The Over-Planned Estate

Once is enough.

Suddenly this office is awash in probates where the decedent decided to help out a bit more after leaving our office.

We had carefully examined the assets, laid out a disposition for the property in the will, and bid farewell to the client.

Next stop for the client: The bank to execute payable on death clauses to make sure the people had money when the client died to settle his or her affairs.

Isnt that what the will is for? Last will

The trouble is that second step means the estate is gutted of those funds and the bequests in the will never get funded. Absent the beneficiary taking a moral course back to our office to unwind this step, the money quite possibly never finds its way back to the estate to make sure the right people get the bequest, or even “people have money to settle my affairs”.

As a matter of law this money which is payable on death belongs to the person the client named after he left our office, and the beneficiary doesn’t have to “do the right thing”. remember you are not here in that event to make it right.

This event might fall into the category of ” I just want it to be simple ” but too much effort means it is not. Instead it gets complex. Saying it once in the right place is enough.

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How Durable is a Durable Power of Attorney?

You know, I am constantly asked, “Mark, now that my loved one is dead, can I still use his durable power of attorney for his benefit, to pay his bills and what not?

No. They are not that durable. And you certainly cannot use it to make dispositions other than what is contained in the loved one’s will.

Durable means it survives incompetency, that is beyond that time the principal is able to revoke it, but is still alive.

If it is not durable it is only “general” or specific to a given task, like the soldier who gives his wife a power of attorney to close on the house they bought before was cut orders for deployment.

If I can quote Neil Young,

Hey hey, my my”

“Rock and Roll can never die”

Once your gone, you can’t come back, “

“When your out of the blue and into the black“.

The same is true for the durable power of attorney. Once you are gone your power of attorney becomes a historical document and the will takes over. Unlike Rock and Roll, the Durable Power of Attorney can die, it dies with its maker.

Obi Wan Kenobi Goes to the Bank

Luke Skywalker drives into Mos Eisley with Ben Kenobi and the two droids his uncle has bought fom the Jawas. They encounter imperial storm troopers looking for the escaped droids.

“These are not the droids you want” Kenobi suggests to the lieutenant trooper.

“These are not the droids we want” the trooper repeats.mos-eisley-spaceport-stormtrooper-high-definition

“Move along” Kenobi suggests

“Move along” the trooper repeats, and the speeder inches away as Kenobi says something about suggestions to simple minds.

The episode from Star Wars is played out daily in banks encountering durable powers of attorney and other estate planning documents. More often than not I am called in to redraft something to make the bank happy, or sometimes I go myself because I apparently really am a Jedi Knight, I have mind control over the young man at the cheap desk in the lobby.

“These are legal documents” I say, and the young man repeats.

“The attorney in fact needs access to her fathers money so she can pay the mortgage this bank holds on his house.”

“I can see your client needs the money to pay us what we are owed” he says.luke at the bar

“Why don’t you take a moment and make the withdrawl” I suggest.

“Let me take a moment and make the withdrawl” he says as he leaves us sitting at the cheap desk.

Now all I need is a catchy theme song.

Wastin’ Away In Litigationville

“We got divorced and the lawyers got all the money.”  “Dad died and the lawyers got everything”.

How many times have you heard that? Why is that?

People do stuff that is based on assumption, folk law, movie law, hearsay, and maybe a little bit of knowledge that is a dangerous thing.  Act first, then see the lawyer.

And so it is they find themselves here, in the office, for more than a visit.

There are certain phrases I have learned to read as a sure sign there is going to be a problem that lasts months. My favorite:

This will just take a minute.

No it wont. And it isn’t the lawyers fault. It’s just the way law is; complex, and not well represented in easily accessible media, the pulpit or on bar stools where most people go first for legal advice.

Personally I turn to the music of Jimmy Buffett for respite from the stress of having to tell people the truth about where they are, breaking into song on the way home:

Wastin away in Litigationville

Looking for my lost statute of laws

Some people say that there’s a lawyer to blame

But I know

It could be my fault

The Power of Attorney – A Banks Sum of All Fears

Banks live in fear. Things have not gone well for them in recent years, and so even the slightest amount of risk leads them to declare all sorts of reasons why they cannot provide service the way their customers need them to when they are unable to bank for themselves. No where is this more pronounced than in their response to a durable power of attorney executed by a depositor, a principal, in favor of the attorney in fact, or agent.

The idea behind a “durable” power of attorney is that your elect to hand to someone the authority to manage your affairs should you become incapacitated, but before you die, which is when your Last Will and Testament becomes effective. This can avoid an expensive guardianship.

Here is a sample of the gymnastic reasons given not to honor these documents:

1) This document is only a copy. My client was in a coma. I presented my copy to the bank one day to allow my clients brother to get to the money in the bank so that same bank could have its mortgage paid. The young man in the lobby looked at the notary crimp and saw it wasnt raised, so rejected it. I drew my notary crimp out of my briefcase, crimped my signature on the same copy, and handed it back to him. We were allowed access to the money. Apparently that made it an original.

2) The references are to bank accounts generally, not our bank. My remedy is to start incorporating the names of the depository institutions into each power of attorney I draft. Older forms do not take this step, which has now become part of the practice.

3) Our bank is referenced, but not the bank account number. So you can put the account numbers down, but this is risky. What if they fall into the wrong hands? Generally we have started putting at least the last 4 digits down, or all of them if the client approves.

4) If you take money out of the account to pay your principal’s bills, that is an estate planning transfer because all this money is designated to go to someone else when the account holder, your principal dies. You are not authorized by this document to make estate planning transfers. While I have begun drafting around this claim, this dodge underscores the duplicitous absurdity of banks claims in recent years. Does this mean that every time a depositor writes a check he is mindful of the impact on his estate?

5) We honor durable powers of attorney, but only the one we drafted, and your principal hasn’t signed this yet. Please have him sign our form then we will allow you access to his money. Right. The principal cannot sign checks competently now, that is why the agent is there, so he cannot possibly sign a new power of attorney the institution drafted. It’s madness, isn’t it?

In Washington we have a statue that allows us to threaten to sue the bank, and sue and recover attorney fees if they fail to honor these documents in good faith. I think they probably have a right to demand the original, or at least some proof the circumstances suggest the copy is a true and correct version of the original but the rest deserve a stern letter from the lawyer.

The best defense against this nonsense is to develop a relationship with the people in the bank lobby between yourself as principal and your agent well before that day you are not able to go to the bank yourself.  Develop trust in a non-threatening environment, put in time reducing the banks fear, and normally this should pave the way to avoid guardianship and a peaceful disposition of your affairs in later life.

Powerless Power of Attorney

The time is present day. The situation is your surviving parent has entrusted you with the role of attorney in fact in a power of attorney he had drafted for him years ago by his long time entrusted attorney, or worse, a form he did himself. Dad is in a nursing home, and that nursing home is demanding payment. You go to the bank where you know he has saved money for this point in his life. You present your identification, and the durable power of attorney which was duly notarized and appears official.

The bank will not give you the money. Much like a car salesmen discussing price, someone in the back room, normally described as “Legal” denies the document is adequate to access the funds. Most of the time “Legal” isnt on the premises, and instead is days from reviewing then rejecting your document.

This is the everyday occurrence of the adult child of elderly parents find themselves in. The remedy is usually an expensive guardianship the durable power of attorney was meant to avoid altogether.

Generally I disagree with the bank, but that doesn’t count for much.

More often the best defense is an active offense. What you want to have had before this point is a lawyer who has actually had the experience of finding what works and what doesn’t work with banks since the apocalypse banking crisis in 2008. Often it is just a matter of naming them directly in the document, but you can’t do that now because Dad isn’t really able to know what he is signing. I am afraid this is something you hope the trusted lawyer knew. Sometimes it is a good idea to visit the bank and develop a relationship with the people in the lobby with your parent along with you well before any of this happened.

Sometimes none of this works, and it is time to ask the trusted lawyer what he knows about guardianship.

 

 

Its the Lawyer’s Fault

I was fired today. So were the other lawyers working on an estate. I believe the perception is we were making the simple will complex. Mind you, this was day two of the estate for this lawman, and just a few weeks after the probate was opened.

The problem originates with how we count money; yours, mine or ours? In lawyers terms; your separate property, my separate property or community property. Depending on what chair you sit in the perception is different.

Now that is an educated comment. Now instead the estate will be divided on the basis of ignorance, force of personality, and power structures in the departed’s family. Might makes right.

Never you mind that. It is the lawyers fault for pointing out the law.  Shame on us for charging a fee to help them. From the chair they sit in the perception is all lawyers are just there to use up the estate.

Not so. Most of the estates lawyers I practice with or against are second generation lawyers not really in it for a quick buck. That was the case today.

Recently I was asked how long has it been that a non-lawyer could just go to court and explain his side and have the judge make a ruling without the assistance of counsel. “About a thousand years” I said. Sure you can go, but the number of trip wires that have been laid down in front of you are so numerous you will not recognize yourself or your case on the other side.

Here is how this happened. We The People make a rule, but the rule doesn’t seem right in all circumstances, so We The People start erecting exceptions to the rule and before you know it, it is so criss crossed and cratered you do not really know what it means. If you have any doubt try reading the tax code.

You can blame it on the lawyers if you want. Frankly I was a bit surprised Jimmy Buffett didn’t blame it on us rather than a woman in his famous tune Margaritaville.

Some people claim there’s a lawyer to blame,

But I know, its my own damn fault.