Elder Law Red Flags Every Practitioner Should Know, 1116 SCBJ, SC Lawyer, November 2016, #34
| Author | Lisa Hostetler and David Ziegler, J. |
Lisa Hostetler and David Ziegler, J.
Introduction
The population of people over the age of 65 is expected to double in the next 25-30 years,1 so attorneys in all practice areas will see an increase in the number of elderly clients needing legal representation. While the age of the client will not always affect an attorney’s manner of representation, there are situations where the attorney needs to consider the client’s age before advising the client. This article describes several hypothetical situations that raise elder law red flags that any practicing attorney may need to address.
I only need a “simple will.”
Joe is in his sixties, he is married to Susan, and they have two adult children, Robert and Erin. Robert has a gambling and alcohol addiction and two young children of his own, Bobby and Rachel. Joe and Susan are very involved in Bobby and Rachel’s lives since Robert is not a stable influence. Joe has worked his entire professional life. Though he is not rich, he and Susan live comfortably in their modest home, which they own as tenants in common. They each maintain separate bank accounts.
After a recent health scare, Joe decides he needs to get his affairs in order, but Joe does not feel he has enough assets to require an “estate plan.” Joe simply wants to leave everything he owns to Susan and then to his children. Joe calls Attorney and says, “I just want a simple will; I don’t need a fancy trust or anything complicated.” Then Joe asks the inevitable question, “How much is this going to cost?”
Joe does not want a “simple” will; Joe wants a cheap will.
Many clients overestimate the capabilities of a simple will and misidentify their need for a complete estate plan. There is also a misconception that using a will allows immediate access to assets without going through probate. Remember, clients often do not know what they really want, they think what they want is not possible, or they think they cannot afford a complete estate plan.
The first limitation of a simple will is that it is not effective until the testator dies. Attorney needs to explain what would happen if Joe had another health scare that left him incapacitated. Without a health care power of attorney, Susan, or one of the children, would be unable to make the decisions necessary to get Joe the care he needs.
They would have to seek court appointment of a guardian, which would not only cost money but time as well.[2] Further, without a durable power of attorney over finances, Susan would be unable to access Joe’s bank accounts if she needed money to maintain their house, pay other bills or transfer funds.3
Second, using a will to distribute an estate will not avoid pro-bate.4 If Susan survives Joe, Susan may need to sell their house quickly or be able to access Joe’s bank accounts. Attorney needs to advise Joe of the various options for transferring assets outside of probate, such as owning assets joint with survivorship. There are a variety of ways to transfer assets and Attorney should advise Susan and Joe of the most beneficial for their particular situation. For a married couple, a joint tenant with right of survivorship deed may be preferred. For a surviving spouse, maybe a life estate deed with a responsible child as the remainderman would work best. Perhaps the Attorney should set up a revocable trust for the clients so that they can have a trustee control their assets even after they are no longer able. Any of these methods, if properly executed, can avoid probate.
Finally, a simple will cannot address more complex issues. If Susan predeceases Joe, does Joe really want half of his money going to Robert directly? Attorney should discuss the options for protecting this money from Robert’s addiction issues. Joe might consider putting Robert’s distributions in a trust for Robert’s benefit with a spendthrift provision and third party trustee, or even excluding Robert in favor of a minor trust for Bobby and Rachel.
Any attorney drafting a will or doing estate planning needs to evaluate the entire situation and consider all of the issues that could arise from simply drafting what the client asks for. By clearly explaining all of the potential pitfalls, and different options to avoid those pitfalls, Attorney can ensure that the client has been fully informed in order to make the best decisions regarding his estate plan. Clients are often willing to select the “best” plan, instead of the “cheapest” plan, after they understand the benefits and detriments of their options.
My mom needs an attorney.
Cheryl wants to bring her elderly mother, Ethel, in to get Ethel’s estate plan updated. Cheryl gives Attorney very specific instructions regarding the work Ethel wants to have done: naming Cheryl as Ethel’s agent in her powers of attorney, naming Cheryl as the primary beneficiary in Ethel’s will, and excluding Ethel’s son, Jeff, from Ethel’s will. During the initial consultation, Attorney notices that Cheryl is doing most of the talking and...
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