While visiting family at the hospital recently, I noticed a PowerPoint slide deck scrolling on a hospital screen discussing when completing a POLST form would be appropriate. Being the process nerd that I am, I thought that it might be appropriate to highlight a few things related to POLST as it fits into the overall portfolio of advance care planning.

Advance Health Care Planning

If you are at least 18 years of age, you should have an Advance Health Care Directive. While it’s probably not as high on an average 18-year old’s priority list as playing Fortnite, it is critical for you to have in case you are seriously sick, injured, or worse. A key component of your Directive is designating someone (you should also include alternates) to act on your behalf should you be unable to do so. A few examples of what this person will have the ability to do is select or discharge health care providers, consent to treatment on your behalf, and make anatomical gifts if appropriate. And while it might be a family member that you choose to act in this capacity, it doesn’t have to be. I have a friend who didn’t select their sibling to make decisions on their behalf because said sibling isn’t exactly good at making critical decisions under duress. And that is perfectly acceptable. The important thing is that you talk to your designee to ensure that they are both comfortable with performing the duties within their role and that they are the appropriate person to do so. The remainder of the Directive allows you communicate your desires on organ donation, treatment options allowable to keep you alive (commonly referred to as “End-Of-Life” decisions), designate preference for burial or cremation, and optionally indicate who your primary physician is. Lastly, as with any critical document, it’s important to periodically review the contents of your Advance Health Care Directive to ensure that it still reflects your desires and values. While the Advance Health Care Directive allows your designees to act on your behalf, it may not give them the ability to share your medical information with the appropriate people as might be needed for proper treatment. So, what does?

Endorsed by Congress in 1996, The Health Insurance Portability and Accountability Act (HIPPA) is intended to protect your confidential medical information from being released, used, or disclosed by others without prior authorization to do so. In addition to the typical “covered entity” such as your health care provider, you can appoint specific authorized recipients to receive your health care information. This document is referred to as a HIPAA Authorization. The authorized recipients are typically the same individuals that are identified within your Advance Health Care Directive. You can however authorize additional individuals as necessary. As an example, my friend wants their sister to receive medical information via the HIPPA but as mentioned above does not want the sister making potentially life altering decisions that would be given to her in the Advance Health Care Directive. The significant point being made here is that your Advance Directive, HIPPA Authorization, and Health Care Power of Attorney (we’ll talk about that next) documents are all independent of each other but designed to work together.

Rounding out the Triple Crown of Advance Health Care Planning is your Health Care Power of Attorney. This document allows you to name individuals to act on your behalf as your Health Care Agent. These individuals should be the same as identified in your Advance Health Care Directive lest conflicts on medical treatment decisions arise by having different people named in each form. So how is it different than the Advance Directive? Where the Advance Directive is geared more for making acute care and end of life decisions, the Health Care Power of Attorney is designed to make decisions for long term care such as nursing home or hospice care within your personal residence. All three of the aforementioned documents should be executed simultaneously and reviewed periodically.

This was supposed to be a quick blog on POLST and I spent a whole page not even talking about it. Let’s change that!

Physicians Orders for Life Sustaining Treatment (POLST)

A POLST form is a medical order signed by your physician. Medical personnel performing treatment on you are legally obligated to follow its directions. This is a document that you would complete when you are medically frail but still able to make decisions on your own and are ready to put medical treatment plans into action as a result of a prognosis where the terminal outcome is expected to be within a short period of time. Copies of this form may be kept by your physician, your chosen hospital, with you, or all the above. The bottom line with a POLST is that it can and should work in conjunction with your Advance Health Care Directive but is a legally enforceable document to guarantee that actions your desire (remember that they must be signed off on by your physician) are taken. A POLST is not required (often the Advance Health Care Directive is all that is needed to care for your wellbeing) but is just another tool to have in your health care planning toolbox. Specifically, in situations where there may be discretion on treatment options that your Directive may not cover.

While for the young of age or young of heart these documents are not exactly as exciting to contemplate as what game you’re going to play next on your PlayStation, they are important. So, put down your game controller and pick up your phone and drop us a call or e-mail should you have further questions on this topic or need assistance.

While shopping for work supplies recently at Office Depot, I noticed that the latest version of Quicken WillMaker Plus 2019 with a digital Living Trust (the terms Living Trust and Revocable Trust are often used interchangeably but refer to same instrument) included for free was only $78.99! It made me question why I chose to go to law school in the first place when the obvious replacement for a portion of the work that I do on a daily basis can be done from the convenience of your own home at a fraction of what most of us attorneys charge for a comprehensive plan. But is purchasing “do it yourself” software to entrust your family’s financial wellbeing really such a wise decision?

Let’s start by answering a level setting question; What’s the difference between a Will and a Living Trust? A Will is a legal document that allows you to specify how your assets and personal belongings will be distributed upon your death. The “upon your death” aspect is important in that a Will does not become active until you pass away. The reason that is important is because there are no legal protections in place should you become incapacitated, in any way, to make financial decisions. The person that would make the financial decisions on your behalf is a court appointed conservator.

What happens to the administration of your Will when you pass away? The probate court within the county that you reside in oversees the disbursement of your assets according to the provisions laid out within your Will while also ensuring that your debts have been paid off. A Will is taken through the probate process in that it’s overseen by the appropriate court during a very public process. If privacy for you and your family is a concern, a Will may not be the way to solely go. Finally, another note of concern is that the administration of a Will is also expensive in that your executor and the probate attorney will get a percentage of your assets for the administration of it.

A Living Trust is the foundation of your estate plan. It allows you to keep your instructions and financial affairs private and ensures that your instructions are carried out efficiently without unnecessary judicial involvement. It allows you to transfer assets such as your property into the trust while you are alive which can have tax benefits for your surviving designees. A Living Trust is sometimes described as being similar to a purse; you own the purse and all of the belongings within it so the purse is really just the vessel to hold all of your specified belongings in one safe place. While you’re alive, you can add and remove your items from that purse as much as you’d like. The purse only gets sealed up upon your death.

For the best of both worlds, a complete estate plan will contain both a Living Trust and a Will so anything that you don’t transfer directly to your trust during the course of your life will be transferred into it upon your death. It also includes a Power of Attorney to enable someone that you assign authority to (known as your “agent”) to make financial decisions for matters outside of your trust on your behalf if you become physically unable to do so yourself (filing taxes, dealing with social security concerns, or even caring for your pets are just a few examples), a health care directive that gives persons that you designate to gain access to your protected health information as well as to make medical decisions on your behalf, memorial instructions that honor your wishes on how to handle your memorial or cremation services, and nomination of guardianship for minor children (guardianship concerns should be addressed in both your Will for when you pass away and within the Power of Attorney in case you become incapacitated and need others to care for your children.  

 

 

Looking at all of the information provided so far, it seems obvious that a Living Trust is the optimal solution for your family’s security, would you still hop into the car and drive down to Office Depot? Not just yet…

Here are a few items that are often not addressed with a conventional do it yourself program that a qualified attorney can help guide and navigate you through:

1. Recording deeds – With a Living Trust, you will place title of your property into the trust. This is an area where an incorrectly recorded deed will not only cloud the property title but can have tax ramifications in the future and can be overlooked by the recorder’s office as well. I spend a fair amount of time in and out of court cleaning up do it yourself deeds.

2. The “Potato Salad clause” – When you pass away, your assets go to those you designate. In this case let’s say it’s your son Fred. What about if you and Fred pass away at the same time from eating a bad batch of potato salad while at a family picnic? Who’s going to be next in line for you? An attorney can make this level of succession planning as simple or complex as you see fit to meet your needs.

3. Blended families – Let’s face it, more and more families that finally get around to the estate planning stage in life might be on their second or more marriages with children from previous relationships entering the equation. This can lead to creative division of assets upon the passing of either one or both spouses. Add the aforementioned potato salad to the mix and now estate planning becomes quite fun for me but not so much for others. A side note on this item is that a qualified attorney can offer up different solutions to various family contingency scenarios based upon experience gained from development of previous plans.

4. Incentive clauses – Worried that your 20 year old son John is going to go out and buy that new Corvette ZR-1 he’s been eyeing immediately after receiving his inheritance check? The good news for you is that your Trust can contain incentive provisions that will provide little Johnny with portions of his inheritance when he hits certain age brackets (such as a portion at 25 years old and the rest at 40 for example), graduates from college, or desires to use the money to purchase a new home. The point being is that you get to set the distribution parameters.

These are just a few simple examples. Your attorney will more than likely have many more items for you to address that may not be done with an off the shelf plan.

It should be noted that there are times when a Will is sufficient for estate distribution due to asset size or family situation. However, a Will alone is never a solid plan. A consultation with a qualified estate planning specialist will help determine the appropriate plan for you.

Last and most importantly: An error or oversight in your Will or Living Trust will likely not get caught at the time of completion which means it’ll lie in wait for your loved ones until it’s potentially too late to correct. This is not the type of gift that keeps on giving (or doesn’t keep on giving) that you’d like for them to have to deal with. The number one reason why you should go to an attorney for this level of planning is the peace of mind that comes from knowing that it was done right by a professional that specializes in these types of things.

By now you’ve hopefully realized the importance of having a trust to protect your assets from the costly and ugly mess known as probate. If not, give us a call and we’ll happily talk to you about the benefits of having a trust. But once one has been established, an often-overlooked question is: how is my homeowners insurance impacted if my trust “owns” my house but the insurance names me as the beneficiary?

Once title to your home has been transferred to your trust, you will need to name the trust as a payee to your homeowner insurance. The reason being is that when the trust is established and you sign a deed transferring your home to your trust, ownership of the home is held by the trust and not by you as the individual. Your insurance policy will only pay for claims by those named within the policy and if your trust isn’t named, whatever it owns (the property) will not be covered.  Warning bells should be going off for you after reading the previous statement!  From an insurance standpoint, the trust owns whatever is specified within the deed for the property while you and your family as the people living at said property own all the personal effects contained within.  More on that below.   

Since your home has been placed in the trust, why not just name your trust as the only payee of your homeowners’ insurance you might ask. We discussed how that option works if the structure is damaged due to a flood or a fire as the insurance will pay the trust out for the repairs to the dwelling. But what about the personal items that might be damaged? While many trusts contain provisions for personal property, they generally don’t have all of your personal items such as that new 70″ 4k TV that you had to have for the Avenger’s movie viewing party or juniors’ favorite pair of running shoes. So, if the trust is named as the only beneficiary, personal effects are not typically covered. Another consideration to account for is what if the TV crashes down onto one of your guests while watching the movie and injures him or her? Guess who is liable for covering the cost of the injury? If you said Marvel Comics or the trust, you’d be wrong! Unfortunately, the homeowner’s insurance will only cover the trust and whatever items have been identified within it. The person that actually owns the TV (you) would be personally liable for the injury.

We just outlined why having only the trust named in your homeowner insurance is not the best option while not including the trust can be disastrous. Recognizing that both of those options are only partial solutions at best, what should you do?

The best way to incorporate your trust into your existing homeowners’ insurance is to name the trust as an “additional insured” party. This way the property can continue to be contained within the trust which will both provide tax benefits as well as protect it from probate.

You should work with your attorney as well as your insurance provider now rather than later to ensure that you, your assets, and your loved ones are adequately protected!