The Importance of Having a Healthcare Representative

Some time ago, Joan Rivers, a well-known television personality, had to be placed on life support after it was reported that she experienced complications during a surgical procedure. When I originally wrote this column, a newscaster mentioned that decisions regarding continuing that life support might need to be made. It’s easy to understand that these kinds of situations are extraordinarily stressful. The situation is even more difficult if the family doesn’t know the patient’s wishes.

Ms. Rivers’ unfortunate situation highlights concerns that many of us have about our own health care: what happens if we can’t communicate with our health care providers and are unaware of what’s going on? Medical and surgical treatment always requires decisions to be made. Sometimes our health care provider recommends a particular treatment, or provides options for different treatments. The health care provider acts on the patient’s direction, which may include authorization for a particular treatment, or the decision to not have a treatment. Examples of these types of decisions include the use of life-saving interventions such a cardiopulmonary resuscitation (CPR), and intubation if the patient cannot breath on their own. Life-sustaining treatments might include feeding the patient through a tube or intravenously.

If a patient can’t communicate decisions to their health care provider, what options are available? One tool that adults in Connecticut can use in such a situation is the appointment of a health care representative. A health care representative may make medical decisions on behalf of the patient when the patient is unable to do so. There is no inherent limit on those decisions – they are not limited to life-saving or life-sustaining interventions, but may include any and all health care decisions for a person who is incapacitated to the point where they can’t actively take part in decision-making and cannot direct their health care provider regarding their medical care.

The ability to make health care decisions when the patient is incapacitated is one important way health care representatives are different from health care agents. The authority of health care agents is limited to conveying the patient’s wishes to medical providers; they have no authority to make decisions. Effective October 1, 2006, Connecticut law was changed to permit the appointment of health care representatives. The difference between health care agents and health care representatives is especially important for those who executed an appointment of health care agent several years ago. The change in the law gives adults in Connecticut a potentially more effective tool in planning for incapacity. A health care representative retains authority to make health care decisions even if the person who appointed them is under an involuntary conservatorship, unless a court order says otherwise.

The next column will examine advance medical directives. Advance medical directives, also known as “living wills,” are commonly used in conjunction with the appointment of a health care representative as part of a legal strategy to plan for potential incapacity.

Copyright© 2014 Domenick N. Calabrese. All rights reserved.

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE, AND SHOULD NOT BE RELIED UPON AS LEGAL ADVICE. FOR INFORMATION REGARDING YOUR SPECIFIC SITUATION, PLEASE CONTACT A QUALIFIED ATTORNEY.

The New Connecticut Uniform Power of Attorney Act Part 2: Advantages of Powers of Attorney

Preserving powers of attorney as an inexpensive means of incapacity planning that is flexible and private is one of the objectives of the new Connecticut Uniform Power of Attorney Act. But just how are powers of attorney “inexpensive,” “flexible,” and “private”?

The best way to deal with legal incapacity is to plan for it before it occurs. Nearly all the tools to plan for future legal incapacity – powers of attorney, trusts, health care representatives, changing ownership of assets, and advance directives – require the person creating them to have legal capacity to put them into place. Unfortunately, most people fail to plan for legal incapacity, and when it strikes, these options are not available.

One of the few options to manage the affairs of an incapacitated adult who has not planned for incapacity is through the appointment of an involuntary conservator in the probate court. The person for whom the conservatorship is being sought must have legal representation, which they must pay for unless they are indigent. The person making the application should also retain legal counsel to represent them before the probate court; this is particularly important where there is conflict between family members. This adds up to significant preparation and cost, in addition to the stress and emotional toll of adversarial court proceedings. Conservatorship proceedings and most documents are accessible to the public. An effective power of attorney may preclude the need for a conservator.

Trusts can be a very effective way to plan for management of assets during incapacity. However, creating a trust and transferring assets into it (a necessary but often overlooked step) is costly.

Powers of attorney are far less expensive and time consuming than these other options. The new Connecticut Uniform Power of Attorney Act preserves key elements of powers of attorney that make them inexpensive, flexible and fairly expeditious to create. How does the new law accomplish this?

It provides a suggested form for a power of attorney, making it efficient to draft compared with a trust. This greatly reduces an attorney’s billable time, translating to lower costs for clients.

The power of attorney can grant a number of authorities to the agent, or very narrow authority to an agent – for example, authority over a single financial account. The power of attorney may be drafted so it expires on a particular date, or it may have no expiration date. This feature makes a power of attorney very flexible.

Powers of attorney are private documents not subject to public inspection, since they don’t need to be filed in the probate court or on the public land records.

A power of attorney is just one part of a comprehensive estate plan. It’s not necessarily a substitute for a trust or other documents. When lay people attempt to draft their own estate planning documents, the results can be disastrous. Planning for incapacity should only be accomplished through a qualified attorney.

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE, AND SHOULD NOT BE RELIED UPON AS LEGAL ADVICE.  CONSULT A QUALIFIED ATTORNEY FOR ADVICE REGARDING YOUR SPECIFIC SITUATION.

COPYRIGHT 2016 DOMENICK N. CALABRESE.  ALL RIGHTS RESERVED.  THE USE, COPYING OR DISSEMINATION OF THIS ARTICLE WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE AUTHOR IS STRICTLY PROHIBITED,

 

 

Disadvantages of Living Trusts

In previous posts to this blog, I reviewed some advantages of living trusts. Like any other estate planning tool, living trusts have advantages and disadvantages. This article will briefly examine some of the disadvantages of living trusts.

Living trusts must be drafted by an attorney to maximize the possibility that your wishes and objectives will be consistent with the terms of the trust. The cost of having a living trust drafted depends on several factors, including the complexity of the trust and the client’s objectives.

Assets must be transferred into the living trust in order to realize many, but not all, of the advantages of the trust. Frequently, family members of someone who recently passed away bring the decedent’s living trust to the probate court. They are unpleasantly surprised to find that nothing was ever transferred into the trust. This defeats the ability of the trust to bypass the probate administration process for assets that may have been in the trust had been transferred into it during the lifetime of the person who created it.

Transferring assets into the trust can be time-consuming and complex. For example, for real estate with a mortgage, the lender may accelerate the mortgage if the property is transferred into the trust without the permission of the lender.

Living trusts do not reduce Connecticut probate fees. Assets in revocable living trusts are included in the calculation of Connecticut probate fees. Unscrupulous purveyors of living trusts have been known to discuss “probate fees” (sometimes using probate fees from states other than Connecticut and including attorney’s fees in the “probate fee”) in their living trust sales pitches. Often, this practice misleads potential clients to believe that living trusts reduce Connecticut probate fees. What’s not disclosed is that attorney’s fees charged to draft the living trust can easily exceed probate fees.

Not all assets may be transferred to a living trust. For example, stock options and community property generally cannot be transferred to a living trust.

It’s possible to accomplish some advantages of living trusts using less complex and less expensive legal tools, such as survivorship, payable on death, beneficiary designation or a durable power of attorney.

Another misrepresentation about living trusts is that anyone with assets valued in excess of an arbitrary number, for example, $75,000, should have a living trust. Such broad statements are designed to encourage the sale of living trusts and are not, by themselves, a reasonable basis for deciding whether a living trust is right for you.

Only after consulting a qualified, ethical attorney who takes time to understand your situation and objectives, and explain your options, can you make an informed decision as to whether a living trust is appropriate for you. Avoid “one size fits all” living trust packages that are sold to attendees of “free” seminars. That approach serves only to benefit high-volume, mass-production sellers of living trust packages.

 

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY.  IT IS NOT INTENDED TO BE, NOR SHOULD IT BE RELIED UPON AS LEGAL ADVICE.  CONSULT A QUALIFIED ATTORNEY FOR ADVICE REGARDING YOUR PARTICULAR SITUATION.

COPYRIGHT 2016 DOMENICK N. CALABRESE. ALL RIGHTS RESERVED.  NO PART OF THIS ARTICLE MAY BE COPIED, REPRODUCED OR DISTRIBUTED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE AUTHOR.

 

 

 

 

 

Three Probate Myths, Misconceptions & Mistakes

This article examines 3 common probate mistakes, misconceptions and myths.

Myth: Probate can be totally avoided by placing assets in survivorship or a living trust.

This myth is often promoted by purveyors of “one size fits all” living trust packages. When a Connecticut resident dies, even if all their assets are in survivorship or a revocable living trust, probate proceedings are still necessary for Connecticut estate tax and probate fee clearance. If probate proceedings don’t take place, there will be a problem when the real estate in which the deceased person had an interest is sold. Property in a living trust or survivorship allows for transfer of ownership independent of the probate court; the probate court has no role determining the legal owner of that property (one element of “avoiding probate”.) However, the Connecticut Department of Revenue Services treats property in a trust or survivorship as includible for calculating Connecticut estate taxes liability and probate fees. Property is clear of Connecticut estate tax and probate fee liens only after the probate court issues a release of lien upon payment of the probate fee and any outstanding Connecticut estate tax.

Misconception: Probate fees and taxes can cost 33% or more of an estate’s value.

Three fees and taxes that may be assessed on a deceased person’s assets are federal estate tax, Connecticut estate tax, and Connecticut probate fees. For anyone dying with less than $2 million in assets in 2016, there will be no federal or Connecticut estate tax liability. Connecticut probate fees are progressive and based on the value of the deceased person’s estate: the greater the value of the estate, the higher the probate fee. In Connecticut, probate fees are established by law, not by probate judges and courts. The courts must strictly adhere to the established fee schedules. Probate fees range from one third of one percent to one half of one percent. For example, if a Connecticut resident dies owning assets valued at $600,000, the Connecticut probate fee will be approximately $2,100. A change in the way probate fees were calculated in 2015 removed the $12,500 “cap” on probate fees and increased the marginal rate for estates valued in excess of $2 million to one half of one percent – a significant increase in probate fees for high value (multi million dollar) estates. It’s likely that more changes to Connecticut probate fees are on the horizon and will be the subject of a future article.  However, Connecticut probate fees are far lower than the 33% or more that some people believe.

Mistake: Relying on the advice of a well-meaning bank teller, friend, nurse, social worker or contractor for probate and estate planning advice.

Even after fourteen years as a probate judge, I am still amazed by how many people believe they can dispense advice on probate matters! I’ve seen people proceed in probate relying on the advice of well-meaning relatives, friends, neighbors, bank tellers, nurses, social worker and others.  Probate is a highly specialized area of the law, and even very few attorneys are well versed in probate law. Attorneys with substantial probate experience are most qualified to give reliable advice.  Probate court clerks cannot give legal advice, but are able to answer many questions and provide probate forms to the public.  Unlike other courts, many  – but not all – matters in Connecticut probate courts do not require an attorney.

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY.  IT IS NOT INTENDED TO BE, NOR SHOULD IT BE RELIED UPON, AS LEGAL ADVICE.  CONSULT A QUALIFIED ATTORNEY FOR ADVICE REGARDING YOUR SITUATION.

COPYRIGHT 2016 DOMENICK N. CALABRESE.  ALL RIGHTS RESERVED.  COPYING, DISSEMINATION AND DISTRIBUTION WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE AUTHOR IS STRICTLY PROHIBITED.

 

 

 

Living Trusts for the Benefit of Children

I recently had a discussion with a married couple with two children, ages 4 and 2. They were interested in providing for their children if something were to happen to both parents.

One way to accomplish this would be with a living trust. The parents could create a living trust, place assets into the trust, and name a trustee in addition to or in place of the parents. If both parents were to pass away while their children were still young, the trust could provide money to pay for the children’s education, medical care, housing, clothing, or anything else for the children’s benefit.

Once the children attained a certain age – it could be any age – 18, 25, 30, or some other age – anything left in the trust would then be turned over to children in their adulthood.

The trustee – the person responsible for managing the trust – would use the trust money to pay for whatever of the children’s expenses the trust was designed to cover. The trustee would be bound by the terms of the trust to be sure the trust assets were properly invested, and the trustee would be liable if he or she wasted trust assets.

Providing for the management of assets for minor children is important – if it’s not done with a trust or custodial account, a guardianship estate might need to be established in the probate court.   In addition to “youth” – those under the age of 18 – there are  reasons why managing assets for the benefit of an adult may be important. For example, it can be very challenging for a young adult to responsibly manage a significant asset. Likewise, adults in their 30s or older may lack the sophistication or maturity to responsibly manage a significant asset. Perhaps providing support for someone with serious creditor issues, or someone who is easily taken advantage of by the unscrupulous is a goal. A parent or grandparent with adult children or grandchildren in difficult marriages may want to ensure that a potential “ex” spouse doesn’t end up with some or all of assets intended for their own child or grandchild. In all of these cases, a living trust could provide for the management of assets and support of loved ones without giving them the asset outright.

Trusts can be funded with any of a variety of assets – real estate, financial accounts, life insurance proceeds, and bequests in a will are just a few potential sources of trust assets.

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO, NOR SHOULD IT BE RELIED ON, FOR LEGAL ADVICE.  PLEASE CONSULT A QUALIFIED ATTORNEY FOR ADVISE REGARDING YOUR SITUATION.

COPYRIGHT 2016 DOMENICK N. CALABRESE.  ALL RIGHTS RESERVED.  THE USE, REPRODUCTION OR DISSEMINATION OF THIS ARTICLE OR ANY PORTION OF IT IS STRICTLY PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE AUTHOR.

 

 

 

 

 

 

Wills: Myths, Misconceptions & Mistakes

cropped-img_1399.jpgMost people realize having a will is a good idea. It provides for the transfer of your assets after you pass away to the people and institutions of your choice. As an attorney and  probate judge, I’ve seen and heard myths, misconceptions and mistakes in this area.

 

Some people believe it’s effective to simply write a note directing who will receive their assets after they die. This won’t work in Connecticut. Connecticut has strict requirements for how a will needs to be executed. If these requirements are not carefully followed, the note won’t be recognized as a valid will.

 

The same principle applies if someone wants to make changes to an existing will. Crossing out and writing in provisions to an existing will generally won’t be valid. If someone wants to change their will they either need to execute a new will or execute a codicil to the current will. The laws of will execution also apply to how a codicil must be executed in order to be valid.

 

Another misconception is that if someone dies without a will, all their assets will go to their surviving spouse. This is only true if the person who passed away had no children or surviving parents. Otherwise, the children or surviving parent will receive some portion of the decedent’s probate assets. If someone passes away survived by a spouse and children, the surviving spouse receives the first $100,000 and half of everything over $100,000. The children receive one half of everything over $100,000. However, if one or more of the children are not also children of the surviving spouse, the surviving spouse receives 50% of all the decedent’s assets and the other 50% are divided equally among the children. Stepchildren of the decedent are not recognized as heirs at law unless there are no surviving blood relatives of the decedent.

 

Photocopies of a will are not legally valid – only the original signed copy of the will may be admitted to probate. If the original cannot be located, additional proceedings in the probate court are necessary to allow admission of the photocopy.

 

All wills name an executor – someone or an institution (such as a bank or trust company) responsible to administer the estate. However, the executor named in the will does not actually become the executor unless they are willing and able to serve as executor and they are appointed by the probate court. Often people state they are the executor of a living relative’s estate, but that is not the case until their relative dies and they are appointed by the probate court.

 

Wills have no legal authority until admitted to the probate court. If someone becomes legally incapacitated, their will has no effect on the management of their assets while they are alive. Trusts, advance healthcare directives, powers of attorney, appointment of healthcare representatives and advance designation of conservators are legal tools used to plan for incapacity.