Marion and Vaughn Eccles in the backyard of their second home in Phoenix, Ariz.
For three years, the Eccles had been spending the winter in Phoenix, Ariz., in their mobile home, but it wasn’t until they bought a house there in 2008 they learned their Alberta personal health directives were not valid in the United States.
Marion, 51, and Vaughn, 62, had assumed their directives, which were drafted together with their wills in Edmonton, would be valid in the United States. “We were talking to our Canadian lawyer about a cross-border trust as part of our estate planning and he asked if we knew our Alberta personal directives were not recognized in the U.S.,” says Marion.
Some jurisdictions call them living wills, but in Alberta, the legal term is personal directives, a signed, dated and witnessed document that appoints a representative to make decisions of a health nature (non-financial) if you are incapacitated or unable to speak for yourself.
Another person, even your spouse, cannot make health decisions on your behalf without first being named an agent in a personal directive.
Wanda Fawcett, wills and estates lawyer at Edmonton’s Bishop and McKenzie law firm, says that while some provinces have legislation that recognizes personal directives made in other jurisdictions, in order for any personal directive to be used in a particular province or state, it will have to comply with the local requirements in order to be valid. “Travelling snowbirds or seasonal second homeowners in the U.S. need to check the local legislation of the particular state they winter in to determine what forms they need.”
Arizona has four life-care planning documents, or health care directives.
The living will covers end of life decisions on behalf of a person who is unable to make them. The health care power of attorney designates another person to make health care decisions in medical emergencies.
A mental health power of attorney document gives an agent the ability to make decisions if you lose your mental abilities, and the fourth form is an authorization for release of medical information.
“An out-of-country medical emergency can be very traumatic, and people can be totally side-swiped to learn that their Canadian medical release documents may not be recognized when they are most needed,” says Paul Deloughery, founder and managing attorney of Deloughery Law Office in Scottsdale, Ariz.
“It’s really important to get these things in place so that you are confident they will be taken care of in case of an emergency,”
Deloughery, whose firm focuses on estate planning, probate and business law, says Alberta’s personal directives do not meet the requirements of the state law (beginning at Arizona Statutes AES36-3201).
Essentially, each of Arizona’s four documents must be witnessed and signed by a notary, and must include specific language that is not found in the Alberta personal directive.
“The issue that an adult or older person may be taken advantage of or pressured into signing these documents is taken very seriously in Arizona,” explains Deloughery.
“So each document must be notarized or witnessed by one adult who certifies specific facts, such as stating that the individual appeared of sound mind, free of duress, fraud and undo influence when signing the documents.”
Only the living will — or end of life — portion of the Alberta personal directive may be given credence in Arizona if it is dated and signed, says Deloughery, whose office caters to non-U. S. citizens.
He says if the right documents are not in place, it could cost $5,000 to get the court to appoint a guardian to make a medical decision if the injured cannot speak for his or herself.
A basic legal general power of attorney and emergency documents package could cost between $500 and $750 US per person.
The Arizona life-care planning forms are also available online at the attorney general’s website, but a lawyer might be required depending upon the complexity of the individual’s situation.
Deloughery says this area of the law is in flux and requirements under the statutes continue to change. He advises Arizona documents be reviewed if they were drawn up more than five years ago.
He adds Arizona’s health care directives are valid in others states, something mobile snowbirds like the Eccles can appreciate.
“We enjoy travelling around the U.S. while down in Arizona each winter,” says Marion, who keeps a copy of their Arizona life-care planning documents in their Phoenix home.
“It gives us great peace of mind to know our wishes will be honoured should something unforeseen happen to either of us.”
WHAT YOU NEED TO KNOW
--Snowbirds or seasonal second homeowners can find the life care planning documents at Arizona’s attorney general’s government website at www.azag.gov/life_care/
--A copy of the printed, signed and witnessed forms should be kept at the second home, or may be registered with the Arizona Advance Directive Registry, www.azsos.gov.
--A Do Not Resuscitate Order form, which must be photocopied onto orange paper and include a photo, can be found at www.azag.gov/life_care/DNR.pdf
In a "traditional" estate plan, each spouse provides for his or her assets to pass to the surviving spouse, with the understanding that the assets will go to the children at the surviving spouse's death.
This may work well when the spouses have only been married to each other, but it can spell disaster if your family is one of the many blended families of today. For couples with children from prior marriages, a better approach is to sort out what's "yours, mine, and ours" and plan accordingly so neither your spouse nor your children are unintentionally disinherited.
Most people want to take care of their spouse or life partner. This means that if you die first, you want your spouse to be able to continue living in the house, to continue driving the car and continue to have access to the bank accounts. But the majority of people also want their own children or other loved ones to inherit something. Many people do not realize how easy it is to accidentally disinherit loved ones.
Children can be inadvertently disinherited by the use of joint tenancy deeds on real estate - or joint ownership of bank accounts.
Here is a common example: Husband, "H," and Wife, "W," have two children. H dies. W remarries Second Husband, "H2". W wants to show her love and commitment to H2, so she retitles the house into her and H2's name as joint tenants with right of survivorship. She also changes the ownership of her bank accounts to be jointly owned with H2. Then she dies. The house and bank accounts suddenly belong to H2. W's children likely get nothing.
The same can happen if people in second marriages prepare estate planning documents that leave all to their new spouse with no provision for the children. If the new spouse inherits everything, the deceased spouse's children often never inherit the assets.
Careful planning can provide peace of mind and valid solutions for blended families. Sometimes it is wise to accompany documents with a carefully-drafted marital agreement, which makes it more difficult for your spouse to contest corresponding provisions that you set forth in your will or trust.
Good estate plans that can resolve estate issues and protect your intended beneficiaries, share common characteristics, such as well-prepared trusts.
A trust allows you to have significant flexibility and control over the disposition of your assets when you die or become incapacitated. Good estate planning can allow your spouse or partner to be cared for until his or her death, with assets (including your half interest in your personal residence) retained in a sub-trust for the benefit of your spouse (with your spouse having as little or as much control over the assets as you desire), then upon your spouse's death, having your trustee distribute your share of the assets to your own children or to other beneficiaries you have selected.
Blended family estate planning does require extra planning and more thought and effort. However, when accomplished, the completed estate plan provides peace of mind knowing that you have provided for both your spouse or companion as well as the children you love.
Estate planning for the inevitable
By RENÉ A. GUZMANSan Antonio Express-News
Feb. 7, 2011, 5:48PM
Like the time-honored talk about the birds and the bees, estate planning is a conversation all kids should have with their parents — for the whole family's peace of mind.
"If you don't have some sort of estate plan set up, the state (laws) will do it for you. And that can be a mess," says Albert E. Vacek Jr., a board-certified estate-planning attorney in Houston. "That could be dragging through the courts system, and it's an expensive process."
With estate planning, the necessary legal documents are organized to ensure that property — money, real estate, etc. — is passed on according to your wishes. Vacek says estate planning can use either a living trust or a will to accomplish those goals. Planning may also include medical care during declining years as well as funeral arrangements.
These can be touchy subjects for anyone. But addressing them before they are needed beats the emotional and/or financial toll that's sure to come if no plan is in place.
For elderly parents, estate planning means baring their assets, their health, in essence their very lives to their adult children. Family traditions and simple pride factor in to how difficult it is to reveal such personal information to anyone, let alone one's children.
"We all had to get together and explain to him that we cared and we wanted to do the right thing but he had to help us," Michele Bussone says of the conversation she and her siblings had with their father, Mike Bussone, now 93. "When he's looking at his four kids, it's hard to be stubborn."
Vacek says the best way to bring up estate planning with your parents is to make it clear to them this is about avoiding any unnecessary burdens on the next of kin - especially that surviving spouse who'd like not to deal with paperwork while grieving.
Of course that means having this conversation before that parent's death, but also before a catastrophic health scare makes it difficult.
Case in point: Mike Bussone was still chopping ice off the roof of his lakeside home in Marquette, Mich., well into his 80s. That changed in 1995 when he broke his hip.
Fortunately he wasn't on the roof when the accident happened, but he still had to drag himself into his home to call an ambulance. Mike lived alone after his wife died in 1990.
It didn't take an accountant like Michele to do the math: It was time for the talk - with the whole family. Michele and her sister, Barbara Allen, live in San Antonio. The eldest brother, Michael, lives in Las Vegas. Their other brother, Stephen, lives in Portland, Maine.
The siblings discussed what they could do for their father and then met with him in Michigan to offer their loving services.
Son Michael was set up as executor of the estate with power of attorney. Barbara is an ex-banker, so she handles the finances. And Michele does the taxes.
Michele says it was a slow, painful process, but her father eventually warmed up to his children making decisions. He also warmed up to San Antonio's winters and moved in with Michele five years ago. That's when she turned to San Antonio elder law attorney Carol Bertsch to put those plans to paper.
Bertsch suggests families bring up estate planning with their parents at their parents' home and limit the topics to those that need to be covered. For instance, talk about riving concerns at one time, living conditions at another.
If a senior parent brings up these topics and more, just go with it. But if your parents get agitated bringing up more topics, let them know you don't need to cover everything at once.
"It's a play-by-ear kind of situation," Bertsch says.
When it comes to your parents' financial and health information, Bertsch says to always ask, not tell your parents to share it.
Even then, stress that you want them involved in the process.
"You definitely don't want folks to think you're trying to take over their lives," Bertsch says.
Bertsch recommends families turn to attorneys for estate planning, though she notes there are other options for varying incomes, such as Catholic Charities of the Archdiocese of San Antonio and the Community Justice Program with the San Antonio Bar Association.
Vacek, who also gives free estate-planning workshops, says some attorneys will give you the first hour free for consultation.
Michele Bussone said she is glad she and her siblings talked with their father when they did. And the way she sees it, estate planning is as much about what it gives elder parents as what it gives the rest of the family.
"Every family has got to pick its time and maybe a spokesperson … but you've got to do it," she says. "And I think it's only fair to our parents. They raised us. The least we can do is take care of issues for them as they're older - the issues that they can't take care of."
Estate Tax Planning 101: ‘Call to Action’
Estate tax 101 applies to all clients. Guiding clients to get the right counsel is an important conversation to have and another reason for clients to value wealth managers’ services
While the new tax laws rejoined the estate and gift taxes, and provided for a $5 million exclusion from estate and gift taxes for individuals ($10 million for married couples), before doing anything else, help clients understand “Estate Planning 101,” Ledyard advises.
Look at the client’s life plan and estate plan, says Ledyard. “Ask clients how they’d like to distribute their wealth, to heirs, taxes, charitably and to family.” He uses what he calls a “map” with boxes for each of the above and maybe a “family tree” under family. Once they’ve done an inventory of assets, ask them, if they “walk out of here today and get hit by a bus, how will the assets pass today—and will that hit your objectives,” he advises. Then the planning can begin.
First, “explain how property is passed: by contract, by tenancy, or by will or estate planning documents, such as arevocable trust,” Ledyard explains. One of the basic goals here is to keep property out of probate upon the owner’s death. Property in a person’s name or in their will goes through probate, but that which is passed via a contract or through joint ownership does not, he says.
Joint Tenancy
“Clients often overlook joint tenancy,” in titling property in the way that is most advantageous for estate and gift tax planning, Ledyard explains. These are some of the joint tenancy options:
Joint Tenants (JT)
Joint Tenants With Rights of Survivorship (JTWROS)
Joint Tenants by Entirety
Joint Tenants in Common
These all apply to different client situations and it is vitally important that the titling is correct. “Fancy documents don’t always coordinate with property titling,” Ledyard says, and clients’ intent “can be totally extinguished” if the titling is not properly done.
By Contract
“IRA’s, life insurance and private contract notes, are passed on by contract,” says Ledyard. Designating the beneficiary correctly, and whether an individual or a revocable trust can make a difference in whether the outcome is optimal.
By titling correctly, more property can pass without being included in probate. Ledyard looks at it this way: for a married couple with $10 million in assets you might divide it into thirds when looking at arranging it for optimal estate and gift planning. So if you are looking at clients with a house; IRA; and another house or other personal property, two of those three can be passed with joint tenancy.
Checklist for Estate Planning 101
Ledyard has several suggestions for Estate Planning 101 that apply to every client:
“Check their will, and create a revocable trust “to avoid probate, a nasty, long time-consuming process,” says Ledyard. In a revocable trust, assets pass similarly to a will but it avoids probate.”
“When meeting with an estate-planning attorney with a client, anticipate that this could change in two years,” as the tax laws expire.
Assets should be “titled in the name of the revocable trust—personal investment accounts, maybe the house. For IRAs, use the beneficiary form and name the revocable trust, because revocable trusts get funded immediately. The revocable trust is flexible—can be changed until the person creating the trust becomes disabled or dies.”
Make sure the will and revocable trust “documents reference the new tax law.”
“Everyone should have a general power of attorney,” says Ledyard, “so if a client gets into a car accident someone can write checks,” on their behalf.
“Everyone should have a health care directive—how you decide (and direct) how you want to spend your last days.”
“Wills: should include a limited power of appointment (LPA), so that somebody lucky enough to benefit from a trust can decide where that goes when they no longer need that income.” And, it’s important to remember, Ledyard says, that, “old LPAs can be stale.”
