Law News and Tips
A Bad Idea
Fred Vilbig © 2020
I got a call from a client the other day.His mother had died, and he had a lot of questions.
His mother and father had divorced years ago.She had remarried, and she and her new husband had had a loving relationship.Not knowing who might die first and wanting to be fair, they had verbally agreed that everything would pass to the survivor on the death of the first of them to die, and on the death of the second, everything would be split 50/50, with half going to her son and half going to his children.They didn’t put that agreement in writing, and everything was owned jointly.They did both execute wills that included those provisions, but that was it.And therein lies the problem.
When a married couple own property jointly, on the death of the first of them to die, everything passes to the surviving spouse.There is no need to probate anything since there is nothing to probate.If you’re talking about real estate, you do need to file an affidavit of death to clean up the title.With regard to financial assets, you probably need a death certificate to show to the financial institution.But no probate.
And when the assets pass to the surviving spouse, the surviving spouse is free to do whatever they want with them.My client said that his step-father was talking about putting the accounts in joint names with his son.The idea was that he wanted his son to be able to pay his bills.But joint ownership between non-spouses can create problems.In the case of bank accounts (they have special rules that apply to them), his son would be able to use that money to pay his bills.But his son would also be free to drain that account.Or if he got sued and lost, the other party could attach those funds to satisfy his or her judgment.In the case of a brokerage account, both joint owners would need to jointly withdraw funds, so he would be no better off than if the account was still in his name.And then on the death of the step-father, all of the assets would pass outright to the surviving son. There would be no probate, and the will that split things 50/50 would prove to be a useless piece of paper.
The best thing that my client’s mom could have done would have been to enter into a pre- or post-nuptial agreement.She and her husband could have agree to split the assets in writing just like they had verbally agreed to do.
But now, my client was in a sticky situation.Although he had a good relationship with his step-father, his step-father was free to do whatever he wanted to do with the assets.I told him that his step-father could put the assets into a trust, and that would avoid probate, allow for his son to take care of him if he became ill, and incorporate the testamentary disposition play he had agreed to with his wife.If he didn’t want to do a trust, he could keep his will and execute a power-of-attorney allowing his son to pay his bills, but not put everything in joint names.There are ways to salvage the situation to achieve what the spouses had agreed to, but it will take some cooperation.
Fred Vilbig © 2020
Identity theft is a big concern in our virtual, technological society. Nefarious people make millions of dollars by stealing your private information and pretending to be you. We use passwords and encrypted software to try to protect ourselves, but these are smart criminals. They know how to work the system.
In a way, identity theft has been with us probably as long as people have been doing business. People would pretend to be someone else to get something valuable. Several movie plots have revolved around this idea: Catch Me If You Can, Face Off, and American Hustle are just a few. (I have to thank my kids for the movie references since I have never seen any of these movies.)
Internet dating sites are also a victim of this kind of thing where the description of the person you think you are meeting doesn’t match the person you actually meet. He’s not an Olympic athlete unless you include drinking Olympia beer as a sport.
A simpler form of identity theft is a forgery. In a forgery, you are pretending to be someone else by signing their name to a document. It’s less elaborate than internet identity theft. You don’t have to dress up and pretend to be someone else. You just have to sign their name. And if what the banks allow for signatures on checks is any indications, you don't even have to try that hard to copy someone’s signature. It’s as if they’ll take just about anything.
That is why we have notaries. Notaries are people commissioned by the State to verify signatures. They affirm that the person signing a document is, in fact, the person supposedly signing that document. If you go to court and a written document is central to your case, you can’t even get the document admitted into evidence unless there is some proof that the document and the signatures are real. If you don’t have a notarized signature, then the people who signed the documents need to go to court to prove that the signature on the document is actually theirs.
With a notarized signature, you don’t have to prove-up the signatures. If the signature is notarized, it is presumed valid. You would have to bring witnesses to prove otherwise.
Normally to notarize a signature, you have to sign a document in the physical presence of a notary. But these are not normal times. Social distancing has become the norm, and that makes notarizing signatures problematic. We recently had a car window will signing to keep our social distance.
But Governor Parson has recently relaxed that requirement. By Executive Order under the declared State of Emergency, we can now do virtual or remote notarization. For our purposes, we have to be able to see the person sign the document through a web-based program, they have to prove they are who they say they are with a picture ID, and after signing the document, they immediately have to send it to the notary. How long we will be able to do this is uncertain, but it relieves some of the stress on people. A lot of people don’t have even the most basic estate planning documents – a will, a power of attorney, or a medical directive – but they are afraid (and rightfully so) to physically meet with us. Now we have an option.
If you need to do some planning, but you were hesitant to take action during the pandemic, give us a call at (314) 241-3963. We are conducting our interviews by phone or by videoconferencing. Based on that conference, we can prepare documents and send them to you for review. After you have had a chance to review the documents to put them in final form, we can now sign them over the internet. Your safety and the safety of our employees is uppermost in our minds.
Fred L. Vilbig © 2019
Many years ago the firm I was with was approached by a Chicago law firm about merging. I admit the managing partner of the firm (I’ll call him Joe) at a wedding in my wife’s hometown. He seemed nice enough, but pretty intense.
The next week he called me. We started the process of investigating a possible merger. This is called “due diligence.” There were meetings between the partners, financial records review, and overall philosophies to consider and compare. It takes a lot of time and effort to think through something like that. You don’t want to make a mistake since undoing a merger is even worse than doing one.
We were almost done with all of that due diligence at the beginning of summer. Joe told us that we would need to take a short pause because his partners were making him take a vacation. Evidently, he hadn’t taken a vacation in years, and his partners were concerned about the amount of stress in his life. He and his family were going to Florida. He said he’d be in touch when he got back.
I was expecting a call after about two weeks. Nothing. Three weeks went by, and there was still nothing. Soon a month had passed, and still nothing. Finally, I called to see what was going on. I got his secretary, and in a very somber tone, she said that she would have someone call me back.
A day or so later I got a call from one of Joe’s partners. He told me that while sitting on the beach on vacation, Joe had suffered a massive heart attack and had died. We were stunned, to say the least. Evidently, the stress of taking a vacation had been too much for him and his heart.
Vacation season is one of those times of the year when people need to think about estate planning. If parents with small children are traveling alone, they need to make sure that everything is in order. When kids go on vacations alone or study abroad for the summer, they at least need to have a power of attorney - to handle financial matters when they are out of town or unconscious - and a medical directive - so someone can make medical decisions when they can't.
There is an old saying - "An ounce of precaution is worth a pound of cure." So a little planning can go a long way. Give me a call.
HOME FOR THE HOLIDAYS
Fred L. Vilbig © 2018
The holidays are great. The food, getting together with family, other people’s decorations. Yes, I said other people’s decorations. We have a peak on our roof that is about 30 feet up, and it must be at least 100 feet down. Yes, I’ll get the decorations up, but it is a death defying feat if I say so myself.
So where was I? Oh, yes: the holidays. My wife’s favorite holiday is Thanksgiving because it just involves cooking a big meal, and she’s a great cook. That’s lucky for my kids since I am not such a great cook, and it really stresses me out trying to get everything on the table at the same time while it is still hot.
But either at Thanksgiving or Christmas, the family gets together for a big meal. The out-of-town kids fly or drive in, and the in-town kids come over for a full house like it used to be. It seems that our holiday dinners last a long time with people staying around the table reminiscing about things. My wife and I often listen to the stories about what the kids did when they were young. Later we’ll check with each other and find out that neither of us knew anything about those things. Often we’re surprised, but at least no one got seriously hurt.
In addition to all of the good times that we have at the holidays, they are also a good time to check up on family members, particularly our parents. For some, we see our parents on a regular basis. We may not notice the little, subtle changes that may be taking place. For others who see their parents only once or twice a year, the accumulation of these little changes can be shocking.
When you’re home for the holidays, you may want to pay attention. Are they eating right? Are they dressing appropriately for the weather? As we age, we all get a little forgetful, but are they getting forgetful to the point that it is a problem? Have they gotten lost when going to the store? Do you see big changes in habits that seem to be ways of compensating for something? Did they use to be social, and now they are a homebody? Do you see big changes in their personality?
As we age, there are changes, but the question is whether they are creating problems. If not, it might still be a good idea to check to make sure that everything is in order. Do they have a will and/or a trust? Do they have a durable power of attorney? Do they have a medical directive that includes a medical power of attorney and a living will? And it’s important for the children to know who is going to be primarily responsible if something happens.
These may be tough, maybe even awkward questions to ask, but they are important. Surprises are not welcome, particularly when it is too late to fix things. In prior columns, I have written about times we have fortunately discovered problems before it was too late. And in other columns, I have written about those times we were too late to fix the problem directly, but we were able to find ways to work around the problem. But there are times when we discover the problems too late to fix other than by going to court, and the client ends up paying a lot of money in legal fees. So even though the questions may be tough and awkward, not asking them can end up costing a lot of money and aggravation.
So enjoy your holidays, but you might want to ask some questions … before it’s too late.
PLANNING FOR YOUNG CLIENTS
A friend recently called me. He has two daughters in their 20’s. They recently got jobs, and they were in the process of applying for benefits. They were asked about whether they had a will, whether they had a power of attorney, and who should be called to handle medical emergencies. That got them thinking, and they turned to their dad for advice. That was nice.
It may seem strange that a 20-something single person needs to think about a will. At that age, dying is one the last things people think about, but it makes sense. With a will, you get to say where your property goes when you die. You can cover that with pay-on-death and transfer-on-death beneficiary designations, but those can be of limited value, and people miss things. So a basic will makes sense.
In addition to saying where things should go, you get to pick who is going to go through your stuff and administer your estate. Even a 20-year-old (or maybe particularly a 20-year-old) doesn’t want just anyone going through their stuff, even when they’re dead.
So even if you think you’ve done all of your planning, it is possible to have missed something, and will is a good safety net. If you don’t have kids, the will can be very simple, but if you have kids, you want to say who is going to be their guardians, and you probably want to avoid having the court administer their money sort of like in a Dicken’s novel.
In addition to a will, a young person certainly would want to have a durable power of attorney. Maybe it’s just my job, but I constantly run into situations fairly regularly where someone is in an accident or gets ill and can’t handle their business affairs. A durable power of attorney (and the word durable needs to be in it) allows someone to handle these things when you can’t.
And finally, a young person needs to have a medical directive of some sort. These do several things. First, they are a medical power of attorney that authorizes someone you name to make medical decisions whey you can’t. Second, they need to include HIPAA authority so that a doctor can talk to your family about your condition. I recently reviewed a medical directive that did not have HIPAA authority. Fortunately, we caught it before they needed to use it because, with that authority, doctors and hospitals won’t talk to anyone about anything.
The last thing that a medical directive should include is a living will. If someone is in a car accident, close to death, with no hope of improvement no matter what is done, do they want to be kept “alive” on machines or just allowed to die a natural death? It’s not a pleasant thing to think about, but it is so important when the time comes.
So when my friend called and asked what his daughters should do, I told them they needed to do some planning. It can make a lot of difference if the unthinkable happens.
NOT WHAT SHE HOPED FOR
Fred L. Vilbig © 2018
Joe (these are not the real names) came to see me about estate planning. He knew that he needed to do something, but he didn’t really know what. Sometimes you don’t even know what you don’t know, but at least he knew he needed to do something more.
Some time ago, his wife, Leslie, decided she wanted to do some estate planning. She didn’t know any attorneys, but she had heard about online estate planning websites. She went to LegalZoom and liked what she saw. She thought she’d need a will, a general power of attorney, and a medical directive. So she worked those up, printed them, signed them in front of a notary, and she was done.
But time can change things. Leslie had been a very intelligent person holding down an impressive job before she retired. After that, she started forgetting things – little things at first, but over time, more and more. She had trouble thinking through problems, big ones at first, but soon even the little stuff. She started making some bad decisions like going outside in a heavy coat in the heat of summer or wearing shorts outside in the depths of winter. Or she might just go outside and stand in the rain totally oblivious to it. If she had just had momentary, isolated lapses, that would’ve been one thing, but it all became the regular course of daily life. Joe knew something was wrong.
He took Leslie to the doctor. The doctor confirmed Joe’s worst fears: it all pointed to Alzheimer’s. All of a sudden, Joe’s entire world, his future, was turned topsy-turvy.
But Joe thought everything would be okay legally. After all, Leslie had prepared her legal documents. But Joe had heard about probate and trusts , so he called me to see if he needed to do something more to protect Leslie if he died first; after all, he was 80. He wanted to do everything he could to protect her. A good guy.
He came to see me, and we discussed the situation. I recommended a trust to take care of Leslie and avoid probate. He liked the idea. We could set up a trust, and using Leslie’s power of attorney, Joe could transfer assets to the trust to avoid probate. So at least that much was covered. But there were still problems.
Joe realized that when Leslie prepared the power of attorney and medical directive, she had not included any backups. She had only named Joe. Due to his age and health, Joe was very concerned about what would happen to Leslie if he died first. Since Leslie had not provided a backup, when Joe died, without a court order, no one could make living arrangements for her; no one could talk to a doctor about or make decisions regarding her medical needs; and no one could administer Joe’s large IRA for Leslie’s benefit.
Joe’s only real option was to have Leslie judicially declared incompetent, get himself appointed as Leslie’s Guardian and conservator, and write a will identifying who should serve as successor guardians and conservatives. The court would be required to follow his suggestions, but it was the best he could do under the circumstances.
So Joe was faced with the unenviable choice of having his beloved wife paraded into court to be declared incompetent (and incur the costs for that) or just hope that she died first. A terrible conundrum to say the least.
A CLIENT LETTER
Fred L. Vilbig © 2018
Let me commend you on what you are doing. Having helped my wife care for her parents as their health and mental capacity declined, I know how physically, intellectually, and emotionally draining this can all be. Growing up, we never really think about the kinds of things you have to deal with now. Some people walk away. Some people delegate the duties. Some people just want to end it all. But you are caring for your mother at what is probably the most difficult time in her life, and also of your life up to now. As I said at the beginning, I commend you.
That said, I wanted to answer some of your questions. The first was whether having your mom declared incompetent created any problems for you personally. To answer that, I need to define what I mean by declaring your mom incompetent.
If she had not done any planning, that would mean getting a court involved. It’s not the end of the world, but it is sort of a pain. You’d need to get a doctor to answer a formal set of questions (“interrogatories”) to say that your mom can’t perform certain basic functions of daily living. For instance, can she remember to take her medicine at the proper time? Does she know to wear a coat when it’s cold outside?
Once you have the interrogatories, you have a hearing. Assuming all goes as planned, the judge would then put you in charge of her finances (a conservatorship) and her person (a guardianship). You would next need to get a court order authorizing you to spend money, and then you have to file an annual financial report with the court.
Fortunately, your mom did all the necessary planning. She has a general durable power of attorney, a medical directive (which includes a medical power of attorney and a living will), and a trust. Although people can put others in charge of things even while they’re competent, your mom (as most people) wanted to retain control as long as she could. So in her case, in order for you to take over, you just need a doctor to certify that she is not able to perform some of the necessary basic functions of daily living.
Just as a caution to you, although getting that kind of certification from a doctor used to be fairly easy, I have noticed in recent years that doctors have become more cautious. They are often reluctant to make that certification. However, given the right circumstances, they will.
Once you do get the certification, you can pay your mom’s bills and make decisions regarding her care. There is no need for any court proceeding. I know you were worried about having to testify, so I’m assuming that is a relief.
I now want to return to your main question about liability. The doctor’s certification does not impose any additional personal liability on you. You are basically already doing what needs to be done. With the certification, you will just have the proper authority to do it. And you can do everything with your mother’s assets, not yours. You will have no additional personal financial liability for your mom.
Once again, I want to commend you on what you are doing. Even though it can be very challenging, it is the right thing to do. Our parents took care of us when we were young, and now it’s our turn. Life is funny that way.
Let me know if you have any more questions.
Fred L Vilbig
As I am writing this, Thanksgiving is around the corner. It is my wife's favorite holiday. Christmas has shopping. Easter has eggs. The 4th of July has fireworks, and possibly a trip to urgent care. But Thanksgiving is just about family getting together for a really good meal.
But sometimes the holidays can be a discovery for us. If we live far away from our parents, we don't see them on a day-to-day basis. On the phone they sound fine. They tell you all about what relatives and old family friends are up to. They talk about their latest doctors' appointments and what ills them. And they ask a lot of questions about you and your family. Everything sounds great, but sometimes it isn't.
No one really wants to admit to getting old. It’s a one-way street. When you're young, you heal and adjust. When you're older, there's only covering up.
So the holidays are a good time to check up on mom and dad. One of the very visible signs that things are not going well is if there is a mountain of mail on the dining room table. If so, then you can rest assured that the bills are not getting paid. Check the refrigerator.
If there is only milk in it, then there is a good chance that mom and dad are only eating cereal. I know the commercials tell us that cereal is a part of a complete breakfast, but the important word there is "part". It is only a part of breakfast, and breakfast is only one of a person’s daily meals. Cereal does not satisfy all your basic nutritional requirements no matter what mom and dad might tell you.
And look in their closets. Do they have weather appropriate clothing hanging where they can easily get to it, or does mom have out that cute little sun dress she really loves?
I'll warn you that if you look like you're snooping around when you are visiting, you might get a very heated reaction ... especially if they are trying to hide something.
So when you visit your parents for the holidays, you might want to nonchalantly:
(1) check the mail,
(2) check the refrigerator, and
(3) check the closets.
It might feel like prying, but it's important.
And while you’re at it, you might want to bring up the subject of powers of attorney, both financial and medical. At some point, someone will probably need to step in and take care of them. That can be a little scary, so you might want to wait until after dinner (and the wine) is settling in to bring up the subject. If you need horror stories to lead into the conversation, then maybe you can look at some of my old blog posts. Ignoring the issue is not a good thing to do. It only leads to trouble.