If you’re in the midst of a divorce, it’s wise to review your current estate plan (or lack thereof), to understand how you need to prepare. In South Carolina, divorce proceedings often take well over a year to complete due to the requirement that parties without grounds for divorce live separate and apart for more than 12 months. While divorce is awful, death is certainly worse and many of our clients aren’t comfortable having their estate plan in limbo pending their divorce. If you’re in this situation, here are a few tips and things you need to know:
Pre-Nuptial Agreements: Make sure your divorce attorney has a copy of your prenuptial agreement and advises you on how it could come in to play during the pendency of a divorce. In most cases a prenuptial agreement often limits (if not eliminates) an obligation to provide for the other upon death. That being said, a prenup won’t override an existing estate plan that was executed after the marriage when all was well in the relationship. As a rule of thumb, do NOT make the mistake of relying on a prenuptial agreement or South Carolina law to “auto-correct” an estate plan.
Trusts / Wills: If there is a trust/will in place it’s important to review the document to recall specifically what it provides for the soon to be ex-spouse. Many mistakenly assume that during a period of separation, any bequests to the spouse will become null and void. This simply isn’t the case. In fact, there is case law in South Carolina which only terminates rights between spouses during a divorce if they have a fully executed and approved settlement agreement in place which addresses this issue. If this is important to you, make sure your attorney includes that language as soon as possible in your proceedings.
Power of Attorney Documents: While there are laws preventing you from disinheriting someone you are still married to (called the “elective share”), there is no requirement that you keep them as your power of attorney. Most of the time, each spouse has listed the other as agent in his or her powers of attorney to make decisions on critical property and health care. If you wouldn’t want your soon to be ex making these decisions, you need to have your attorney update your documents. If you don’t have these documents in place, it’s time to get them in place to make it clear who is in charge of your decisions if you’re unable to make them on your own.
Take the time during the pendency of your divorce to recall and review all accounts that have a POD (Payable on Death) or Beneficiary designation. It’s quite common that spouses name one another for everything from insurance proceeds to annuity plans. Talk to your attorney before making any changes as certain accounts are likely still a part of the marital assets. Once you’re given approval on what accounts you can control, it’s time to decide who should replace your spouse on these documents and accounts and how that falls in line with your overall estate plan. If your divorce attorney isn’t a qualified estate planner, now would be a good time to get a referral.
Unfortunately, there are certain steps that can only be taken once the divorce is finalized. As mentioned, in South Carolina and in many other states, it’s rather difficult to disinherit your spouse entirely while still married. However, reviewing the items mentioned above and getting a head start on planning for your new life as a single individual will keep you moving in the right direction and make sure there is not an unintended windfall for a soon to be ex-spouse.
Baby boomers beware . . . there’s a new custody battle on the rise and it has nothing to do with family court, divorce or minor children. In fact, the newest custody battle is over YOU and it’s occurring statewide in our Probate Courts.
As many of us age, we simply hope someone will be there to help care for us in our final years.
Do you know who will manage your health and finances if you’re unable to do so?
So, how do we avoid anyone fighting over us in court? Less than one-third (1/3) of our population has executed a Health Care Power of Attorney or General Durable Power of Attorney to name an agent to act in our place. The reasons why vary from person to person but we’ve found for the most part it’s just wishful thinking that we will die peacefully in our sleep without facing the hurdles of aging including dementia and or Alzheimer’s Disease. Statistics; however, tell a different story. One in 3 seniors will die with Alzheimer’s disease or another dementia. One in 8 people over age 65 in the United States has Alzheimer’s disease now, and nearly 50% over age 85 are suffering. In 2014, an estimated 5.2 million people in the United States were living with Alzheimer’s disease. Sobering, isn’t it?
What’s worse is that as a whole, we’re completely unprepared and by the time we realize it (or our family does), it’s often too late because we’ve lost the ability to legally execute these documents. For more information on obtaining these documents, please contact our office for a completely free (no obligation or sales pitch) consultation. And if you’re reading this because you already have a parent in this situation, please make sure to read our other posts on Guardians and Conservators to better understand the Court’s role. Still have questions? Post them here or call/text our office at 843-871-9500. We’d love to hear from you.
Has a loved one recently been diagnosed with dementia or Alzheimer’s disease?
Here’s what you need to know now:
STEP ONE: If you’re concerned as to whether or not the individual in question is capable of making rational, clear-headed decisions about their health care, daily living decisions or placement decisions, you first need to determine if they’ve executed a Health Care POA (Power of Attorney). This document allows an individual to decide for his or her self who can serve as their agent in handling their medical related issues if and when they are unable to do so on their own. This document should not be confused with a General Power of Attorney which addresses banking and other transactional business (and is discussed in other posts on this blog). If your loved one has not executed a Health Care POA, proceed to STEP TWO. If they have, please congratulate them on being prepared as they’ve just saved themselves (and you) a major hassle. Only proceed to STEP TWO if the person they nominated is unable or unwilling to serve or you have reason to believe they are taking advantage of their powers.
STEP TWO: Before approaching the Probate Court or your attorney to begin the Guardianship process, it’s first wise to consult with the loved ones medical provider and personal attorney to determine whether or not it’s too late to have them execute a Health Care POA. Remember, a diagnosis doesn’t mean the person is already fully incapacitated and these professionals can help determine if costly court intervention can be avoided by having a capacity examination and simultaneously executing documents whereby the loved one makes their own choice as to who should make their decisions in the future. This can also prove useful if the loved one needs to revoke a previously executed document because the person they named (their agent) is no longer acting in their best interest.
STEP THREE: Often times referred to as and confused with a “conservatorship,” guardianship is needed when a someone who is incapacitated due to age or disability has not named a Health Care Power of Attorney to address their health care needs. If your loved one didn’t take this step or is no longer able to do so, you must petition the court for guardianship. This process often takes several months and requires that two (2) examiners find the person is no longer able to make their own decisions. Following that ruling, the court will then transfer duties such as daily medical care, living arrangements, and medical decision-making to the petitioner. This process can be timely and in some cases costly, especially if family members disagree as to whether or not a guardianship is necessary or disagree as to who should be making such decisions.
Here are a few common questions we are asked about the process:
The following is a list of possible duties of a guardian:
To the extent possible, the guardian should seek feedback from the ward when making these decisions.
If you need further information related to guardianships, please refer to our blog or contact our office to set up an office or phone consultation. We have a dedicated team of attorneys who work regularly in this area and can help guide you through this difficult process.
Well-intentioned family members often add a loved one to their bank accounts. There are a variety of reasons this may occur: shared expenses, planning for final expenses, long-term care concerns, or a potential for future incapacity. In many of these instances, one individual contributes most or all of the funds to the account. After death, the question then arises among family members and heirs as to whether these funds are part of the decedent’s estate or pass directly to the other person named on the account.
Here’s the typical scenario we see: Dad passed several years ago. Mom has three children but only one of them lives nearby. Mom adds the local child (Child A) on her checking and savings account so that Child A can help make sure the bills get paid, handle the account during her absence or illness and then “do the right thing” when she dies. Child B and C are aware of the arrangement but have been told by mom and Child A that this is just for convenience. At Mom’s death, Child A goes to the bank and personally claims all of the funds and declares they are hers as joint owner of the account. The funds comprise the bulk of mom’s estate which was to be divided equally. An argument and threats of litigation begin . . .
In this scenario, it is important to remember that bank accounts are ultimately governed by the account agreement with the financial institution. They should always be your first stop when trying to determine the true ownership of your accounts (when setting up this type of arrangement) or the first stop for a Personal Representative trying to determine whether or not these funds belong to the estate.
The account agreements at many financial institutions now provide that multiple owner accounts are owned as joint tenants with rights of survivorship. You may recall we previously discussed the two types of joint property ownership in South Carolina. As a quick recap, owning property as joint tenants with right of survivorship (a mouthful but a useful tool in estate planning) gives each joint owner an equal interest in the property. At the death of the first joint owner (mom in our scenario), their share belongs equally to the surviving joint owner(s) automatically (Child A). Therefore, Child B and C would not have access to these funds nor would the Probate Court have jurisdiction over them as they are a non-probate asset.
In researching this post, we reviewed the consumer account agreements at several major banks. All provided for ownership of joint accounts as joint tenants with right of survivorship as the default (or sometimes only) option. Again, this means that these assets pass directly to the other person whose name appears on the account, and are NOT an asset of the estate. The result is that accounts are opened with rights of survivorship even when that may not be the intent of the original account holder.
In addition to the account agreement, recent amendments to the South Carolina Probate Code provide a general set of rules to apply in these situations. The Probate Code’s default rule for accounts with multiple owners is also to consider them joint ownership with right of survivorship.
So what does this mean for the estate? Unfortunately, the answer is: it depends. Most likely, the account belongs to the surviving joint owner unless the designation on the account agreement indicates a different result.
If a dispute has arisen as to ownership of a decedent’s account, consultation with an experienced probate attorney may be helpful. Despite these rules, sufficient evidence of a different intent by the Decedent may be able to reverse this outcome. More importantly, we suggest our estate planning clients be aware of these rules when deciding whether or not to create joint accounts or how much funds to place in them.
The South Carolina Bar Association has a wonderful publication that we use regularly for our clients called the South Carolina Senior Citizens Handbook. This free publication is a great resource for anyone 55+. It addresses topics ranging from Medicare to Reverse Mortgages to Age Discrimination. Parts III and IV of the publication specifically address our practice areas and include valuable information on Guardianships and Conservatorships as well as Estate Planning. We encourage our clients to review this publication to learn about valuable rights, benefits and issues that may effect them as seniors. Should you have any questions regarding these issues, please contact our firm so that we can schedule a consult.
Evan Guthrie says:
December 19, 2014 at 7:52 PMGreat resource. I know of many seniors that would benefit from sharing it.
Many of our elderly clients come in asking for a Power of Attorney. A doctor, family member or friend may have mentioned that they need one, but aren’t able to explain why or what type. This post will provide some basic information on the different types of Power of Attorney and what they allow others to do.
A Power of Attorney authorizes someone else to act on your behalf in a legal or business matter. There are different types of Power of Attorney including General, Special, Health Care and Durable.
A General Power of Attorney authorizes your chosen individual (called an “agent”) to act on your behalf in a variety of situations. These can be very broad in nature and allow the agent to perform many duties including but not limited to handling banking, buying and selling property, taking out a loan, entering into contracts, filing tax returns, applying for and handling government benefits (Social Security, Disability, etc.), making gifts and more. After consulting an attorney, these powers can be narrowed or expanded to suit the client’s needs or concerns.
A Special Power or Limited of Attorney authorizes your agent to act on your behalf only in a specific circumstance. We frequently draft these documents to authorize an agent to sell a piece of real estate, care for and authorize medical care for a child (usually when the parent is out of the country), or handle government benefits on behalf of our client.
A Health Care Power of Attorney authorizes your agent to make health care decisions on your behalf if you are not able to do so. The agent’s decisions would not supersede your own decisions and only apply if you are unconscious, incompetent, or otherwise unable to make your own decisions. This is different from a Living Will, which simply allows you to express your wishes related to life-sustaining procedures.
A Durable Power of Attorney: This is not a unique type of Power of Attorney but instead refers to a language in a General, Special, or Health Care Power of Attorney that allows them to remain in effect even if you become incompetent. With the exception of a Special Power of Attorney, we strongly recommend that you include the appropriate language in your Power of Attorney documents to ensure they remain effective during any period of incompetency. In fact, for many of our clients the fear of future incapacity is the sole reason to have these documents.
The ability to download and create a Power of Attorney online has lead to serious issues and litigation. Often, people don’t understand that the POA becomes valid as soon as you sign it unless it’s specifically drafted not to do so. This means that your agent can immediately start making decisions and exercising the powers you have granted them. This is often not the intent. Similarly, if a POA is being executed after a diagnosis of dementia, Alzheimer’s or related illnesses, it’s important to have an attorney prepare the documents so that he or she can attest to your competency to do so. Many attorneys offer consultations at reduced rates to discuss these documents and others that might be a part of your estate planning. It’s wise to share your specific situation and get advice about exactly what you need to have in place to protect yourself, your assets and your heirs.