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man reading newspaper

If spelling tests weren’t always your strong suit in school, fear not! Today’s legal word of the day is an easy one that’s having a momentary editorial heyday.

Ripped From the Headlines

As you probably heard, The New York Times took the highly unusual step of publishing an unsigned, anonymous op-ed entitled, “I am Part of the Resistance Inside the Trump Administration.” The person was identified only as follows:

“…. a senior official in the Trump administration whose identity is known to us and whose job would be jeopardized by its disclosure. We believe publishing this essay anonymously is the only way to deliver an important perspective to our readers.”

man with newspaper near train

Whodunnit?

The article led to a nationwide guessing game. Who is the senior official in the Trump administration who penned this “explosive” piece? Suspicion fell onto, of all people, Vice President Mike Pence. This is because the op-ed writer uses the word “lodestar,” and Pence has used this obscure word multiple times. (Pence vehemently denied he was the author, by the way.)

I don’t know who wrote the op-ed, and we may never know, but the real winner out of this news cycle is the word you never knew you needed in your vocabulary—lodestar!

So, What DOES Lodestar Mean?

Lodestar means “a star that leads or guides,” and is especially used in relation to the North Star.

timelapse of stars

Now, Let’s Talk About a Similar Kind of “Star”

At this point you’re like, “Gordon, this is a cool word I can def use in playing Scrabble, but what does it have to do with the law?”

Well, “lodestar” is a synonym and practically interchangeable with the word “polestar,” which is defined as a “directing principle; a guide.”

A court will use the term polestar like so: In this case, our polestar must be this principle . . .

Basically the court will use such-and-such as its guiding principle.

direction sign on a mountain

For example, in the law of wills, the Iowa Supreme Court stated In the Estate of Twedt that “the testator’s [maker of the will’s] intent is the polestar and if expressed must prevail.” You’ll see the same in the law of trusts, the intent of the settlor of a trust must be the polestar.

The word is also used in the law of charitable giving. The intent of the donor is the polestar which courts must follow if there are any issues. For example, suppose a donor posthumously donates $100,000 to a nonprofit, but the nonprofit no longer exists. What was the donor’s intent? Is it stated anywhere what the donor wanted to happen to the charitable funds if the nonprofit was no more? If not written, did the donor discuss the matter with anyone? To resolve any dispute involving a charitable gift, the guiding principle–the polestar–must be the donor’s intent.

Practical application of the Word Polestar

A major reason to have an estate plan is that YOU get to control your own future, rather than being controlled by outside forces or outside events. Through proper estate planning, you can be in total control of the answers to the following questions:

And if there are any questions or issues regarding your estate plan, lawyers and judges looking at your estate plan will make decisions based on YOUR intent. Your intent will be the polestar!

Don’t delay any longer – thank your lucky (North) stars you still have time to make a proper estate plan. I’d be happy to talk with you about your estate plan any time, or you can get started on organizing your important info in my free Estate Plan Questionnaire. I can be reached via email (gordon@gordonfischerlawfirm.com) or by cell (515-371-6077). I’d truly love to hear from you.

Before we dig in to the details of what role a health care power of attorney document is and how it fits into the grand estate plan scheme let’s consider three hypotheticals.

Health hypothetical #1

Jill is in a serious car accident. While chances of recovery are good, it will take time. In the meantime, Jill is necessarily on serious painkillers and in recovery she’s sleeping much more than usual. Between her injuries, medications, and need for sleep, Jill isn’t particularly communicative.

Health hypothetical #2

Sam is beginning to suffer from early onset dementia. Things become harder to remember. He feels almost as if a fog is falling around him. It’s growing worse. Even simple concepts, or simple choices, are becoming more difficult for him.

Health hypothetical #3

Elizabeth suffers from manic depressive disorder. Most of the time, drugs, therapy, and a regime of proper exercise and sleep keep the disease in check. But, still she has “episodes” of an exhilarating, super energizing high, followed by a dark crash into deep depression.

Common Legal Need for Jill, Sam, and Elizabeth?

Jill, Sam, and Elizabeth have very different diagnoses and face very different challenges. But, in at least one way, Jill, Sam, and Elizabeth are the same. All three would be wise, for multiple common-sensical reasons, to execute a a health care power of attorney (“health care PoA”).

We’ll come back to Jill, Sam, and Elizabeth shortly, but first let’s discuss the basics of an estate plan and in particular a health care PoA.

Health Care PoA: One of Six “Must Have” Estate Plan Legal Documents

An estate plan is a set of legal documents to prepare you (and your family and loved ones) for your death or disability. There are six basic estate plan legal documents that nearly everyone should have:

1. Estate plan questionnaire
2. Last will and testament
3. Health care power of attorney (option for living will)
4. Financial power of attorney
5. Disposition of personal property
6. Disposition of Final Remains and Instructions

There are numerous other important estate planning tools, such as trusts, but these six documents are a common part of most everyone’s complete estate plan. And, the health care power of attorney document is certainly an important part of your overall estate plan.

Serious Incapacitation

A health care PoA becomes critically important when you’re seriously incapacitated and unable to make health care decisions for yourself. This new state of incapacitation, preventing you from making your own health care decisions, might be the result of serious illness, injury, lack of mental capacity, or some combination of all of these.

alarm clock with red cross on it

How Health Care PoA Works

A health care PoA is a legal document that allows you to select the person (your “agent”) that you want to make health care decisions on your behalf, if and when you become unable to make them for yourself.

Once your health care PoA goes into effect (typically most people elect to have this be the case only if an attending physician certifies you are unable to make medical decisions independently), your agent will then be able to make decisions for you based on the information you provided in your health care PoA. If there are no specifics in your health care PoA relating to a unique situation, your agent can and should make health care decisions for you based on your best interests. Obviously, the person you select as a your health care PoA agent should be someone in whom you have the utmost trust.

Equally important, your agent will be able to access your medical records, communicate with your health care providers, and so on.

Many Types of Health Care Decision

Keep in mind your health care PoA isn’t just about end-of-life decisions; it can cover many types of medical situations and decisions. For instance, you may choose to address organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, and other situations in your health care PoA.

For people who feel strongly about not wanting to be kept alive with machines, specifically covered in a document that can be thought of as a part of your health care PoA known as a living will. brightly colored pills

What Happens Without Health Care PoA?

If don’t have a health care PoA and you should become disabled to the degree where you are unable to make health care decisions for yourself, your doctor(s) will ask your family and loved ones what to do.

You might disagree with the decision your family makes. Or, your family members may not be able to agree on how to handle your medical care.

Ultimately, if your immediate family members cannot agree on a course of action, they would have to go to an Iowa Court and have a conservator/guardian appointed for you. It may, or may not, be someone you would have chosen. Further, the conservator/guardian may make decisions you wouldn’t have made.

Going to court to plead for a guardianship and conservatorship is all very complicated, time consuming, and expensive. This is especially true when compared with the convenience of simply putting a health care PoA in place should the need arise. A healthc are PoA gives you control over how decisions are made for you, and the agent you choose will carry out your wishes.

No “One-Size-Fits-All” Health Care PoA

All Iowans are special and unique and have special and unique issues and concerns. It’s completely up to YOU as to what’s contained in your health care PoA. You name the agent(s). You decide what medical decisions will be covered and how. It’s all up to you.

Health Care PoAs in our Hypothetical Examples

Speaking of everyone’s unique needs, a health care PoA would help Jill, Sam, and Elizabeth, despite their disparate diagnoses and circumstances.

Jill, who suffered severe injuries in a car accident, could use a health care PoA.

Sam, who has early onset dementia, needs a health care PoA.

Elizabeth, with her mental health diagnosis, would benefit from a health care PoA.

Do you have a Health Care PoA Yet?

We never know when or if an accident or illness will befall us and if it will render us incapacitated. Of course, we all hope that’s never a reality, but it’s better to be prepared in the off chance the unexpected becomes existence.

Do you have further questions about a health care PoA for you or your family? You can email me anytime at gordon@gordonfischerlawfirm.com or call me on my cell at 515-371-6077.

Are you interested in securing your future through putting into place a solid estate plan? A great first step is to download my helpful (and free!) Estate Plan Questionnaire.

Pop the popcorn, uncork the champagne, and put on your best red-carpet duds to tune into the 90th Academy Awards tonight! In between award envelopes (hopefully there won’t be another embarrassing best picture flub like last year), consider how your 2018 Oscar ballot has some surprising connections with estate planning. It may sound like a stretch, but hear me out while you watch the pre-show coverage.

Anything Could Happen

If you’re a film buff who has managed to watch all nine of the Best Picture category nominees (first off, I’m jealous), you may have a strong opinion about which one deserves to win. However, just like life, anything could happen! You may think The Shape of Water most certainly will be victorious, but in the end, Darkest Hour ends up taking home the gold with the bravado of a Churchill speech. You know one of the films will win, just like you know someday you’re going to pass away. However, you cannot know which one of the films will win ahead of time, just like you cannot know how and when your final scene will be.

Jimmy Kimmel Oscars

Expecting the unexpected is what estate planning boils down to. With something fun and entertaining like the Academy Awards, surprises can make for ready Oscar party fodder. But, when it comes to your estate—all of your assets you worked hard to acquire—surprises can make for frustration infighting for your family, extended probate time and fees, and assets being distributed in a way that you wouldn’t have chosen.

Estate planning allows you to make certain your loved ones and the charities you care most about “win,” regardless of when you pass away.

It’s All in the Family

Many of the films nominated this year have familial relationships as a central plot device in the scripts. Without a doubt Dunkirk’s British civilian family who answered the call to assist with the rescue efforts in northern France during WWII undergoes a heartbreaking tragedy of their own. And, no one can deny the wrenching emotions of the mother Mildred in the aftermath of her daughter’s murder in Three Billboards Outside Ebbing, Missouri. The movies Call Me By Your Name and Lady Bird specifically both feature teenage protagonists, which brings up a clear benefit and point of necessity for estate planning.

Call Me By Your Name

Teens are still considered minor children until they would turn 18, their parents should have guardianship defined through their estate plans. That way, if something were to happen to the minor’s legal guardian(s), they could be immediately placed under the care of another trusted adult. Unless guardianship has been established, an Iowa Court must choose guardians for the minor child if the legal guardian died or was incapacitated. Unfortunately, with no clear choice as to what the former caregivers would have preferred, the Court must basically make its own and best determination as to who the parents would have preferred and what would be in the best interest of the children. The Court may or may not, choose who the former caregivers would have named.

Leave a Lasting Legacy

Some of the greatest films of all time have won the “Best Picture” category and left a cinematic legacy that has lasted well beyond their premiere date. These movies and the stories they tell live on in infamy, as generation after generation experiences their contribution to the entertainment industry.

Perhaps one or more of the 2018 Best Picture nominees will join this upper echelon of cinema (and maybe not), but estate planning also allows you to also make a mark on your world—a chance to leave a lasting legacy. A legacy can be interpreted differently be different people. A legacy to you could mean leaving a sizable charitable bequest to your church or alma mater. It could also mean bequeathing your art collection to your favorite museum. It could mean establishing college funds for all of your children and grandchildren to represent your belief in continuous learning. Whatever you envision your legacy to be, an estate plan will allow you shape it…think of it like your own star on the Hollywood Walk of Fame!

hollywood walk of fame star

Let me know your pick for Best Picture in the comments below and if you want to discuss your estate plan don’t hesitate to contact me via email or by phone (515-371-6077). You can also get started on the creation of an estate plan by filling out my free, no-obligation Estate Plan Questionnaire.

love in lights

Valentine’s Day is coming up quick and while I think the commercialized messages of “this is love” can get a little cheesy, I’m a full supporter of a day that celebrates love. Be it love for your spouse, a celebration of the fact that you are awesome, or showing even more adoration for you furry best friend, the world could always use a little more love. In this important addition to the #PlanningForLove series, let’s talk about ways you can show love to your children through you estate plan.

I’ve discussed the importance of guardianship quite a bit on this blog. It’s important that anyone with minor children establish guardianship so that if something were to happen to you as a legal guardian that your minor children (under age 18) would be immediately placed in the care of someone you know, trust, and most importantly, choose. Just as establishing guardianship is a powerful gift that your children will hopefully never have to actually know about or experience, a testamentary trust can also continue to provide and support your children if something were to happen to you.

There are an almost endless number of different kind of trusts and you can put just about any asset in a trust. Testamentary trusts are one of the most common kind of trusts I establish for my clients. You may recognize the first word of the type of trust from “last will and testament.” Indeed, a testamentary trust is a trust written into your will and provides for the distribution of a portion or all of your estate.

Sounds simple enough, but you’re thinking, “What does this have to do with my kids?”

Different from an inter vivos trust, which is established during the settlor‘s lifetime, the testamentary trust kicks in at the completion of the probate process after the death of the person who has created it for the benefit of their beneficiaries.

Typically testamentary trusts are created for minor children or others (such as a relative with some kinds of disabilities) who may inherit a large amount of money if you (the testator) were to pass away. The general thinking is that you may not want a minor child, or even a young adult, to have uninhibited access to their inheritance until a certain age (and presumed level of maturity) is reached. (I can imagine what I would have done with an inheritance at, say, age 18 and it surely wouldn’t have been the smartest use of money!) The testamentary trust then terminates at whatever age you choose, at which point your beneficiaries receive their inheritances outright and can use the funds in any way they choose.

 

child with red heart

The testator can choose distribution to be distributed in percentages such as 25% at age 18, 25% at age 22, and the remaining 50% at age 25. Or, the trust funds may be distributed in full at a single age. (All at age 25 is the default if the testator doesn’t choose otherwise.) Distributions can also be made immediately upon your passing if all beneficiaries are legal adults (age 18 or older). The testamentary trust could also be set-up for disbursements around milestones, such as a percentage or full disbursement when the beneficiary graduates from an accredited two- or four-year college institution.

Testamentary Trustee

With a testamentary trust you also need to designate a trustee. The trustee is responsible for managing the trust property according to the rules outlined in the trust document, and must do so in the best interests of the beneficiary (for example, a minor child). Generally I advise the appointed guardian also be the trustee of a child’s testamentary trust.

Testamentary Trust Options

In my Estate Plan Questionnaire I offer clients three main options for testamentary trust organization. (Note that there can be more than one testamentary trust created in one will.)

  • Option 1: Separate trust fund for each beneficiary. Each beneficiary’s inheritance to be held by the trustee in a separate fund. Whatever is left in each beneficiary’s trust fund, if anything, will be distributed to that beneficiary when they attain the age(s) indicated in the following section. This option ensures that all of your beneficiaries are treated equally, regardless of needs.
  • Option 2: Single trust fund for multiple beneficiaries. The entire inheritance will be held by the trustee in a single trust fund for the benefit of multiple beneficiaries (such as multiple children). The trustee may make unequal distributions during the term of the trust if a beneficiary needs additional assistance. Whatever is left in the trust, if anything, will be distributed equally when your youngest beneficiary attains the age(s) indicated in the following section. This option will allow the trustee to accommodate a particular beneficiary’s needs by distributing more of the inheritance to that beneficiary during the term of the trust. (Recommended with younger beneficiaries.)
  • Option 3: No delayed distribution. Beneficiary’s inheritance may be made directly to the beneficiary or a court-appointed conservator if beneficiary is a minor/incapacitated. Funds will be distributed directly to the beneficiary at the age of 18.

 

Mom and daughter hugging

The important takeaway from all of this is that a testamentary trust can be entirely personalized to fit your wishes. For example, most folks want the testamentary trust written in such a way that their beneficiaries may have access to funds to pay for higher education costs like tuition, room and board, books, and fees, on top of the necessary funds needed for an adequate standard of care, protection, support, and maintenance of the beneficiary.

Estate Plan Revisions & Updates

If you already have an estate plan review it. Estate plans never expire, but major life events or a change in estate planning goals can necessitate changes. For example, if your family welcomed a new baby or adopted a child then it’s definitely time for update your estate plan to include them! Maybe something changes in the future with one of your beneficiaries and you want to change distribution percentages or ages? Simply contact your estate planning attorney and let them know your wishes.

A Lasting Love

 

hearts on a string

The love for your children knows no bounds and without a doubt you want to make certain you can still provide for them if something unexpected were to happen to you. There’s no day like today (or Valentine’s Day!) to get your ducks in a row just in case. The best place to begin is with my Estate Plan Questionnaire or by contacting me.

As Valentine’s Day approaches you’ll see all kinds of gift guides telling you if you get these gifts, your significant other will love you that much more. I’m here to present a different kind of gift guide: one with important gifts that you cannot buy from a store. These gifts are all a part of estate planning in one way or another. At this point you’re thinking what does some legal/financial thing like estate planning have to do with a holiday that celebrates love? On the outset, not much. But, dive into the reasons behind proper estate planning and most often I find love is at the foundation for most folks.

Read on for a gift guide you definitely won’t find in a magazine!

For your Spouse: Review your Beneficiary Designations

Your estate plan is essential for the majority of your assets, but it doesn’t cover some important accounts that are passed along via beneficiary designations. Such accounts can include savings and checking accounts, life insurance, annuities, 401(k)s, pensions, and IRA accounts. Whomever is listed as the beneficiary on these accounts overrides what’s written in a will (if the two are different). That means keeping these beneficiary designations are super important. Let’s say you listed your first spouse as a beneficiary on your life insurance, ended up getting divorced, got remarried to a great person you have many happy years together and then you pass away. Unfortunately, you never changed the beneficiary designation and the ex-spouse inherits the money. More than likely you would have wanted the account assets to go to your current spouse. (More valuable than some heart-shaped Valentine’s jewelry, right?!)

man with bouquet of roses

It’s good practice to review all of your beneficiary designations if there have been any life events that would necessitate a change, addition, or update, such as a birth, death, or change of capacity in a beneficiary.

For the Entire Clan: Talk About your Estate Plan Decisions

It’s important to discuss your estate planning decisions with your family members both before and after the plan is executed. In drafting the estate plan you’ll need to indicate to your qualified estate planning attorney whom you’re entrusting the important roles of executor, attorney-in-fact, guardian, and other designated representatives to. Before naming someone in a legal document you should discuss the role with them first to be sure they are willing, able, and informed to the duties of the role.

strand of hearts

After the estate plan is executed you’ll want to discuss your estate planning decisions with loved ones, family members, and beneficiaries, especially when your choices may take them by surprise. How can a discussion be a gift, per se? Explaining your wishes is a way of expressing your love by heading off any confusion your family and friends may feel upon needing to execute your plan.

This is yet another reason to have an attorney draft your plan—your estate planer can help you communicate your to loved ones.

For your Kiddos: Nomination of Guardian

This is the kind of “gift” your child(ren) will hopefully never need to experience. One of the most critically important features of an estate plan is establishing guardianship for any minors (i.e., children under the age of 18) in your care. Why? In the tragic and terrible chance that something was to happen to you resulting in immense incapacitation or death, who do you want to care for your children? Nominating a guardian in your will allows you to select the people you know will love, care, and look out for the best interests of your child.

Unless guardianship has been established, an Iowa Court must choose guardians. Unfortunately, with no clear choice as to what the former caregivers would have preferred, the Court must basically make its own and best determination as to who the parents would have preferred and what would be in the best interest of the children. The Court may or may not, choose who the former caregivers would have named.

For your Favorite Charity: Charitable Bequest

Valentine’s Day doesn’t just have to be mean about personal relationships! It can also be a day for sharing the “love” for charities you care deeply for. In making or updating your estate plan think about what charities are near and dear to your heart? Which organizations and how much would you want to leave to them? You can include your church, alma matter, local cause, or international organization in your estate plan as beneficiaries. It doesn’t cost anything extra, other than assets from your estate. Want a clearer picture of how a charitable bequest could help your favorite charity? Talk to the nonprofit’s leaders or fundraising staffers. I’ll bet they’ll tell you the result of your charitable bequest, no matter how big or small, can make an important impact.

Love can take on many forms and express itself through many different types of gifts and actions that show you care. Choose this Valentine’s Day to express your affection (be it for a significant other, your children, or a charity) with a “gift” that shows a clear investment in the relationship. And, speaking of amore, I would love to discuss any aspect of this gift guide with you! Contact me at any time.

strand fo valentine

People can say “I love you” in many different words and through many different actions. This Valentine’s Day I want every Iowan to consider creating an out of the ordinary gift…an estate plan! An estate plan is not just an important legal document that saves your friends and family time, money, and potential heartbreak. A quality estate plan is also a way of expressing care, commitment, and, yes, even love…be it adoration for your significant other, for your family, or even just out of respect for your life and legacy.

I could go on and on about the importance of having health care and financial power of attorney documents in place well before you hopefully never need it. I would be happy to share more than you’d ever want to know about the nomination of a guardian for minor children. Don’t get me started on the importance of detailing your wishes in the disposition of final remains document. But, since it’s the weekend I thought we could have have a little fun with these sharable valentines (use the tag, #PlanningForLove!) to get you inspired to take that first estate planning step and fill out my free Estate Plan Questionnaire.

Love is When

Help your favorite people avoid any reason for in-fighting or litigation. Have a quality estate plan made by a professional and then discuss your decisions with those close to you.

Love is when quote

Great Love

For any great love you’ll want to continue providing and supporting that individual even after your passing. Talk to your estate planner about what tools and strategies, like a living revocable trust, would be best for your situation.

Great Love Quote

Saved Up Wishes

There’s no better way or place to detail your wishes for what you want done with your hard-earned assets than in an estate plan. For instance, if you want to give a portion of your estate to the charities near and dear to your heart, you can do so in your will.

love letter illustration

Look in the Same Direction

If you’re married you and your spouse both need your own individual estate plan! Many married couples do have the same estate planning goals and opt to have the same estate planning attorney draft both of their plans. Other times couples opt for separate attorneys. (Give this piece a read for more information.)

Coral and Teal Heart Pattern Valentine's Day Card

Of course, I would love to receive a Valentine from you, but I would also like to talk with you about your estate planning needs and how, oddly enough, this legal document makes the perfect Valentine’s Day gift. Contact me at any time via email or phone (515-371-6077).

wine and glasses

A fancy dinner out on the town is nice. Going to see a show is great. A trip to the spa for a couple’s massage is romantic. All are excellent date ideas and I fully recommend you pursue them! But, in addition, there’s one unconventional date idea you and your significant other should consider this Valentine’s Day: reviewing your estate plan.

forever scrabble tiles

Don’t worry, even though I’m an attorney I totally understand that reviewing multiple pages of a legal document isn’t outright romantic (much to the relief of my wife). However, because I am an estate planning attorney I know realistically how important it is to keep your estate plan updated and current. Taking time with your significant other to consider your current and future assets, as well as your estate planning goals is a practical “date” with major benefits for the future like saving time, money, and eliminating hardship on your family and friends.

Major life events like the birth of a child or grandchild, marriage or divorce, moving to a new state, a major change in financial situation, and/or the loss of a designated representative or beneficiary could necessitate changes to your estate plan to keep it valid.

An outdated estate plan could more easily be challenged in probate court or create unnecessary tensions between your loved ones. (This is yet another reason estate planning relates to the concept of love so well—the act of proper, quality estate planning can reduce the likelihood of future tensions and conflicts. Knowing that with a bit of planning and annual updates you can give your family and friends clear instructions that allow them to sidestep drama is certainly an act of love in its own right.)

Let’s use some hypothetical examples to explore why it’s necessary to update your will and the other important estate planning documents. If you have minor children you should have nominated a guardian in your will in case something was to happen to you. Let’s say the primary guardian you nominated has since moved far away—this may mean you need to consider nominating a new guardian.

In another example, it came to light since you made your estate plan that your financial power of attorney designated representative has fallen on hard times due to a gambling addiction…you’ll seriously need to consider amending the document and designating a different representative.

Speaking of change, remember too that state and federal laws are perpetually changing and when certain rules change, so too must your estate plan. Case in point? The “Tax Cuts and Jobs Act of 2017,” AKA the new GOP tax bill. For instance, the changes to the federal transfer tax exemptions could impact decisions as to if a certain type of trust is applicable. Again, this is where an experienced professional estate planner, whose job it is to stay up on these policy changes so you don’t have to, is beneficial.

two shells make a heart

A Legal & Loving Tradition

Again, it’s a good idea to review your estate plan at least once a year even though estate plans never expire. What better date reminder for a long-lasting document indicating a standing commitment to care and support than Valentine’s Day? Make it a tradition! (You can even drink wine and eat a box of chocolates while you review.) Along with reviewing the estate planning documents, it’s smart to check in with your professional advisors like your estate planner, financial advisor, insurance agent, and the like.

Of course, if you don’t have an estate plan yet that’s the first step. Even more “romantic” than reviewing your estate plan? Filling out my Estate Plan Questionnaire! Don’t hesitate to contact me with any questions and share the results of your estate plan review with me via the hashtag #PlanningForLove on Facebook, Twitter, and Instagram.

I KEEP six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.– Rudyard Kipling

I’ll use all six “serving men”—what, why, when, how, where, and who, albeit sometimes in slightly different order—to explain three broad topics: (1) estate planning; (2) trusts; and (3) business succession planning. If you’re unsure of any of the three topics listed, this is the blog post for you.

man taking notes in notebook

WHAT is an Estate Plan, Anyway?

What do we talk about when we talk about estate planning? There are six documents that should be part of everyone’s estate plan. Additionally, you should also keep these six documents updated and current. It’s also important you take note of assets with beneficiary designations (such as those on IRAs and bank accounts).

WHO Needs an Estate Plan? Everyone!

Everyone needs an estate plan. If you’re young, healthy, unmarried, have no children, and have no significant or unusual assets, perhaps you could talk me into the idea that you don’t entirely need an estate plan. Even in such exceedingly rare cases, I strongly recommend making sure your beneficiary designations are completed and up-to-date.

For example, beneficiary designations can be found on your checking and savings accounts and on your retirement benefit plan. But, if you’re married, and/or have kids, and/or have significant or unusual assets, and/or own part or all of a business, you most definitely need an estate plan.

WHY Do You Need an Estate Plan?

Estate planning is not exactly material for scintillating conversation. In fact, I’d bet most of us like to avoid this topic because it can be confusing, and requires lots of decision-making. And, yes, it forces one to think about the mortality of loved ones and the self. Estate planning, after all, is a roadmap about what you want to happen after you move on from this life. While it may not be a fun topic, it is indeed a necessary one. If you die without an estate plan, there are several negative consequences.

Without an estate plan, you cannot choose who receives your estate assets.

If you die without a will, you leave the decision of who will receive your property, in what amount, and when up to the Iowa legislature and/or Iowa courts. With this situation there is always the very real possibility that the distribution of your estate will be greatly different than if you had chosen it through an estate plan.

Without an estate plan, you cannot choose a guardian for your minor children.

If you die without an estate plan, Iowa courts will choose guardians for your children. One of the most important aspects of a will is that it allows you to designate who will be the guardian for your children. This can ensure that your children are cared for by the person that you want, not who the court chooses for you.

Without an estate plan, Iowa courts will choose your estate’s executor.

If you die without an estate plan, the probate court is forced to name an executor. The executor of your estate handles tasks like paying your creditors and distributing the rest of your assets to your heirs. If the probate court has to pick who will be your estate’s executor, there is always a chance that you would not have approved of that person if you had been alive. If you have an estate plan, your will names a trusted executor who will carry out all of your final wishes, pay your bills, and distribute your assets as you intended.

Without an estate plan, you can’t help your favorite nonprofits.

If you die without an estate plan, all your assets— house, savings, retirement plans, and so on—will pass to your heirs at law as specified under Iowa’s statutes. If you have an estate plan, you can include gifts to your favorite nonprofits and see that they are helped for many years to come.

HOW Do You Structure Your Estate Plan?

light bulb on post-it note

Again, there are six basic documents that should be part of everyone’s estate plan:

  1. Estate Planning Questionnaire
  2. Last will and testament
  3. Power of attorney for health care
  4. Power of attorney for finance
  5. Disposition of personal property
  6. Disposition of final remains

We’ll go through each document briefly, so you have a sense of what each entails.

Estate Planning Questionnaire

Estate planning involves facing heavy questions, and depending on the amount of assets and beneficiaries you have, may take quite a bit of time and thought. I recommend clients (and even those who aren’t my clients) complete an Estate Plan Questionnaire. An Estate Plan Questionnaire is a simple way to get all of your information in one place, and makes it easier for your attorney to build your estate plan.

As with any project, it helps “to begin with the end in mind.” A questionnaire can help get you there.

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Last Will and Testament

Now let’s discuss your last will and testament. In sum, you’ll be answering three major questions:

Q1. Who do you want to have your stuff?

This includes both tangible and intangible things. An example of a tangible item would be your coin collection. An example of an intangible asset would be stocks.

Q2. Who do you want to be in charge of carrying out your wishes as expressed in the will?

The “executor” is the person who will be responsible for making sure the will is carried out as written.

Q.3. If you have kids under age 18: who do you want to take care of your minor children?

You’ll want to designate a legal guardian(s) who will take care of your minor children until they are adults.

Power of Attorney for Health Care

A power of attorney (POA) for health care designates someone to handle your healthcare decisions for you if you become unable to make those decisions for yourself. A healthcare POA can govern any kind of decision that is related to your health that you want to address. A healthcare POA may include decisions related to organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, and more.

For example, if you don’t want to be kept alive with machines, you can make this clear in your POA for healthcare. But, keep in mind your POA for health care isn’t just about end-of-life decisions, again, it can cover any medical situation.

Power of Attorney for Finance

The power of attorney for financial matters is similar to the health care document just discussed, only your designated agent has the power to make decisions and act on your behalf when it comes to your finances. This gives them the authority to pay bills, settle debts, sell property, or anything else that needs to be done if you become incapacitated and unable to do this yourself.

It might be obvious by now, but I’ll state it just in case: choosing an agent for a power of attorney requires that you think long and hard about who would be best suited for the job and who can be trusted.

woman on laptop on patio

Disposition of Personal Property

Now, let’s get to the disposition of the personal property. This is where you get specific about items you want particular people to have. If you’re leaving everything to one or two people, then you may not need to fill this out. But, if you know you want your niece Beth to have a specific piece of jewelry, and your cousin Karl to have that bookshelf he loved, then you’d say so in this document.

Disposition of Final Remains

The disposition of final remains document is where you get to tell your loved ones exactly how you want your body to be treated after you pass away. It can be as general as simply saying “I want to be cremated and scattered in my garden,” or it can be specific and include details of plots you’ve already purchased or arrangements you’ve already made.

Beneficiary Designations

Along with the six basic estate planning documents, don’t forget about your assets with beneficiary designations.

Common accounts with beneficiary designations include savings and checking accounts, life insurance, annuities, 401(k)s, pensions, and IRAs are all transferred via beneficiary designations. These beneficiary designations actually trump your will!

Regarding assets with beneficiary designations, you must make sure that designations are correctly filled out and supplied to appropriate institution. Remember to keep these beneficiary designations updated and current.

WHEN Do You Update Your Estate Plan?

Let’s say you’ve gone to an estate planning lawyer, and these six basic estate planning documents have been drafted and signed. What else? You need to keep these documents updated and current. If you undergo a major life event, you may well want to revisit with your estate planning lawyer, to see if this life event requires changing your estate planning documents.

What do I mean by a major life event? Some common events would include:

  • Selling or buying land
  • Birth or adoption of a child or grandchild
  • Marriage or divorce
  • Illness or disability of your spouse
  • Purchasing a home or other large asset
  • Moving to another state
  • Large increases or decreases in the value of assets, such as investments
  • If you or your spouse receives a large inheritance or gift
  • If any family member, or other heir, dies, becomes ill, or is incapacitated

This is just a short list of life events that should cause you to reconsider your estate plan. There are many others; if you think you might have undergone a major life event, check with your estate planning lawyer.

WHERE Do You Keep Your Estate Plan?

You should store your estate planning documents in a safe place, such as a fireproof safe at home, or a safety-deposit box. Another option in our digital era is storage on the “cloud.” Just make sure the important agents under your estate plan—say, for example, the executor of your will, or power of attorney representative—can access the documents if and when the need arises. For most folks, that’s enough: the six documents, keeping the documents current, and remembering about those assets with beneficiary designations.

Wait a second…what do you mean by “for most folks, that’s enough?” Indeed, for most Iowans what I’ve outlined here is enough. There may be folks who have more that $5 million in assets, or who have complex assets (for example, more than one piece of real estate), or own part or all of a robust business, or otherwise have unusual situations. In such cases, a trust may be helpful. That’s considered more “advanced” estate planning and will mean additional conversations and collaboration on what estate planning tools work best for the situation.

See? That wasn’t so bad!

Whether it’s complicated or simple, it does require some thought and time. But, it’s worth the investment. A proper estate plan can save you and your estate costs and fees, help your family and friends, and provide you peace of mind.

Perhaps most importantly, through proper estate planning you can help your favorite charities in ways large and small.

Do you have an estate plan? Why or why not? I’d love to hear from you in the comments below. You can reach me at any time at 515-371-6077 or gordon@gordonfischerlawfirm.com.

Everyone has unique needs and thus every estate plan needs to be personalized. Online templates for estate plans won’t cover the nuances of your life, wishes, and assets. The best place to start on your personalized estate plan is with my Estate Planning Questionnaire.

footballs on wall

Turn on ESPN, put on your jersey, and stock with fridge with a cold beverage…the College Football Playoff National Championship is tonight. While reading up on the stats and predictions for the southern powerhouse showdown between the Alabama Crimson Tide and Georgia Bulldogs in Atlanta’s Mercedes-Benz Stadium, I couldn’t help but make a connection with estate planning. Goal posts to estate planning goals may seem like a stretch, but hear me out.

Football is a complex game—the field is full of moving parts and competing strategies; it’s a game of inches where just a few missteps or right moves can make a huge difference. Estate planning works the same way. Here are just five of the surprising similarities between estate planning and the game of football:

1. Your Clock Will Indeed Run Out

Just like every football season eventually comes to an end, your (hopefully long and healthy) season will also come to a close. When it does, you need a special kind of playbook for the rest of your team…AKA an estate plan. In this analogy an experienced lawyer is the great coach who is going to help you put plans in place for when the game changes unexpectedly or the stadium lights turn off for the last time. And, just like so much can change over the course of a season, a lot will happen over the course of your lifetime. That’s where annual reviews and revisions after significant events fit in.

While it is often difficult for people to ponder their unavoidable exit off their own fictitious field, preparation for what happens after your season is over can be one of the most comforting aspects of financial and legal planning.

2. The Main Players

Let’s take this analogy a bit further and put some estate planning terms into football speak.

Estate – An estate is the whole playbook, containing the following documents: your will; health care power of attorney; financial power of attorney; disposition of personal property; and final disposition of remains. (Click on the link preview below to delve deeper.)

Will – A will deals primarily with the distribution of assets and care for minor children. You need to make certain the will is well drafted, solid, and can stand up in court. Keep in mind though, important assets such as a life insurance policy payouts, retirement assets, and investment accounts may well contain beneficiary designations that trump your will.

Trust – You have lots of different options with this player. A trust can dictate how your assets will be dispersed, the timeline and manner in which they are dispersed, and who’s overseeing the process.

3. You Must Make Mid-Season Starting Lineup Adjustments

Just as a coach may switch up who’s starting partway through the season, you’ll may need to make adjustments to your estate plan as things inevitably change over the course of your life. Big events like marriage, birth of a child/grandchild, moving to a different state, a large change in financial status, divorce, and other significant changes are good reason to review your “playbook.”

4. No ‘I’ in Team

Your loved ones and close friends are all a part of your team; part of being a strong team player is including them on the plays you’re making. Discuss important aspects of your estate plan with the people it involves to avoid any confusion or conflict when it comes times for them to carry out your wishes. For instance, if you have minor children (under age 18) you’re going to want to establish legal guardianship if the worst happens and you’re no longer around to care for them. You’ll want to discuss with your chosen guardians ahead of time to make sure they’re willing and available to carry out the responsibility.

5. Final Score

football on field

 

There are probably at least a few more good football analogies I could tie into the conversation of why you need an estate plan, but the most important takeaway is that you never know when the game is going to change. So, you need to have your “playbook” written out ASAP. The best place to start is with my free, no obligation Estate Plan Questionnaire. You can also shoot me an email or give me a call at 515-371-6077 to discuss your situation (or football).

senior citizen guardianship

Recently a friend sent me an article from The New Yorker, “How the Elderly Lose Their Rights.” (While a long read, it’s worthwhile.) The piece focused on the tragic case of a Nevada couple—Rudy and Rennie North—who fell victim to a court appointed guardian who failed (terribly) to put the senior victims’ best interests first and asserted the little known situation where “Guardians can sell the assets and control the lives of senior citizens without their consent—and reap a profit from it.” At first this situation is a bit confusing. How can a couple, with grown adult children, be assigned as wards of a state-appointed conservator/guardian who is then in charge of making health, financial, and social decisions for the individuals?

Given the current and growing population of elderly in the U.S. the issue of court-appointed guardianship it’s an important subject. According to the Census Bureau, “residents age 65 and over grew from 35.0 million in 2000, to 49.2 million in 2016, accounting for 12.4 percent and 15.2 percent of the total population, respectively.” And, between 2000 to 2016, 95.2 percent of all U.S. counties experienced increases in median age.

senior couple at table

What is a Guardian / Conservator?

To be able to protect yourself against such a situation, let’s establish what a guardian and/or conservator actually does and what are the causes for a conservator to be appointed. One person may be both the guardian and conservator and can be combined into a single court action. (Note: these definitions are applicable in the State of Iowa. In some states the words have different definitions and a “guardianship” in Iowa may be considered a “conservatorship” under the verbiage of a different state.)

Iowa Legal Aid offers a clear definition of the two terms:

“In a conservatorship:

  • The court appoints a person (the conservator) to control the property (or estate) of a ward.
  • A conservatorship deals with the person’s financial decisions.

In a guardianship:

  • The court appoints a person (the guardian) to control the person of the ward.
  • A guardianship deals with non-financial decisions such as where the ward lives and what type of medical care the ward gets.”

For simplicity’s sake, for the rest of the article we’ll just say guardian/guardianship, but know that could also include a conservator/conservatorship.

How does a Guardian get Appointed?

A guardian may be appointed if a court finds an individual incapacitated, which can be due to varied conditions like mental disorder, physical or mental disability, chronic abuse of drugs and/or alcohol, or physical illness. Basically if the court is convinced that a person lacks sufficient ability or understanding to communicate or make decisions in their best interest they could appoint a guardian for the continued supervision and care of the individual.

The process is such that a petition is filed in the prospective ward’s state with information regarding the proposed guardian, the guardian and ward’s relationship (if any), and other info on heirs. Any person deemed “competent” can be appointed as a guardian, so that could include an adult child/parent, spouse, or friend. It could also be a professional guardian entirely unrelated to the ward.

two senior citizen women

The legal standing for guardianship immigrated over to the U.S. colonies from England and is based on an English statute that’s survived for over 800 years. The state holds the power of parens patriae, “a duty to act as a parent for those considered too vulnerable to care for themselves.” Because this power is of the states and not federally regulated, there are disparate record keeping standards, sealed court records, and no databases of collective figures at the local, state, nor federal levels.

Potential Dangers of Guardianship

Guardianship in the U.S. straddles a fine line between protection and exploitation.

One of the major tenants of the concept of guardianship is “trust.” And, it’s true that there are great guardians who certainly work in the best interests of their charges. Most people assume the role of a guardian for good reason (like caring for a parent), but there are also substantiated cases where victims (largely senior citizens) were subjected to physical abuse, financial theft, and neglect. In a 2010 report, “Guardianships: Cases of Financial Exploitation, Neglect, and Abuse of Seniors,” the Government Accountability Office identified over 150 reported victims who had suffered a total of $5.4 million in stolen funds.

Guardianship has large potential for issues and consequences given the large quantities of people involved. Currently there over 1.5 million adults who live under the care of a guardian who is either a family member or unrelated professional. These guardians control an immense amount of assets to the tune of $273 billion. It’s also true that in the majority of states there are no qualifications to attain the status of guardian other than taking a course, having not declared bankruptcy recent, and not be convicted felon.

two seniors speaking on sidewalk

The American Bar Association published the statement that “an unknown number of adults languish under guardianship” even if they no longer have the need for someone to make decisions for them (or never did).

Another danger is that while guardianship could be terminated through a court hearing if it can be proved the need no longer exists, the ABA study also asserted the guardianship situation is typically permanent, leaving few ways out for the adults under care. Those who do try to fight against a court-appointed guardian often end up paying excessive amounts of money in attorney and court fees—some even going bankrupt in the process.

Additionally, the aging population of America places increased pressure on court resources which, in turn, can make it difficult for court appointmented guardians to have the optimal high level of oversight necessary. Thus, shady guardians can more easily slip through the cracks and continue to abuse the system and their wards’ assets.

How to Protect Against the Potential

It’s pretty safe to say that no one in their right mind would want a court-appointed guardian (particularly a stranger) to have control over your life. Especially in a way that they could legally:

  • Change your permanent residence to a more restrictive location.
  • Consent to withdraw life-sustain medical procedures.
  • Place restrictions on communications, visit, or interactions with another person.
  • Make decisions contrary to your wishes regarding general life in areas like recreational activities, clothing, and food choices.

As an example of the prospective consequences of these powers is how a guardian placing restrictions on whom their ward can interact with can result in isolating the ward from their family members. According to Elaine Renoire, a director of the National Association to Stop Guardian Abuse, a victims’ rights group, the top complaint she hears about guardians is how they can legally prohibit their wards from seeing or speaking to their loved ones.

senior citizen on bench

The following legal and estate planning tools are proactive measures you can take today to avoid the potential of being subject to court appointed guardianship.

Health Care Power of Attorney

Health care power of attorney is one of the six main documents all Iowans should have as a part of their estate plan. It allows you to choose a designated representative to make medical decisions on your behalf if you are to become incapacitated either temporarily (such as under anesthesia) or permanently. If you cannot express your medical treatment wishes clearly and coherently, your agent could then make such wishes be known on your behalf. The designated agent also retains the right to receive your medical record information that would otherwise be inaccessible as it is protected under HIPAA laws.

Financial Power of Attorney

Similar to the health care power of attorney, financial power of attorney is a legal document that designates someone to handle your financial decisions and take actions like pay bills, settle debts, and sell property on your behalf if you become incapacitated and unable to do this yourself.

Trust

The number of different types of trusts are practically limitless and a trust could be a valuable estate planning protection tool in some situations. A successor trustee could be named and the document could be used as a safeguard for financial protection.

woman walking down street with flowers

Proactivity is Key

By being proactive, you can be certain that someone you love and trust will be responsible with their guardianship powers and big/small life decisions, not the courts. Have these documents crafted by an experienced estate planner (not a DIY website) and keep them up-to-date as circumstances change. Luckily there are smart people in Iowa working toward policy change, such as the National Health Law and Policy (NHLP) Resource Center at the University of Iowa College of Law and their recent task force report citing 232 policy recommendations. But, the road toward substantial policy change is long and it’s best to have your own legal safeguards in place just in case.

Want to discuss guardianship further or get started on your powers of attorney documents? Contact me at any time.