Category: Estate Planning Lawyer

Houston Estate Lawyer Answers, “How Does a Power of Attorney Document Work?

A power of attorney (POA) is a document that serves as a written authorization to represent or act on another’s behalf. However, a POA does not necessarily give someone the right to make all decisions. There are different type of POAs, and they have different rules determining the abilities of the person named as Power of Attorney.  As a Houston Estate Attorney, I want to be clear that if you are an agent under POA, it is important to know what decisions you can, and cannot make on behalf of the grantor. Here are a few frequently asked questions regarding POAs.

Do I have the authority to make medical or financial decisions for the grantor? Or both?

You can have either a financial or medical power of attorney. You may have already guessed but a financial power of attorney has authority over your financial matters and a medical power of attorney can have power over medical decisions. A medical power of attorney can have many different guidelines or limitations depending on the desires of the grantor. While it is possible that you have been granted the power to make both medical and financial decisions, it is important to point out that two different legal documents must be executed.

Does this Power of Attorney expire after a set time period or does it go on forever?

This can depend on the state you live in and what that state allows. If your power of attorney expires after a set time, it is important to renew or set up a new power of attorney at that time. If your power of attorney is durable that means that it will hold authority granted by the documents unless the individual chooses to revoke the power of attorney. If you do have a durable power of attorney it is still important to regularly review the document, as some instructions will not accept a power of attorney that is over a certain age, which is typically 12-24 months.

Is my Power of Attorney effective now or after a triggering event?

Many POAs are effective at the time that the document it executed. However, if you wish, you can make it effective only after a certain triggering event such as incapacity.

If you have been named as an agent under a POA for someone, be sure to periodically review the document with an experienced Houston estate attorney who can ensure that you have the decision making authority you need. If you do not have a POA, you should consider putting one in place to ensure that someone can speak for you if you are unable to speak for yourself. Contact us today at  (281) 218-0880 to get started.

Life Insurance for a Professional Racecar Driver? You Bet!

Since she was in her early 20s, Danica Patrick has driven a racecar—speeding 200 miles per hour around an oval track bordered by concrete walls. It’s dangerous.

Patrick said, “So no matter what your skillset is, those things just happen. Absolutely it is a risk.” 11-15-16

Forbes’ article, “Danica Patrick: You May Not Drive a Racecar, But You Still Need Life Insurance,” says that it’s a risk that she’s chosen to manage in part with life insurance. She’s owned life insurance since she started racing, and she now advocates on behalf of Life Happens, a nonprofit founded to help consumers make smart insurance decisions.

It’s a rite of passage to buy life insurance before your first race. However, Patrick has more personal reasons. Her parents were in favor, as each lost their fathers during childhood and witnessed the financial stress placed on their families. They managed the risk with life insurance and saving six months’ worth of expenses for an emergency.

As far as Patrick is concerned “she didn’t want to leave people with bills they can’t pay, and not only dealing with the sadness of a loss, but trying to figure out how you’re going to manage the rest of…life.”

Life insurance allows us to deal with personal loss without compounding it with financial stress. The suggested policy for most families is a term life insurance policy with a death benefit that is approximately 15 times their annual income.

With term life insurance, many life insurance needs will expire, assuming that a family is on track to reach financial independence around retirement age. The specific term of your policy should last at least through the children’s college years—and at most through the age at which you can reasonably expect to be financially independent.

If you want to create an estate, fund charitable bequests, replace an estate lost to taxes or build cash value, you will need some type of permanent life insurance—whole life, universal life, or variable life. Note that permanent life insurance creates additional financial complexity and can be expensive.

If you have a spouse or minor children, you have loved ones relying on you financially. Term life insurance can be pretty inexpensive. And even if you’re not a racecar driver, you face one of life’s most common risks—riding in or driving a motor vehicle.

As Patrick remarked, “It’s probably pretty uncommon to come across someone that hasn’t been in some kind of a car accident. Now, there are surely varying degrees, but you’re not wearing a six-point harness with a helmet on and an ambulance sitting nearby. So, it’s a risk no matter what you do if you’re driving anything.”

Reference: Forbes (Sept. 23, 2016) “Danica Patrick: You May Not Drive a Racecar, But You Still Need Life Insurance”

Complete a Complete Estate Plan

When it comes to planning, the focus is typically on making you better prepared for the future. That means limiting taxes, creating wiser investment strategies, knowing when it’s best to claim Social Security and developing sustainable retirement income plans. All of these help you on the path to your financial future and your long-term goals. But The Brainerd (MN) Dispatch reports in “3 common estate planning questions, answered,” that there is, however, one exception. That’s estate planning. While much of financial planning primarily benefits you, your estate planning primarily benefits your family and loved ones. 11-14-16

The basic component of your estate plan is your will but there may be other parts you need. Depending on your estate, you may want to consider a trust, in addition to healthcare directives, powers of attorneys and guardian designations. You should also remember that your will isn't necessarily the only instruction when it comes to distributing your assets. The beneficiary designations on your retirement and brokerage accounts, and the life insurance policies you own will take precedence over what you say in your will. Review beneficiary designations regularly to be sure the money in your accounts or the death benefit on a life insurance policy goes to the right person.

A trust can be complicated, so talk with an estate planning attorney to see if it makes sense and whether you'll actually benefit from using a trust. If most of your assets are covered by beneficiary designations or owned in joint tenancy, those assets are already exempt from probate, so they won’t necessarily benefit from a trust strategy.

The executor or the personal representative is the person who will be responsible for carrying out the instructions in your will, settling your debts and paying taxes on your estate. As far as selecting an executor, it should be someone with the capacity to carry out the needed tasks of the position. It also needs to be someone who is willing to serve and is familiar with your situation such as a family member or a close family friend.

If you don't spend every last dollar you have to your name on the day you die, you'll need to have an estate plan. Speak with an experienced estate planning attorney to develop one.

Reference: The Brainerd (MN) Dispatch (Sept. 23, 2016) “3 common estate planning questions, answered”

A Few Words of Advice for Getting Married in Your Golden Years

If you're in your senior years, you may want to think twice before tying the knot. The love bug can bite at any age, and that can include pain in your wallet. This advice comes from The Hartford (CT) Courant in its recent article “Fit to Be Tied? Think Twice About Marriage in Your Golden Years.”

A late marriage can mess up your previous plans for your estate, personal finances, as well as any advance directives for your end-of-life health care. It can also impact decisions you've made and will make, in addition to those of your spouse and heirs. 11-11-16

No one is saying that older folks shouldn’t marry. They just need to be aware of the impact it may have on their plans. Elder law attorneys advise that those thinking about marriage later in life, at the time when personal wealth is typically the highest, understand the laws on the property rights of both spouses.

Property owned jointly or exclusively by either spouse is deemed to be marital property when it comes to divorce settlement or settling an estate in many states. If you understand the applicable property rights before the marriage, it’ll let you modify your wills, powers of attorney, health care proxies and designated beneficiaries to avoid legal conflicts in the future. Those who marry later in life must face several estate planning issues younger couples don’t. For example, there may be an accumulation of considerable assets or both may have children from earlier relationships.

Marriage is a legal contract between two people that can only be ended by death, annulment or divorce. The laws concerning marriage typically aim to protect the rights and interests of both spouses. One spouse can’t entirely “disinherit" their surviving spouse, regardless of what he or she writes in a will. Under the law of some states, a surviving spouse is entitled to the income generated from a third of their late spouse’s estate for the rest of their life after all its liabilities are settled.

A good idea to eliminate possible hard feelings is a professionally drafted prenuptial agreement. This document details the legal course to be followed in the event of divorce and decreases the possibility of major disagreements.

Reference: The Hartford (CT) Courant (Sept. 24, 2016) “Fit to Be Tied? Think Twice About Marriage in Your Golden Years”