Legal Issues to Consider Before the Death of a Loved One by Shelley - - PDF document

Legal Issues to Consider Before the Death of a Loved One by Shelley Thompson, Esq.1 When a loved-one is suffering from a terminal disease or normal complications associated with aging, often the last thing on their mind is helping them address legal issues. Indeed, the thought of legal issues becomes complicated to the point you or your loved one may become frozen at the thought of addressing them. This article is intended to help you narrow down the issues to address and provide a checklist of things to consider before the possible death

• f a loved one.

Healthcare Documents First, inquire as to whether there is a healthcare or medical power of attorney (“HCPOA”) in place for your loved one, where it is, and who has copies. Be sure it notes the contact information for the person responsible for acting on behalf of your loved one on medical

• issues. In Colorado, your loved one is permitted to make his or her own decisions on medical

care, unless he or she can’t communicate, in which case the person he or she has named as his health care “agent” may communicate for him or her. It is important that the right people have this document, and the contact information for the agent is stated.2 Second, find out if a “HIPAA Release” exists for your loved one. A HIPAA Release is a document that allows your loved one’s designated friends and family to receive access to his medical status and records if he or she can’t communicate, and for a period after his or her death. The HIPAA Release is important, because without it, a healthcare provider may withhold information from loved ones. Third, ask your loved one if he or she has a living will. A living will is a short document that allows your loved one to decide in advance whether he or she wishes to be kept on life support in the event he or she is in a coma with an irreversible illness or injury. It also allows him

• r her to specify the number of days he or she would like to be kept on life support after a doctor

has made the determination his or her condition is irreversible. Note, he or she may want his HCPOA to specify that the living will prevails in the event of conflict between the two. In other words, he or she may want to entrust his or her health care agent with all medical decisions he or she cannot make, except for the one decision he or she has taken away from loved ones – that he

• r she does not wish to be kept on life support.

Some clients ask, “what is the difference Between a Do-Not-Rescusitate Order (“DNR”) and a living will?” A DNR states that your loved one does not wish to be resuscitated if he or she is under cardiac arrest or similar condition. As a result, this document should only exist in the rare instance that its maker is terminally ill or very elderly, and has determined, thoughtfully and unequivocally, that he or she has spent adequate time on this earth. As an aside, with respect to healthcare, consider using a website like Caringbridge.com,

• r a similar mechanism, to easily keep loved ones informed of the status, wishes, and

circumstances surrounding a loved one’s illness. Loved ones will greatly appreciate being kept

1 Shelley Thompson is an attorney with Allen & Vellone, P.C., in Denver, Colorado. She handles

complex disputes and litigation, and provides estate planning for high-net-worth families, families with small to mid-size estates, and non-traditional families. For questions on this article, you can reach Shelley at 303-534-4499.

2 As an aside, some young women prefer to note in their HCPOA how to deal with decisions in the

event they are pregnant when injured.

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apprised and advised of when and how they can help, yet using such a site means you won’t be

• bligated to make dozens of phone calls with each piece of news.

Wills and Trusts Ask your loved one whether he or she has a will or trust in place, and where the original

• is. Then, ask whether he or she has reviewed it within the past several months? Does it still meet

his or her wishes? Offer to discretely read it aloud to him or her, or read and thoroughly summarize it for him or her. Often, people who are in the last stages of their lives are mistaken about what their will says or do not realize it was never changed to account for certain wishes. Once, a client asked me to amend his will and bring it to his bedside during, what we did not surely know at the time, were his final days of life. The amendment was to change a cash gift he had left to a beneficiary from a dollar number to a percentage of his estate. This was based on the fact that the amount he was leaving to his wife was unclear, due to fluctuating real estate values and uncertainty with respect to his medical condition. The decision and timing were, luckily, exactly right. We executed the amendment, and my client, sadly, died just two days later. After reviewing how his assets were titled, we then realized that had the amendment not been made, he would have unintentionally left his wife 50% less than he had intended, all because of an unintentionally overly generous gift to another beneficiary. Note, financial Powers of Attorney work during incapacity, but not after death. So while a Financial Power of Attorney may allow an agent to speak for your loved one in the last months

• f his or her life, when he or she needs help executing his or her affairs, it will not allow the agent

to take care of things after his or her death. Only a will or trust works after death. Watch Out For This Hidden Trap For The Unwary: Your loved one may not realize that joint accounts, life insurance proceeds, and IRA’s do not pass according to his or her will. They go wholly to the person named on the account or on the beneficiary designation, regardless of what his or her will says. So for example, if your loved one has named, in his or her will, his or her three children to receive his or her estate equally, but he or she has one daughter who helps him or her manage his or her affairs as a joint owner on his or her checking accounts and home deed, then the end result may be quite different than what he or she intended. The daughter will wholly take the house and the cash in the checking accounts, and to the extent there are any other assets, they will be divided equally between the three children, including the daughter. After death, it takes little discord amongst siblings for this estate plan to result in damage relationships between siblings forever. So when reviewing a will with your loved one, be sure to also ask who is named on jointly held property, and on the beneficiary designations with the life insurance, and IRA proceeds.

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Charitable Giving Is your love one’s favorite university or charity addressed in his will? If your loved one always had an intent or desire to give charitably, yet has never set up his charitable giving, encourage him or her to do so now. This can be done with all levels of estates – large and small – and it often has a more positive impact on the donor and the donor’s loved ones than one would

• expect. For example, involving loved ones in charitable giving may teach them what the donor

was passionate about during his or her lifetime (i.e., an alma mater, world health, homelessness, etc) and encourages them to give as well. So encourage your loved one to consider: (a) asking family which personal property items they would like and specifying in his or her will that he or she wants the rest of the items donated to a charity of his or her choice; (b) setting up a charitable trust during his lifetime that allows his or her loved ones to receive all or most of what he or she planned to leave them, while still providing for a charity; (c) specifying a cash gift for his or her church or a charity, and possibly an intended use. Ways To Reduce Potential Conflict The first way to reduce potential conflict is simple – your loved one should probably not name his or her child as her personal representative (executor) or trustee, regardless of the child’s ability to handle the task. This is because naming one child over others automatically puts a conflict of interest on the child named as executor. That child has a legal duty to look out for the best interests of all the children, and at the same time, must making decisions and distributions with respect to herself. Again, it takes little discord between siblings for this to produce a

• conflict. Even if the named child does everything right, his or her siblings may see flaws that

lead to expensive litigation the decedent never intended. Similarly, naming all the children as joint executors leads to discord between siblings. When choosing someone other than a child, I recommend my clients consider only one criterion in choosing an executor – it should be someone they completely trust. It does not need to be someone who excels in business or accounting, because executors often hire a lawyer or accountant to help them. It does not need to be a family member. An executor simply needs to be someone your loved one wholly trusts to handle things the way he or she wanted. If your loved one suddenly realizes he or she has someone named he or she no longer fully trusts, or children are named, encourage him or her to consider a simple amendment to his or her will and/or trust naming a different executor. The second way to reduce potential conflict is for your loved one to fill out the Personal Property Memorandum that came with his or her will, and is incorporated therein by reference. The Personal Property Memorandum is a place he or she can describe household possessions and who is to receive them on his or her death. This is important if your loved one would like to see certain items remain in the family. For example, if he or she has not designated who gets dad’s military memorabilia, and later the beneficiaries cannot agree, there may begin a long-lasting bitterness between siblings. And sometimes, those items will simply be sold in an estate sale and the profits – not nearly as valuable as the sentimental value – split between siblings. In Colorado, a Personal Property Memorandum needs to be signed, but need not be formal, notarized, or even typed. So nothing should stop your loved one from sitting down with a piece of paper to make these final decisions on property. Generally, regardless of how equitably items are divided between loved ones, this written decision is accepted and respected, where the decedent herself wrote it in the memorandum. It is often this small act that helps maintain a positive relationship between loved ones for years to come!

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Also, encourage your loved one to consider designating the items that no one wants – towels, sheets, clothes, for example – for a charity of his choice. These items are often of great value to a homeless shelter, battered women’s shelter, or job bank. The third way to reduce potential conflict is for your loved one to note memorial instructions, even if few. This also does not need to be formal or notarized, but again, it’s something of importance to loved ones. The simple act of writing a few things down keeps loved

• nes from arguing about the decedent’s wishes, and also saves them from having to make hard

decisions at a difficult time. The fourth way to reduce potential conflict is to deal with any special needs children or grandchildren separately. Talk to an attorney about how to best accomplish this. The last way to reduce potential conflict is, if one child has died but his or her children are alive, be sure the will states what the testator wants for the children of the deceased child. Don’t Wait Longer! In sum, a few hours of planning can save relationships for years to come. Go over these items with your loved one to be sure each is addresses to his satisfaction. In doing so, you may save the family tens of thousands of dollars in litigation costs, years of heartache and bad feelings between beneficiaries, and much stress on loved ones. Take the time to talk to your loved one about these matters now. Most importantly, listen to and respect his or her wishes!