By Attorney Mitch Adel
For years, I have been a subscriber of Real Simple magazine. I love the short quick reads that offer advice on how to solve everyday problems that come up in life and around the house. Nothing beats a simple “fix it” or input from another reader about how to solve common problems in ways you might not of thought of yourself. I seen an article that is related to what I do everyday, but that all changed this month. In the March 2013 issue there is an extremely useful article on “5 tough parental talks.” As it says in the tagline of the article, it is not easy to discuss death and dying with your folks but it's important all the same. The topics in the article are written as questions and are terrific, but please BE CAREFUL, some of the cost- cutting advice can have the opposite effect.
The second question in the article, an important one, asks “Do you have a Power of Attorney?” This is an extremely important document, and the advice on how to start the process with someone's parent is spot on. The author and her source explain that the best option is to contact an elder law attorney. Now, if you have read some of our elder law firm's blogs in the past, I can see how you might think my writing about this article is self serving, but in addition I want to share with you the reasons why.
The first question asks “Do you have a will?”, again a great question and a document that everyone should have, but be careful about the advice that is given. The author's source explains that not having a will means that the probate court judge will divide the assets and this process can cost thousands of dollars. Depending on the complexity of the assets that the deceased person had this can be true, but please also understand that even if you have a Last Will and Testament, your family may still have a costly probate experience. In fact, if you rely solely on a will for an estate plan, your estate will go through probate. This answer to the first question, again ends with the advice of how to start the process and shares that an attorney is the preferred option, but the scariest part is next. Their advice is to offer a cheaper alternative – a “do it yourself” (DIY) website. In the writer's defense they do acknowledge that using the DIY method should only be used if you have no property and few or no investments. My worry here is that some people will only see this as a cheaper solution and again, if not used properly a “simple” will can have the opposite effect.
The most hair-raising question in this article is “Do you have an authorized user on your bank and investment accounts?” Again, great question and putting the financial institution on notice of the above mentioned power of attorney is the best answer. However, in the article it says that families should meet with their bank or brokerage house to fill out the appropriate paperwork to have another family member listed as a co-owner and then list the account joint with rights of survivorship. This will allow the other family member (child) to withdraw funds and close accounts if the parent becomes incapacitated or passes away. While both the ability to access the funds and close accounts outside of the probate court are true, the article fails to mention that if the child, while the parent is still alive, has any creditor issues such as a car accident that leads to a lawsuit, a divorce or a bankruptcy, all of the money in the parent's account is exposed to that co-owner's (child's) creditors. In order to avoid having the children's problems affect the parent's assets, families should rely on a properly drafted power of attorney to access the funds while the parent is alive and a beneficiary designation on the account or a revocable living trust to avoid the probate court's involvement at death.
Every year the number of “do it yourself” (DIY) websites increases and with it an increasing amount of information available to you without your having to leave your couch. I cannot stress enough the importance of being extremely careful with how you utilize that information, no matter how reputable the source. You should never replace professional legal advice with something you read online or even in a magazine. If you have any questions or would like to discuss your individual situation please call our office 800-798-5297 to schedule a free one hour consultation.
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