanced Health Care Directive, in which you nominate someone to serve as your guardian should you need one. You may also want to name an agent under Power of Attorney to handle your finances for you if you are unable. Any of the attorneys at Levey, Wagley, Putman & Eccher, PA would be happy to discuss these documents with you. Interested? Give us a call!

Effect of Pre-marital Agreements on Estate Planning

Posted on September 18, 2018

by Tavis R. Hasenfus, Esq.

A pre-marital agreement can be an effective way to determine what happens to each spouse’s assets upon the dissolution of the marriage or death of a spouse. However, for the agreement to be enforceable you must ensure that some important requirements are met.  First, each party must voluntarily enter into the agreement.  To satisfy this requirement, I always encourage the other spouse to seek independent legal counsel.  This step helps to ensure that both parties are completely informed of all the rights that that they are giving up by entering the agreement, as well as assisting both sides in understanding what the agreement means in the event of a separation, divorce or death.  In addition, each party must make a full disclosure of all his or her assets and liabilities.  Without a full disclosure, it is impossible for one to enter the agreement voluntarily, because he or she does not know all that he or she is giving up.  The best way to achieve a full disclosure of assets is to compile an accurate list of all your real estate, vehicles, valuable tangible property, bank accounts, investment accounts, stocks, retirements and other property of value.  Also included in this list should be liabilities — both secured and unsecured.  This “disclosure of assets” can then be incorporated into the agreement evidencing a complete knowledge of the assets a spouse may be giving up a right to by entering the agreement.

Once a complete disclosure is made and each party is informed of his or her rights regarding that property, the agreement itself can include but is not limited to contractual terms relating to the marital rights of each party to the use of specific property, including the right to buy, sell, encumber, etc.; the disposition of property upon separation or death; spousal support; death benefits and succession of property through each party’s estate planning documents. It is possible to craft the agreement in such a way that the happening of a certain event (one spouse abandoning the other for example) causes certain provisions of the agreement to take effect; unless that event is clearly defined and easily proved in court, however, it could create a huge wrinkle in a future divorce proceeding that the court may not be well equipped to handle.  A clause of this nature also may create undesirable consequences during the marriage.  For instance, a clause stating that if one spouse separated from the other that spouse receives nothing or pays substantially more, may encourage an undesirable marriage to persist when a separation is the best solution.  For these reasons, it is uncommon to include such terms, but not necessarily unworkable.

The most beneficial part of a premarital agreement is that it creates a mutual contractual relationship that sets in stone the proprietary rules, during the marriage and after the marriage. It is a document that can be referred to find a definitive answer on every aspect of the family’s assets, much like an operating agreement can be referred to when questions arise regarding the operation of an LLC.  It provides predictability, in a very unpredictable world.

Is the Estate Properly Insured?

Posted on July 26, 2018

A recent Maine Supreme Judicial Court decision should serve as a cautionary tale to beneficiaries of any estate involving real estate. Make sure any improvements on the real estate that are part of the estate are properly insured, and don’t assume that a homeowners’ policy bought by the person who died will cover the home after his or her death.

In this case, Estate of Carol G. Frye v. MMG Insurance Company, the person who died, Caroll Frye, had given the home to his sons reserving a life estate to himself (the right to live there till his death). He then bought an insurance policy that covered his personal property and his interest in the real estate. His interest in the real estate terminated upon his death, so the insurance policy only covered his personal property after his death. About three months after he died, the house burned to the ground. Mr. Frye’s sons asked for payment to the estate for the replacement value of the house, but the insurance company only paid the estate for the value of the personal property loss.

The sons challenged the insurance company court. The trial court granted the sons’ motion for summary judgment, but the Supreme Judicial Court reversed that decision, siding with insurance company.

The take-home message is, if you are the beneficiary of an estate that includes real estate with improvements, make sure any homeowners’ insurance covers any and all losses to the estate and, if not, figure out how to modify the existing policy or secure a new one.

If you don’t know whether the policy you have covers what you need it to cover, we would be happy to review it for you.

“Finding your Feet” – Planning for Incapacity

Posted on April 21, 2018

I went to see the movie “Finding Your Feet” at Railroad Square Cinema in Waterville yesterday. Why does a feature film get a mention in my blog, you wonder? Well, without giving too much away, the film was a wonderful celebration of life and chance for renewal – even later in life. Also, one of the characters suffers from Alzheimer’s disease. (For more about the movie, check out the New York Times review: https://www.nytimes.com/2018/03/29/movies/finding-your-feet-review.html.)

Among the many sad aspects of Alzheimer’s is the loss of one’s capacity to make legal decisions. The potential loss of capacity – not only from Alzheimer’s, but a stroke or a freak accident at any age – is one of the reasons we recommend that almost everyone should prepare a durable power of attorney and advance health care directives. If someone loses capacity without having prepared either of these documents, it can be very difficult for loved ones to handle the person’s affairs. Often family members end up having to go to court to get a guardianship or conservatorship, a much more time-consuming, difficult, and expensive process than preparing power of attorney and advance health care directives ahead of time.

Another issue related to Alzheimer’s disease is the high cost of care. In “Finding Your Feet,” part of the story was that the husband of the character with Alzheimer’s disease had to sell their house to pay for her care. In Maine, Alzheimer’s care can cost as much as $10,000 a month, and many people live with Alzheimer’s for many years. Unfortunately, Medicare usually does not cover this type of care. Medicaid often does cover institutional care for individuals with Alzheimer’s disease, but the eligibility rules can be difficult to figure out.

If you would like advice about either planning for incapacity or paying for long-term care or both, give us a call at (207) 377-6966.

My Spouse Just Died – Now What?

Posted on February 7, 2018

by Daniel J. Eccher, Esq.

The period immediately following the loss of a loved one can be overwhelming emotionally. The most important thing to figure out immediately is how to carry out your loved one’s wishes as to organ donation. Next, get in touch with family and close friends – the people you don’t want hearing about it from an obituary or the media, the folks you turn to when you need support. Then, you need to make arrangements for the body. Did he or she want to be buried or cremated? If the latter, what did he or she want done with the ashes?

If you don’t know what funeral home to use, you may want to ask friends and family for advice.

The next step is planning for the ceremony (if any). Did he or she want a religious or secular ceremony, or perhaps just a “Celebration of Life” party? If he or she was a veteran, the VA web site has lots of information about options: https://www.cem.va.gov/funeraldirector.asp

Once the ceremony is arranged, you’ll want to let people know when and where it is. Usually people announce it in a formal obituary. If you don’t feel up for that, you can ask another family member or close friend for help. Alternatively, you can just use a simple announcement.

After the funeral, you’ll want to start thinking about the legal effects of the event. You’ll need more than one copy of the death certificate (I would recommend getting at least three). Next, you’ll need to inform the Social Security Administration, insurance companies, and banks. Then, you should consider contacting an experienced probate attorney. If you don’t already have a relationship with one, we would be happy to consult with you.

For a list of things that we will need, check out Ms. Wagley’s blog post on the topic here:

https://leveyandwagley.com/probating-an-estate/how-to-probate-an-estate-in-maine

For a more thorough checklist of what to do after the death of a loved one, follow this link:

https://www.aarp.org/home-family/friends-family/info-06-2012/when-loved-one-dies-checklist.html

Do you want to make some of this process easier for your loved ones before you die? Check out our page on estate planning: https://leveyandwagley.com/estate-planning-and-probate

Do you and your spouse know your tenancy status?

Posted on December 13, 2017

by Tavis R. Hasenfus, Esq.

Of course you do — you own your home.  Well, that’s not exactly what I was asking.  Sure, you have your deed that unequivocally declares that you and your spouse own your property together, and, after years of keeping your lawn pristine, you know your boundaries like the back of your hand (or do you? — but we will save that for another day). The question is, do you know if your deed contains those two magic words which keep your spouse from needing to step into probate court after you pass away to retain what was always known to be his or hers?

In other words, does your deed say that you and your spouse are Joint Tenants, meaning the real estate will pass automatically to the survivor upon the death of the first spouse? Or, does it leave these magic words out, thereby leaving your spouse’s interest in the real estate to pass through his or her Will or, worse yet, through intestacy – and perhaps to a relative you’ve never met?

A simple review of your deed can answer this important question and help you and your spouse prepare for the future.

There are certainly reasons why one would want to hold real estate with their spouse as tenants in common instead of joint tenants, but it is important to determine how the real estate is currently being held while both spouses are in good health so that, if needed, a simple deed can take the place of a court filing — or worse.

New ABLE accounts – an option in special needs planning

Posted on January 26, 2016

Mo & downs syndrome childCollege savings plans, often referred to as “529” plans (“NextGen” plans in Maine) have been around for a long time, as a way for parents to set aside funds for a child’s education. These accounts receive favorable tax treatment and have been quite popular with parents and grandparents.

However, this option is generally not useful for parents and grandparents of special needs children, who may never pursue post-secondary education because of their disabilities. These families also worry that a 529 plan will cause the child to lose benefits such as SSI and MaineCare (Medicaid).   Just the same, these disabled children are likely to need funds in the future for things other than college, such as adaptive equipment, transportation, health and wellness activities, and job training.

Soon these families will have the opportunity to set money aside for their disabled children in an account known as an “ABLE” account. “ABLE” stands for “Achieving a Better Life Experience” and is a federal law enacted in 2014.

These are some of the features of an ABLE account:

  • The funds in the ABLE account will grow tax free.
  • Distributions for “qualified expenses” (such as the things referred to above) are not taxed. (Non-qualified expenses, however, are taxed and subject to a 10% penalty.)
  • As much as $14,000 per year can be contributed each year to the beneficiary’s ABLE account.
  • Funds in the ABLE account, up to $100,000, will not affect the beneficiary’s eligibility for SSI or MaineCare (Medicaid).
  • Any funds remaining in the ABLE account when the beneficiary dies must pay back the state of Maine (or other state where the beneficiary lives) for what the state has paid for the beneficiary under the Medicaid program.

Before this savings option becomes available to special needs children and their families, the state must establish its own ABLE account program. This is likely to occur through the Financial Authority of Maine (FAME), which administers the NextGen program.   Hopefully this will happen soon, so that special needs families have the same opportunities to save for a disabled child’s future as they do for non-disabled children.

Medicare coverage when you are in a foreign country

Posted on May 23, 2014

By Sally M. Wagley, Maine elder law attorney

Many retirees look forward to travel, including international travel. But don’t assume that Medicare or your Medicare supplement policy will cover your care in another country, without the purchase of additional insurance.

travel

Medicare has extremely limited coverage for international travel, even if there is an emergency. Here’s what you need to know:

1. Medicare Part A will not cover care outside the US unless: a) the nearest hospital is in a foreign country rather than in the U.S. (e.g. Canada or Mexico) or 2) you are traveling through Canada to or from Alaska by the most direct route.
2. Medicare Part B will only cover services outside the U.S. if you are on board a ship which is less than six hours away from a U.S. port and within territorial waters adjoining U.S. land.
3. Some Medicare supplement plans and Medicare Advantage plans may cover care while you are traveling outside the U.S. – check your policy –but probably only during the first month or two of your trip.
4. Consider purchasing additional coverage through policies available from private companies. The U.S. Department of State has information on this at http://tinyurl.com/elr-insurance-abroad

Note: Medicare does cover care in U.S. territories such as Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa and the Northern Mariana Islands.

Under no circumstances will Medicare pay for your care if you are living in a foreign country. Consider the following:

1. If the country has a strong national health plan, you pay be able to pay into the plan and receive coverage.
2. Look into “expatriate” health insurance plans available from private companies.
3. If you are moving to a place which is remote or has poor local health care, look into evacuation coverage.
4. Make sure the coverage includes any preexisting conditions for which you might need care.
5. Think twice before cancelling your Medicare “B” coverage. If you later move back to the U.S., you will incur penalties and have to pay a significantly higher premium.

The information provided on this website is for informational and educational purposes only. This information should not be construed as rendering legal advice or offering an answer to a specific legal problem.

Home Care: My Mother’s Story

Posted on May 2, 2014

 

By Sally M. Wagley, Maine elder law attorney

 

My mother, pictured here as a young woman, was healthy and active for a long time. But in her mid 80’s, she developed peripheral artery disease, resulting in the amputation of her leg.

The silver lining in this story is that my mother continued to live independently until her death, just short of her 91st birthday. This, in spite of the dire predictions of her rehabilitation team, who insisted that Mom have 24-hour care, preferably in a facility. Mom wanted to go home and we hired 24- hour care from a local agency. But after three days the workers had little to do. Mom, thanks to years of exercise and a strong will, was able to transfer from her bed to her wheelchair without help and to fix herself simple meals.

We replaced the workers with non-medical help from another agency, Neighbors, based in Brunswick. These workers, who became like family, came in three days a week, two hours a day, to do light housekeeping and laundry and prepare lunch. In addition, an RN from another agency, CHANS, came in once or twice a week to change bandages, take vital signs and check Coumadin levels. It was also helpful that Mom lived in an apartment in senior housing, where the evening meal was served and emergency response was available. Thus, the six to ten hours a week of in-home services (at a far lower cost than institutional care) enabled my mother to remain at home.

This happy ending is not possible for many Maine seniors, who cannot pay privately for services. A recent Portland Press Herald article reported on serious underfunding of home care and long waiting lists. Government reimbursement rates have not increased since 2005. Workers receive low wages, leading to labor shortages in. This short-sighted policy is inhumane and costs the taxpayer more: an average of $558 per person per month, versus an average of $4150 for a nursing home resident.

The information provided on this website is for informational and educational purposes only. This information should not be construed as rendering legal advice or offering an answer to a specific legal problem.