Tuesday, March 31, 2009

My spouse died, what do I do now?

You’ve been widowed... now what?
This post discusses common issues and challenges faced by newly widowed persons, and answers a question that was recently asked of me at a Seminar I had presented, “How to Avoid Probate”.

There are many legal and financial considerations that need to be addressed by a recent widow(er). After the initial shock and grief have been absorbed, a person can be left feeling confused and unsure of what to do in order to best secure their financial future and to ensure that their family is protected from the consequences of failing to plan for their own estate.

So, what to do after your spouse dies?

I would advise that you consult a qualified estate planning attorney and a financial planner. Pull together your financial information; get acquainted with your current asset, income, and debt situation. This is particularly important if you were not the primary person to handle finances in the relationship. You will now be responsible for your own financial maintenance, and it is important that you are able to understand the nature and quality of your investments, and determine the best strategy for ensuring that you will be able to live comfortably within those means. Perhaps you need to downsize your home, or update your life insurance policy? A financial planner can assist you with these issues.

You should also consult an experienced probate & estate attorney to probate your spouse’s will, if he or she left one. You may also need to re-title certain assets, if they are in your former spouse’s name, collect life insurance policies on your own behalf, and consider whom you have named as beneficiary on your own life insurance policies or retirement plans. If your spouse is still your named beneficiary, then now is the time to change that designation. You may also be entitled to certain government benefits such as Survivor’s Benefits from the Social Security Administration, which has information here: http://www.ssa.gov/pubs/10084.html
or certain benefits that are payable to surviving spouses of Veterans. Those benefits can include such assistance as bereavement counseling, burial assistance, or death pensions. Specific information on Veteran’s Benefits can be found here:

You will also need to consider your own estate planning needs. Have you written a will? What would happen if you were to die? Have you taken steps to ensure that your final wishes are carried out, and that the people whom you want to take care of will in fact be protected?
If you fail to take steps ahead of time, then the assets that are in your name alone when you die will pass through the probate court, ensuring a costly, public, and lengthy administration. Because you now own all of your marital property, your estate may be quite large. If your estate is sufficiently large enough to reach the estate tax threshold ($1 million in Massachusetts, $3.5 million Federal, for deaths occurring in 2009) then you absolutely should consult an estate planning attorney, who can help you to minimize the tax bite.

An estate planning attorney will assess the best plan for you, reviewing such factors as your health, family particulars, assets, income, expenses & debts, and create an estate plan that best fits your specific needs and wishes.
Note that if you have children or grandchildren with special needs, or family members who may be subject to bankruptcy proceedings or a child who might be facing divorce, then you need to consider how best to plan for them. If you don’t plan ahead, it is likely that the people you want to protect won’t be so protected, and the people that you don’t want to reap the benefits of inheritance (creditors or ex-spouses) might enjoy a nice bite of your children’s inheritance. An attorney can help you wade through these issues and determine the plan that is right for YOU, whether that is a simple estate plan or a more sophisticated plan that includes a trust.
While all of these considerations may seem overwhelming, it is important that you get your affairs in order, and work with experienced professionals who will assist you. May you find peace and comfort in your memories, and joy in the journey still ahead.

*** The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. You are invited to contact the office to arrange an appointment. Contacting Attorney Kent does not create an attorney-client relationship. Please do not send any confidential information to the office until such time as an attorney-client relationship has been established.

Thursday, March 12, 2009

Guardianship Changes (& how to avoid this proceeding!)

What is a Guardianship action?

A guardianship is a legal right given to a person to be responsible for the food, health care, housing, and other necessities of a person deemed fully or partially incapable of providing these necessities for himself or herself. Sometimes the Guardianship encompasses both the right to make decisions on behalf of the incapacitated person and also to manage their financial affairs. This would be called Guardianship of the person and estate in Massachusetts.

Some Guardianships allow for extraordinary powers, such as the power to administer drugs, assent to medical procedures, or to commit a person involuntarily.

Guardians are held to the highest fiduciary standard, which means, in legal terms, that they must always act in the best interest of the ward. However, the probate court has lacked the mechanisms to control and prevent abuses of the Guardianship system until recently. This lack of control and lack of monitoring of Guardianships has led to some well-publicized and serious abuses of the system, wherein persons were stripped of their civil liberties and right to self-determination, or wherein their estates were looted by those Guardians to whom their money was entrusted.

The Massachusetts Uniform Probate Code was signed into law on January 15th, 2009, and the new Guardianship provisions become effective July 1, 2009.

The new changes are profound and will impact positively persons currently under Guardianship or possibly subject to future proceedings. Some of the more notable changes are;

* Limited Guardianships will be encouraged, so as to allow the incapacitated person as much personal freedom and self-determination as possible

* Guardianship control of the estate (a person's financial affairs) will be a separate and distinct proceeding

* Guardians seeking to admit an incapacitated person to a nursing home will now be required to obtain written findings by the court that such admission is in person's best interest

* Guardians will now be required to file annual reports on the capacity of person under Guardianship, whereas they previously only had to account for their management of money if they were Guardians of the estate.

* The probate court will now now mandate monitoring throughout the period of Guardianship

The net effect of these changes is a sweeping change that positively protects the rights and interest of individuals, and will very likely cut down the abuses that have existed in the previous system.

In sum, the MUPC offers many long-awaited positive changes to a flawed system. However, the more important point I need to make in summary is that most Guardianships can be avoided with pre-planning by means of a Durable Power of Attorney.

A Durable Power of Attorney is a seriously powerful tool, and yet it is often overlooked or misunderstood by people.

•A power of attorney is a document that allows you to appoint an individual to act as your agent (called an attorney-in-fact) should you ever become incapacitated, even if temporarily. You decide what powers your agent will have. For example: power to pay your bills, buy/sell property, make investments, run your business, etc.

•Benefits: allows you to avoid becoming the subject of a public, costly, and often embarrassing Guardianship proceeding, and allows your agent to act without delay.

•Drawbacks: The document is effective on signing; If you are uncomfortable with giving such power over to your agent immediately, you can give it in escrow to your attorney, to hold until such time as your physician deems you incapacitated. Obviously, give your physician a copy of the document.

I applaud the legislature for improving Guardianship law and practice. However, pre-planning so as to avoid such proceedings by having a Durable Power of Attorney in place in the event of your incapacity can avoid the cost, delay, and red-tape involved in a Guardianship proceeding.