Category Archives: Estate Planning

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.

“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

A stitch in time saves nine

Posted on September 26, 2013

By Patrice A. Putman, Maine elder law attorney

The old saying “A stitch in time saves nine.” makes a lot of sense. Unfortunately, too often, people don’t know that there may be a legal “stitch” needed. Below is a situation that I’ve seen. Luckily, if discovered and fixed early, a client can save a lot of time, money, and frustration.

Most married couples own their home as “Joint Tenants”. This means that when one spouse dies, the property automatically becomes owned entirely by the other spouse. Nothing needs to be done to accomplish the change in ownership. In order for this transfer of ownership to the surviving spouse to happen automatically, the deed into the spouses must expressly state the concept that the spouses own as “joint tenants” or that the surviving spouse is to automatically become the sole owner of the home.

It is also possible for a married couple to own their home jointly, but as “tenants-in-common”. The home will be owned by the spouses as tenants-in-common if the deed is not explicitly a “joint tenancy deed”. If the home is owned as tenants –in-common, the surviving spouse does not automatically end up with ownership of the entire home. Rather the half owned by the deceased spouse must go through probate and title passes according to the will of the deceased or through the laws of succession (if there is no will). The property must go through probate, a personal representative must be named and the property must then be deeded according to either the Will or intestate laws.

There are times when a new widow or widower who thought she/he owned the property as a joint tenant finds that she/he did not.

Here is a hypothetical: Husband and wife own property together. The deed says “I seller, give to you, husband and wife, a piece of property.” This deed is a tenancy in common deed, something which the spouses didn’t understand and didn’t intend. Husband dies. Wife goes to a lawyer to see if she needs to do anything with regard to probate. All the bank accounts were jointly owned (no probate needed), life insurance had a beneficiary listed (no probate needed), the IRA has a listed beneficiary (no probate needed), cars were owned jointly (no probate needed). Then the lawyer asks to see the deed, and sees that the deed is not a joint tenancy deed. Now a probate estate must be opened, heirs must be notified, if there is a Will, the original must be found and filed, probate and attorney fees must be paid and a new deed will need to be executed and recorded. If the Will says “all to my spouse” then, after the personal representative has been appointed, a new deed can transfer the deceased spouse’s share to the spouse. If there is no Will or if the Will leaves part of the estate to others, the widow who thought she owned her house entirely, may now own it partially with children, step-children or others. Either way, things just got a lot more expensive and complicated.

Here’s the simple solution: Go look at your deed(s). If your deed(s) say you own the property as “joint tenants” or if the deed is clear that the surviving owner is to be the sole owner, then you are joint tenants and when one of you dies, the property will be owned entirely by the other automatically. If your deed is not a joint tenancy deed, then you and your spouse own as tenants in common. Once you understand how you own the property, then you can decide whether it fits your needs, or whether you need to see an attorney to get advice on whether your deed fits your needs. If a fix is needed, it’s an easy fix while both of you are alive. It may be needlessly expensive and upsetting if you find out after your spouse has died that the form of ownership didn’t work to your best advantage. This is clearly a situation where a stitch in time saves nine. Go read your deed! Make sure it says exactly what you need it to say, so that it does exactly what you want it to do. If you are not sure, get help sooner rather than later!

The information provided here is for educational purposes only. It should not be construed as rendering legal advice or offering an answer to a specific legal problem.

Second marriages: what if your spouse requires expensive long term care?

Posted on July 12, 2013

By Sally Wagley, Maine elder law and estate attorney

We have had a number of clients, either divorced or widowed, become happily married later in life. Sadly, after a number of years of love and companionship, one of them may start to decline and need expensive care in a nursing home or assisted living facility. For purposes of discussion, we’ll assume that the husband is the one who needs institutional care, with the wife remaining at home. The wife may find out to her chagrine that she is expected to use her own assets — accumulated by her before the marriage from a lifetime of work –on her husband’s nursing home costs. She may find out that after he has depleted his own funds, he will not qualify for state assistance through Maine’s Medicaid program (called MaineCare) until she has spent down her own funds to a certain point. This causes her great anxiety, for two reasons: most important, she wants to make sure that she has enough to live comfortably for the rest of her life; in addition, she may want to be able to pass on assets to her own children.

What can a couple do in this situation? Advance planning, while both are still healthy, is the best option. If they qualify for and can afford long term care insurance, that will make it less likely that the wife will have to spend down her own savings. Another option is an irrevocable trust, whereby the wife places some of her own assets into an irrevocable trust, naming one or more of her children as trustees. She gives up control of the principal in the trust but will receive income from it. In this way, she can put some of her assets off limits for purposes of her husband’s possible future long term care expenses. In order for her to safely do this, however, she must feel reasonably confident that neither she nor her husband will need long term care in the next five years, as MaineCare has a “five-year look-back” rule which penalizes people who transfer assets in order to qualify for MaineCare.

For a couple who is already in crisis, there are still options. The spouse may purchase a certain type of annuity which meets the requirements of the law. This annuity will protect her assets while providing a stream of income. She can invest her countable assets into exempt assets, such as repairs or improvements to her home, or the purchase of a newer car.

As a last resort, some spouses choose to divorce for the purpose of preserving assets. This is a wrenching decision for most clients, but may be the only option for ensuring that the spouse at home to preserve what she has worked so hard for over the years. This divorce, however, will not prevent the wife from continuing to provide love, companionship and care to her husband, just as if they continued to be married.

Second marriages: providing for a surviving spouse in a trust

Posted on July 9, 2013

By Sally Wagley, Maine elder law and estate attorney

We have had a number of clients who fit the following profile: They are married for a second time, each with children from a previous marriage. One of them has substantially more than the other. Let’s assume for discussion purposes that the husband is the one with more than the wife. The husband wants to ensure that, should he die first, the wife has enough income to live comfortably for the rest of her life. However, he does not want to leave assets to her outright, as he wants to make sure that his children will ultimately inherit.

One option is for the husband to leave some or all of his estate to a trust for his wife’s benefit. Such a trust typically provides that she gets all the income generated by the assets placed in trust, to give her a stream of income which is adequate to maintain her standard of living. The trust may provide, in addition, that should the trust income and her own income be inadequate, the wife can receive amounts of principal which are needed for this purpose.

Who should be the trustee of this trust? One option is for the husband to name one or more of his children as trustees. If his estate is substantial, it is possible to have a bank serve as trustee. Or, if the husband trusts the wife to be a responsible trustee and to abide by the rules of the trust, he can name her to be the trustee, with one or more of his children to become the successor trustee if she becomes incapacitated.

This arrangement may be coupled with giving the wife a life estate in any real estate which he owns separately, such as a primary home or a cottage.

Second marriages: pre-nuptial and post-nuptial agreements

Posted on June 28, 2013

By Sally Wagley, Maine elder law and estate attorney

Some clients who marry later in life do not think, before the wedding, about the usefulness of a prenuptial agreement. In the flush of romance, these clients may not have their minds on practical matters, such as ensuring that their assets will remain separate should they divorce and ensuring that children from previous marriages will inherit.

After the wedding, when things calm down, these clients may turn their attention to these sobering issues. They may, at that point, wish they had executed a prenuptial agreement. Is it too late for these clients to execute an agreement of this kind?

No, it is not too late for these clients. Post-nuptial agreements under which each member of the couple agrees to forego certain spousal rights in the event of divorce or upon death. In this situation, each one will need to see advice from his/her own lawyer, as a single lawyer would face a conflict of interest in representing them both. Also, each one has to make full disclosure to the other of all financial assets that each has, so that there are no secrets between them in this regard.

Second marriages: the “elective share,” your spouse’s right to part of your estate when you die.

The law in Maine is such that, absent an agreement to the contrary, a married person cannot disinherit his or her surviving spouse. The law gives the surviving spouse the right to go to court to demand that he or she receive at least one-third of the deceased’s “augmented estate.” The determination of the amount that the surviving spouse can receive takes into account not only the assets in the deceased spouse’s name but also some of the surviving spouse’s assets.

We have many clients who marry later in life, sometimes for the second time. Each spouse has accumulated assets separately and may have children from a previous marriage. One or both spouses may wish to favor his or her own children in the will, choosing not to leave anything to the surviving spouse or perhaps to leave only a modest amount. For those clients who die without being aware or without addressing the “elective share” issue, the deceased’s children may be in for an unpleasant surprise, should the surviving spouse choose to seek more from the estate than what was left to him or her in the deceased’s will.

Clients who are either planning to marry or who are already married, who wish to agree that neither will file for the elective share against the other’s estate can put this in writing in a prenuptial or postnuptial agreement.

Second marriages: giving your surviving spouse a life estate in your home

Posted on June 19, 2013

By Sally Wagley, Maine elder law and estate attorney

Consider the case of this typical client of ours, a man in his 60’s, married for the second time to a lovely woman, also in her 60’s. He has three grown children from his previous marriage and several grandchildren. She too has children and grandchildren of her own. Both have property, savings and investments of their own, which they wish to keep separate, and which they wish to leave directly to their own children rather than to each other.

When they marry, the wife moves into the husband’s home. The husband chooses to keep the home titled in his own name, rather than put his wife’s name on the deed, so that the home will ultimately go to his children when he dies. At the same time, he does not want his wife to have to move out of the home when he dies. He comes to us for advice.

One of the options we offer him is revising his will so as to provide his wife with a “life estate” in the home. The will we prepare for him states that should his wife survive him, she has the right to occupy the home for as long as she wants, provided she pays the expenses (taxes, insurance, utilities, maintenance) and takes care of the home. Should she choose to move out of the home, the property will then belong to his children, who can do with it as they choose. If she remains there until she dies, then upon her death the husband’s children will at that point receive title to the home.

In this way, the husband can ensure that his wife will not be uprooted while at the same time ensuring that his children will inherit the property when she no longer needs it.