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ADDITIONAL ESTATE PLANNING ISSUES
Estate Planning involves much more than just having a last will
and testament or a grantor revocable trust (living trust). I
shall discuss wills, trusts and probate in another section of my
website. In this section, I am going to discuss pre-marital and
post-marital agreements, durable powers of attorney and advance
directives. These documents as well as wills or trusts are all
extremely important parts of proper estate planning.
PRE-MARITAL AND POST-MARITAL AGREEMENTS
When folks marry for a second or subsequent time, they usually
wish to protect children, relatives or other beneficiaries from
their prior relationships. There is nothing inconsistent with
wanting a happy and fulfilling marriage with a new partner while
at the same time wanting to protect those children or relatives.
How is this accomplished?
I always recommend that a man or woman embarking on a new
marriage should have a pre-marital agreement (also called a
pre-nuptial agreement). Such an agreement can and should
carefully and clearly set out the assets that each has and how
those assets are to be distributed upon the death of a spouse or
upon some other termination of the marriage such as a divorce or
annulment. If a couple has already married and do not have a
pre-marital agreement, then I recommend a post-marital
agreement. The pre-marital agreement is best because it is
entered into before the marriage takes place and thus, the terms
and conditions are set out in advance. We don’t have to be
concerned about a an incapacitated or recalcitrant spouse if
that matter is taken care of before the wedding occurs.
Nevertheless, a post-marital agreement can also be effective in
the event there is no pre-marital agreement. Both, when properly
prepared and properly executed, are going to be enforceable. A
pre or post marital agreement can and should contain just about
any provision that the parties want in regard to how they will
conduct their marriage. For example, there can be provisions
relating to cost-sharing of food, rental or mortgage payments,
utility payments, travel expenses as well as provisions relating
to what assets are to be distributed to the heirs or
beneficiaries of a spouse when he or she dies or when a marriage
is otherwise terminated. In the event of a divorce or annulment,
there can be provisions relating to the payment of or the waiver
of alimony and attorneys fees. What I want you to keep in mind
is that the best way to protect your heirs in the event of a new
marriage, is to have an agreement that clearly sets out your
goals, intentions and plans after your new marriage has
commenced.
There are two issues that should be discussed. First, in order
for a pre or post marital agreement to be enforceable, it is
best if each party attaches as an exhibit to the agreement a
complete and up to date statement of his or her assets and
income. The reason for this is that since a spouse may be
waiving, releasing or relinquishing important rights, it is
necessary to know what those rights are that are being waived,
released or relinquished. By attaching a copy of a financial
statement, the intended spouses prove their awareness of what
the other person’s assets and income are. The second issue is
also very important. Both parties to a pre or post nuptial
agreement should have their own separate attorneys. One attorney
should not represent both parties to the agreement. The reason
is that since each party is perhaps waving, releasing or
relinquishing rights in the assets and income of the other, it
is important that each party receive separate legal advice. I do
realize that frequently folks feel that they have such a simple
situation that they don’t wish to have two separate attorneys. I
don’t blame them. Nevertheless, one attorney should not
represent both parties. Therefore, if one does not wish to have
an attorney, the attorney who represents the other party should
still not represent both.
DURABLE POWERS OF ATTORNEY
Durable Powers of Attorney. First: A quick lesson in
terminology. A durable power of attorney is a document that
creates a relationship between the person who creates the
durable power of attorney—he or she is usually referred to as
the “Principal” or as the “Maker,” and the one who acts for the
Principal or Maker, and that person is referred to as the
attorney in fact. For purposes of a durable power of attorney,
the words “Principal” and “Maker” mean the same. A lot of times
you will hear someone say that he or she is the “Power of
Attorney” for someone. That’s not technically correct. The Power
of Attorney is the document, not the person. A durable power of
attorney should stay in force even in the event that the Maker
has become incapacitated, but only so long as that person has
not been adjudicated incapacitated by a Court. A durable power
of attorney automatically expires and is thus null and void,
simultaneously with the death of the Maker.
According to Florida Statute 709.08, in order to be valid in the
State of Florida, the durable power of attorney must contain the
following language: “This durable power of attorney is not
affected by the subsequent incapacity of the principal except as
provided in section 709.08, Florida Statutes.” The durable power
of attorney can contain language that is not the same as this so
long as it clearly shows the Principal’s intent that the
authority that is conferred by the durable power of attorney is
exercisable notwithstanding the Principal’s subsequent
incapacity. This is the major difference between a durable power
of attorney and a general power of attorney that does not
survive the incapacity of the Maker.
This is as critical and as important a document to have as any
other document you can name. A properly drawn durable power of
attorney will authorize the attorney in fact to conduct the
affairs of the Maker in a number of ways, all of which are
designed to enable the attorney in fact to carry on the affairs
of the Maker the same as if he or she could or would do. A
durable power of attorney that is to be used in Florida should
be signed by the Maker and should be witnessed by two persons
and should also be notarized. The notary can be one of the two
witnesses, but if so, the notary needs to sign the document
twice—once for being a witness and once for being the notary.
Different states have different requirements that are related to
the validity of durable powers of attorney so if you have one
that was not drawn in Florida, it's very, very wise to make sure
it is valid here, BEFORE you need to have it used. For example,
if you want to use a durable power of attorney to convey real
property in Florida, the document MUST be witnessed by two
persons and must also be notarized. I can't tell you how many
times I have been involved with real estate transactions where a
power of attorney prepared in some other state had to be used.
The laws of some other states might not require that a durable
power of attorney must have 2 witnesses to be used to convey
real property. But the state of Florida does, so keep that in
mind if you are planning to use a durable power of attorney to
transfer the title to real property within the state of Florida.
I, personally, believe that if you reside in the state of
Florida, you should have a durable power of attorney drawn in
this state, regardless of what your previous attorney told you.
But I'm a Florida attorney and I would say that, wouldn't I? No
matter what, if your durable power of attorney is to be used in
Florida it is very wise to check to make sure it meets all of
Florida's requirements.
Here are some of the provisions that I believe should be placed
in a durable power of attorney: They are, in no particular
order:
1. Provisions to sell, mortgage, encumber and convey real
estate;
2. Provisions to enter safe deposit boxes, to negotiate, cash,
make bank deposits, receive and otherwise use and handle checks,
drafts, and money market funds.
3. Deal with the department of motor vehicles, Internal Revenue
Service, post office, social security administration, veteran's
administration, Medicare and those agencies that provide welfare
services including but not limited to S.S.I., S.S.D.I., and
Medicaid.
4. Provide for the ability to make gifts and to do whatever may
be necessary and appropriate to carry out estate planning for
the purpose of affecting the wishes of the Maker of the durable
power of attorney.
5. It is sometimes appropriate to have a durable power of
attorney address such matters as Medicaid planning and
disability planning, including the ability to create or modify
an existing trust, if there is one. Also, in Medicaid planning,
it is absolutely necessary to have a durable power of attorney
provide the authority to establish, create and where necessary,
amend or modify certain types of trusts, known as qualified
income trusts, elective share trusts, irrevocable income
producing trusts, special needs trusts and spousal sole benefit
trusts. Additionally, there is something known as a lifetime
personal needs contract and it is necessary that a durable power
of attorney permit the attorney in fact to execute one of these
for the maker or creator of the durable power of attorney.
6. I also recommend that the durable power of attorney contain
language that is similar to the language used in a designation
of health surrogate document, which will enable the attorney in
fact to make health care decisions, if necessary. This is not
critical, if there is a living will with health surrogate
designation document, but sometimes, it's wise to be extra
cautious.
7. I also like my clients to have durable powers of attorney
that contain a provision for the right of the attorney in fact
to obtain a do not resuscitate order, should that unfortunate
situation arise.
8. The durable power of attorney that I prefer to use contains
language that allows the attorney in fact to execute documents
that are held in a Totten Trust and also a living trust.
Every now and then, someone will tell me that they know they
need a durable power of attorney in the event something
catastrophic happens, but they do not trust their children or
heirs sufficiently to give them the awesome powers that are
contained in a durable power of attorney. I do not know how to
deal with this. Please remember, however, that this is not any
type of honor to bestow on someone. A durable power of attorney
imposes a burden and what must be done is to try and determine
who can best fulfill that burden. If you cannot trust your
children, or any other person for that matter, with the powers
to be given by a durable power of attorney, then you should
discuss this you’re your attorney.
ADVANCE DIRECTIVES
Florida Statute 765 provides that an Advance Directive is a
written witnessed document or oral statement in which
instructions are given or expressed concerning any aspect of a
person’s health care. This includes, but is not limited to a
living will, the designation of a health care surrogate or the
making of an anatomical gift. An Advance Directive that has been
executed in another state but that complies with the law of the
State of Florida will be recognized as being valid. The Statute
also provides that any competent adult (over the age of 18) can
make a living will or written declaration for the purpose of
directing the withholding or withdrawal of life-prolonging
procedures in the event that such person has (1) a terminal
condition; (2) an end-stage condition; or (3) is in a persistent
vegetative state. A living will must be signed by the principal
(the one making it) in the presence of two subscribing
witnesses, one of whom is neither a spouse or blood relative of
the principal. If the principal is physically unable to sign the
living will , one of the witnesses must subscribe the
principal’s signature in the principal’s presence and at the
principal’s direction. Further, another section of Chapter 765
provides that a person may designate a surrogate to make health
care decisions for a principal. A designation of health care
surrogate shall be signed by the principal in the presence of
two subscribing adult witnesses A person unable to sign his/her
name may, in the presence of witnesses, direct that another
person sign the principal’s name as required by the statute. The
person who has been designated as the surrogate shall not act as
witness to the signing of the document designating him/her as
surrogate. At least one person who is a witness must not be
either the principal’s spouse nor blood relative.
I strongly advise that the Advance Directive be witnessed by 2 persons and that it also be acknowledged by a notary public.
The matter of Advance Directives has taken on great importance
and significance because of recent actions by the Florida
Legislature and Governor and by the U.S. Congress and the
President in regard to a woman who was determined to be in a
vegetative state, here in Florida. It is not my intention to
discuss what was or was not proper in regard to the woman’s
care; nor to discuss who was right or who was wrong in regard to
the method of that treatment and care. The position that the
husband took and the position that the parents and other family
members took, has been and will probably continue to be the
subject of much debate—but not here. I must say, however, that
regardless of one’s personal views on how the woman should have
received care and treatment, the intervention of the Florida
Legislature, the Governor, the U.S. Congress and the President,
was an unwarranted intrusion into the matter. I believe that we
all must be concerned when elected officials decide to get
involved in personal and individualized matters. This is
especially true where such officials are responding to a large
number of letters, phone calls and emails, which, in the end,
did nothing but to further inflame what in my opinion was a
highly personal matter that was best left to the Courts. In
fact, it is interesting to note that even after all the
interference from elected officials, one of whom claimed that to
be able to diagnose the woman’s condition not by ever personally
examining her, but by looking at televised photos of her, every
Court of Law that examined the matter, concluded that the
original trial Judge ruled correctly. The Courts—State and
Federal—all refused to get drawn into the political issues; and
for that, and regardless of how you believe that the matter
should have been concluded, we should all be thankful.
I believe that everyone should consider having an Advance
Directive, that it should be in writing and that it should be
prepared by the attorney of your choosing. I know there are many
pre-printed forms, but I am a believer in using the services of
professionals when it comes to decisions that involve great
impact. After all, these are such highly personal matters, that
it behooves us to take the utmost care to be sure we have fully
and carefully set forth what we want. |
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