Like many of you who may be reading this blog, I have experienced the trauma of having a child diagnosed within the Autism Spectrum. This blog is not limited to those who have children within the Autism Spectrum, as the advice I am providing is also applicable to other types of diagnoses which might render your child a special needs child.
In this series of blogs with regard to guardianship in Pennsylvania, I have discussed the nature and process of guardianship of the person. The guardian of an incapacitated has general and specific legal obligations and duties to the incapacitated person. The general obligations include: bringing lawsuits on their behalf in the case of injury; assertion of the rights and interests of the incapacitated person; respect for the wishes and preferences of the incapacitated person; participation, where appropriate in the development of a plan of support services to meet the incapacitated person’s needs; and encouragement of the incapacitated person to participate in the management of his or her personal affairs, if feasible.
Undue influence claims are more likely in families suffering from internal conflict, or where family members are excluded. Unfortunately, the proliferation of do-it-yourself estate planning and access to beneficiary designations has made it even easier to deprive others of their inheritance. If you are the victim of inheritance fraud you have rights and need to take immediate action to protect your inheritance.
A do-it-yourself estate plan can lead to a number of unintended consequences as demonstrated by a recent Florida Supreme Court case, Aldrich v. Basile. In this case, Ms. Ann Aldrich wrote her own Will on a pre-printed legal form. Ms. Aldrich specifically listed each item of her property in her Will, including the account numbers for her financial accounts. The Will left each item of property to Ms. Aldrich’s sister, Mary Jane Eaton; and if Ms. Eaton did not survive, then Mr. James Aldrich was designated as the alternate beneficiary.
One of the unfortunate aspects of estate administration is addressing problems caused by out-of-date or incomplete estate plans. Wills, Trusts and other documents need to be reviewed on a regular basis to address changes in family structure or applicable tax laws. News coverage on the Last Will and Testament of actor, Philip Seymour Hoffman, has drawn attention to some pitfalls associated with failing to update an estate plan.
Guardians For After Born Children.
A fundamental problem with Mr. Hoffman’s estate plan was the omission of his two children born after the Will was drafted. This resulted in a failure to name guardians for Mr. Hoffman’s after-born minor children. Section TWELFTH of his Will only appoints a guardian for one of his three children. At a minimum, failing to name a guardian for all of your children creates uncertainty. In families that are already experiencing discord, this uncertainty can cause disputes and litigation. It may also result in people, whom you do not know or approve, having a significant role in the lives of your children.
Omitted Children May Receive Unequal Distributions.
In general, failure to address after-born children in an estate plan may also have significant financial and tax impacts. Some states, such as New Jersey, have statutes for children omitted in a will, but these statutes may provide little in the way of tax or asset management planning. New Jersey’s omitted child statute, N.J.S.A. 3B:5-16, also has few provisions addressing imbalances in non-probate assets such as IRAs, Payable on Death Accounts, etc.
Asset Structure.
Depending on the size of Mr. Hoffman’s Estate, and the extent of his non-probate estate planning, his estate plan could result in significant taxes. For example, the Will only provides a Trust that terminates entirely when his child is 30 years old. If the Trust receives substantial assets from the Estate, terminating the Trust could result in additional estate taxes on subsequent generations. Application of the generation skipping transfer tax exemption to a dynasty trust should have been considered.
Estate planning documents should provide effective asset management strategies. Trusts are useful not only for tax planning purposes, but also for longer term asset management purposes. Distributing trust corpus to a beneficiary damages the creditor protection and asset management benefits of a trust.
Conclusion
In summary, it is crucial to review an estate plan on a regular basis to identify any issues related to family structure or tax issues. The review should include: 1.) the terms of the will and any trusts or beneficiary designations; and, 2.) the agents under a power of attorney and advance directive. Failure to keep an estate plan up-to-date can cause significant problems and be very costly for an estate.
The age of majority in Pennsylvania is 18. This means that at age 18, not only can an individual legally vote and drink alcohol, he or she has the right to make legally binding decisions on his or her own behalf. This is true regardless of whether or not an individual has a disability. However, if a person is unable to make decisions for him or herself as a result of an injury or for any other reason, the court may be petitioned to judge the person to be “incapacitated” and appoint a guardian to make decisions for that person.
At some point in our lives, many of us are chosen to serve as a Power of Attorney for an elderly or an incapacitated person who may need assistance with their day to day affairs, whether due to infirmity, immobility, or issues with their mental capacity. Prior to taking actions utilizing the Power of Attorney, it is a good idea for an individual to have ground work laid out to properly memorialize any actions taken while utilizing the Power of Attorney to avoid potential future legal action. As a litigator who works extensively in probate litigation, I have seen many instances where a lawsuit is filed due to alleged abuses of a Power of Attorney. As such, below are some simple rules to follow when utilizing a Power of Attorney.
Just because a Will may be unfair to different members of a family its lack of perceived fairness does not invalidate the Will in the absence of additional evidence. It is well settled that if the testator has the capacity to execute a Will, then in that event, it is not the duty of the Court to rewrite the Will, but instead, to enforce it in its current format. The test of capacity to execute a Will is quite a low standard. In general, the testator need only understand the property which he possesses and which he wishes to dispose of and the individuals to whom he wishes to bequeath this property. Provided the testator meets this simple two pronged test, and the distribution is not the subject of an outside influence which is unlawful in nature, then the bequest will stand. This might be despite the fact that the decedent’s bequest may be extremely unfair to other potential heirs of the Estate.
Often times, in order to simplify writing checks on behalf of an elderly individual or one whose capacity may be failing, individuals may agree to open a joint account which would then permit the person who is providing assistance to write checks on behalf of the individual who actually has deposited the funds into the account. This typical joint account with right of survivorship is subject to the Multi Party Deposit Account Act. This Act has important implications with regard to matters wherein the subject account may be a substantial asset of the Estate once the true owner of the account passes away. It is for these reasons that you should be aware of the Multi Party Deposit Account Act.
Powers of Attorney are important documents that assist in the management of your assets, and are typically used if you are rendered unable to manage your own financial affairs. Any individual (regardless of citizenship) who owns overseas property faces unique issues when establishing a Power of Attorney for these assets. Optimally, a local attorney in the country where the property is located should draft a limited Power of Attorney to address management of the foreign property. Depending on individual circumstances this may not be realistic or possible.
