Top Ten Mistakes Made In Wills, Trusts, Powers Of Attorney And Health Care Directives

ESTATE: Your estate includes all property owned by you minus all of the debt and liabilities you have.

1. KEEP YOUR DOCUMENTS UPDATED: People often forget to change their documents and keep them updated. Keep your documents relevant to changes occurring in your personal life.
a. Even if you don’t know that there are going to be changes in your life, you should still plan for potential changes, such as nursing home costs.
b. Most people make the mistake of not planning ahead if they know marriage, children, or even remarriage is in the future.
i. If you get divorced, take your ex-wife or ex- husband off your accounts and off of your documents. Especially any power of attorney documents that spring into existence if you become disabled or cannot make decisions for yourself. You wouldn’t want disputes later on regarding whether your ex-wife/husband has rights to your property.
ii. For example, if you have children from a first marriage but decide to leave everything to your spouse, your children may be left with nothing after your death. If they are age eighteen or older they no longer have a statutory right to your property. Thus, it is important to constantly update and/or change your documents when your personal life is also in transition or changes are occurring.

2. KEEP YOUR DOCUMENTS ORGANIZED AND IN A SAFE PLACE: People do not keep their personal documents organized and thus make it hard for the executor to find important papers.
a. Generally, it is a good idea to assemble all of your key documents in one place to help save your executor or administrator time and headache in the future.
b. If you have a safe deposit box, do not assume that your executor knows where your safe deposit key is hidden or where you did your banking. Thus, it is also important to update your files.
i. These issues came to surface in the case In Re Will of Nash, Deceased. The deceased, Lucille B. Nash, had never told anyone that she had a will. Not until the appointed Administrator and Ms. Nash’s tenant farmer were going through her belongings after her death was anyone aware of a possible will that Lucille B. Nash had made. However, there were several problems with this alleged will. One being that there were eight separate black ink deletions apparently made with a widepointed felt marking pen. The standard attestation clause and the signature of the witnesses were not disturbed. The Court however did admit the document to probate and declared it the decedent’s law will and testament. It further stated that nothing indicated that the will be treated as a spoliated will although it contained the black ink markings.

3. SEEK PROFESSIONAL HELP: If you want changes to your will or other documents then you should seek your lawyer’s help before making any changes.
a. Changing or simply throwing out your will can arise in all sorts of problems.
b. Any time you want to make changes to your will or other documents it is very important to make sure that those changes are properly executed. (signed and witnessed)
i. Failing to do so may result in those changes not taking effect.
ii. It is best to have your documents redrafted or in the case of a will an option is to make a codicil to your will that is properly executed.
c. Also, it is important to let those people closest to you and those who are beneficiaries to know that you have a will in existence and where they can find the will.
i. There have been situations where the family does not think there is a will or they don’t know that there is a new will and the estate is handled according to the old document or according to statute. Then a new will is discovered at a later date and if there are substantive changes it can cause problems (Refer to In Re Will of Nash case again)
d. In addition, before filling out generic forms regarding a will, trust, or power of attorney, it is best to see your attorney first to go over what you exactly desire.
i. People can be very naive or too trustworthy and enter into Trust arrangements that take advantage of the individual. Thus, be aware of these Abusive Trust Arrangements. This is why it is important to always contact your attorney if you are unsure of a certain agreement you want to enter into. It has gotten so serious that the IRS has put a notice out that it intends to actively examine certain abusive trust arrangements that are sold by promoters. These promoters promise benefits under federal tax laws that do not exist. Examples: Business Trust, Equipment or Service Trust, Family Residence Trust, Charitable Trust, and Final Trust.

4. PLAN FOR YOUR FUTURE MEDICAL EXPENSES: When making a will, starting a trust, or appointing a power of attorney it is important that you plan ahead. Often times, people do not think or do not realize they will need a certain amount of funds available to them, especially if they suddenly become sick or anything unexpected should happen to them.
a. Consider the fact that you may need funds for your own medical care in the future and how to protect your finances in the event you need full time medical care.
i. Many people forget to consider the possibility that they may need to be in a nursing home one day.
ii. There are times when your personal property may have to be used to pay off debt from your medical/healthcare cost.
b. Full time care like the nursing home facilities and assisted living facilities can quickly deplete your financial resources in that qualifying to receiving federal aid is difficult in that you need to have $1500.00 or less available at all times to receive Medicaid.
i. It is important that you plan ahead for unexpected circumstances. Anything can happen and it is best not to learn the hard way. For instance, Medicaid is a very important to consider but should rarely be relied on for support in the future. For instance, if you are financially sound now then you should not have to completely rely on Medicaid in the future.
ii. Nursing Home costs are extremely expensive and although you may not plan on ever living in one, there is always that chance you may have to. Thus, keep a good amount of savings to support yourself, especially if a sudden illness occurs. Unfortunately, in Ohio if you do not have enough money to pay for some of your health expenses, your personal belongings may be taken in order to pay off your debt. One way to avoid this from happening is transferring some of your personal belongings (perhaps those that mean the most to you) to a close and trustworthy relative or friend now. The property will then be in his/her name. Simply make arrangements with this person to have control over the property, until you can no longer.

5. BEFORE YOU MEET WITH YOUR ATTORNEY TO DRAFT ANY DOCUMENTS, MAKE SURE YOU ARE WELL PREPARED. Many people have the misconception that your attorney will automatically know exactly what you need in your documents.
a. Make lists of all of the property you own or have an interest in, including any business interests.
b. Consider whom you would like to leave property to, including any charities or organizations that you wish to receive gifts, and how much you would like to give to them.
c. Think about any specific gifts you would like to give to specific people. For example, gifting specific pieces of real estate, jewelry, antiques, or collectables.
i. Often times people come in thinking that their attorney will guide them through the entire process. This is a huge misconception and people should understand that the attorneys are here to help get your documents in order, but unfortunately we are not mind readers. You should have a good idea as to what property you would like to give to a certain person, charity, organization, etc. We are not here to tell you what to put in your will, but to guide you through the process.
ii. If you have a particular interest, such as wanting to give an anatomical gift, then the attorney can show the proper procedure to take and give you recommendations on how to go about doing it. It is also good to write down every piece of property that you know you own or at least think you own so that we can get everything on paper first.
d. When drafting a power of attorney, consider the extent of the power you would like to grant to the fiduciary.
i. If you would like the fiduciary to be able to make gifts to other people, that power needs to be specifically provided for.
ii. If you would like the fiduciary to be able to make gifts to himself or herself, it is important that the power is expressly stated in the document.
1. Shumar situation: Father wanted his daughter to set aside a specific amount of money for his granddaughter, none for his grandson, and take the rest for herself. She did so, but her power of attorney did not give her the power to make gifts. Dad was in a nursing home and did not go to the bank to sign the documents setting up the accounts so she signed them as power of attorney. After his death his grandson and granddaughter are questioning her ability to set up these accounts. The Deceased never wrote anything down in writing and the Power of attorney did not give the powers she exercised. She has since spent the money and will most likely have to give it back to the estate to distribute according to the will provisions, instead of by his actual wishes.

6. THOROUGHLY EVALUATE YOUR CHOICES FOR FIDUCIARIES: It is very important that you choose a person that you can trust and that understands your estate plan and your instructions so that they can see to it that your property is handled how you expect it to be handled, and in the event that person has to make medical decisions for you that they understand what it is you want or do not want done to you. The chosen person should also be someone who agrees with your decisions.
a. Choosing an Executor: Choose someone you can trust and that has the ability to accept the responsibility of handling your affairs.
i. Some people who have many children want to make all their children the executor because they think one child one would be hurt if one child is chosen over another. Do not let this get in the way. This is your estate we are talking about. The more people involved the longer it will likely take to handle your affairs. You have to remember that all the executors must agree on what happens with your property. This is another reason why it is important to let loved ones know how you are executing your will; thus, no surprises and hurt feelings will result.
b. Choosing a Power of Attorney: Choose someone you are sure does not have an ulterior motive and that you can trust wholeheartedly.
i. A power of attorney carries a great deal of responsibility and trust in the person you choose to appoint. They can effectively make decisions regarding your property and finances on their own accord.
ii. It is important to choose wisely because power can do strange things to people.
c. Choosing a Trustee: Don’t just choose someone who you are friends with. Make sure the chosen agent is someone who agrees with your decisions and someone who is trustworthy.
i. This is a difficult thing to decide but remember a trustee can bind his actions to you with either his actual or apparent authority – so be very careful whom you choose as a trustee.
d. Choosing a Health Care Power of Attorney: This person must be someone who agrees with the decisions you have made regarding your medical care.
i. Having someone in charge of making decisions for you when you are unable that understands and respects your decisions is extremely important.
ii. The health-care power of attorney in general supersedes a living will executed by the person – thus, it is very important to know your agent’s healthcare views. Make sure their views are similar to yours and what you would want. (the most recent and publicized event involving this complicated situation was the Terri Schiavo matter)

7. EVERYONE SHOULD HAVE AN ESTATE PLAN: It is a common misconception that people do not think that they have enough assets to need to worry about having a will or a power of attorney.
a. Estate plans are not just for the wealthy. A properly drawn estate plan can help your family disburse your property and pay off your debts.
b. It is especially important to have a will if there you have property that you would like a specific person to have when you die. For example, passing on your wedding dress, your car or a family heirloom. Having a will serves to dictate who that person is.
c. Do not limit yourself to only having a will or having a power of attorney. Talk to your attorney about your specific situation, including any future plans and your health, so you and your attorney can come up with the options that are best for you, whether that be a trust, a will, a power of attorney, a living will and/or a health care power of attorney.

8. DON’T UNDERESTIMATE THE POWER OF ATTORNEY: A power of attorney is a document in which you give another person the authority to act on your behalf. In essence, they step into your shoes and handle your affairs as you would. It is important to think about how much control you want to give up and for what purpose.
a. Many powers of attorney are general in nature and encompass all of your property and finances.
i. Make the amount of authority you are giving the power of attorney very clear in the document.
ii. If you want the power to be broad, make it so, but if you want it to be limited, the language must be very specific and very clear.
b. If you need or want a power of attorney for a specific limited purpose, make sure that purpose is clearly written otherwise you could end up in a situation where all of your money is gone, all of your assets have been transferred to others, and you have no idea how it happened.
i. Shumar: Gentleman granted his brother in law a power of attorney that he believed would give him the authority to move one account for him. Before he knew it, his life insurance policy beneficiaries had been changed from his own children, to his brother in law’s children, and one of his CD’s had been cashed out and to this day is unaccounted for. An additional 30,000.00 is missing from another account.
c. Remember that you can revoke a power of attorney as long as you are still of sound mind. Once you give a power of attorney, it does not have to be forever, but remember that you must file a revocation with the County for the power of attorney to be invalid.
d. A power of attorney is no longer in effect once you pass away.
i. If you have a power of attorney make sure your banks regularly check to make sure that the grantors are still living.
ii. If they do not, there is a chance that the power of attorney can close your accounts before your executor has a chance to be appointed by the Court to control those account.
1. Clara Simmons: Woman sold a piece of investment property and received a check proceeds three days after her death. Her daughter stole the check out of her mailbox, forged it, and deposited it under a power of attorney granted to her by her mother. She then took the money out of the account and used it to her advantage when those funds were specifically given to other people under the will. The bank never checked to make sure the power of attorney was still valid. The deceased had been dead for 4 days.

9. TALK TO YOUR FAMILY ABOUT YOUR PLANS: The less surprise there is, the easier it will be for your family to deal with your death. While sometimes the secrecy is important and/or necessary, there are times when it is better to make sure everyone involved knows exactly what your wishes are. This can help to avoid long, expensive litigation.
a. Disinheriting: When you decide to disinherit someone who would normally inherit from you it is important that your documents are clear.
i. It may be helpful to make your wishes known to more than one person, or even to the person you are disinheriting prior to your death.
ii. This will help avoid problems when it comes to administering your estate.
1. Schlund: Father disinherited his son, for his own reasons. The son believes he was wrongly cut out. He is now challenging the amendments made to his father’s trust documents, trying to argue that he was unduly influenced at the time and that he did not know what he was signing. This serves to prolong distribution to the other children and to cost the father’s estate money in paying attorneys to litigate and resolve the dispute that should be given to the heirs that were not disinherited. However, that may be the goal of the disinherited son.
b. No Contest Clause: This is a clause that you would include in your will or trust that makes it clear that any person who challenges the document will lose the ability to receive their gift.
i. If the gift is something the person is willing to sacrifice, sometimes this may not be as effective as hoped.
1. Schlund: The only thing the disinherited son stands to lose is a VCR.
c. Health Care Power of Attorney and other Health Care Directives: It is best to review your plans and wishes with not only the person you appoint as power of attorney, but other members of your family as well. This way they will know how you would like your health taken care of in the event that you are incompetent to do so yourself.
i. It helps them to understand your decisions and can help avoid confusion and delays.

10. LIVING TRUSTS ARE A USEFUL TOOL IN DEALING WITH YOUR PROPERTY: There is a common misperception that living trusts are not a good legal device to use in your estate plan.
a. This is due to situations where the trust is improperly prepared or it is not properly funded.
b. Some advantages to a living trust include:
i. Trustor maintains control during his or her lifetime as you name your self as Trustee of your living trust. A Successor Trustee is named to take over in the event you become incapacitated or in the event of your death.
ii. Avoidance of the publicity, expense and delay of probate;
iii. Avoid the interruption of income for family members on the death of the head of the family or on his or her becoming disabled or incompetent.
iv. It can be amended or revoked at any time.
v. Allows the grantor to view the trust in action and make appropriate changes.
vi. Enables a going business to continue without interruption.
vii. Requires less accounting, administration, and judicial supervision than a trust created by will.
viii. It may be less vulnerable to attach on the ground that the grantor lacked capacity.
ix. Spendthrift provisions.