Power of Attorney
Dear Len & Rosie,
I have a half-sister in poor health. I live about 1,500 miles away from her. She wants me to get everything that is left in her estate when she dies. Her husband died and left everything to her and they had no children. In addition to me, she has two half-sisters. One of them is very ill and another is quite well. She has listed my name only on her will, and my name is on all of her bank accounts as a joint tenant. She inquired about giving me a power of attorney, but her lawyer said that is was not necessary. Is this going to work?
It’s not a bad start. Your half-sister’s attorney is right. She does not have to give you a power of attorney to enable you to inherit her assets when she dies. Powers of attorney expire on death and have nothing to do with how a deceased person’s assets are paid out. But your sister should consider giving someone a power of attorney. If she names you as an “attorney-in-fact” or “agent” on a durable general power of attorney, then you would have to legal authority to make legal and financial decisions on her behalf. Without a power of attorney it’s likely she would have to be placed under a court-supervised conservatorship if one day she became unable to manage her own affairs and protect herself and her finances from people seeking to take advantage of her.
Powers of attorney are a useful means of keeping her private affairs private, and allowing people she trusts to help her if she needs help some day. If she is concerned that she’ll lose control of her affairs if she signs a power of attorney, she can sign a “springing” power of attorney under which your authority to act on her behalf kicks in only if one or two physicians declare that she can no longer make her own decisions. A power of attorney is a “just in case” document that every adult should have.
When your sister dies, everything that she holds in joint tenancy with you shall become yours, automatically, without probate. All you will need to do is to take a certified copy of her death certificate to each bank to remove her name from her accounts. If she owns stock or other securities, it’s best to seek the assistance of a stock broker instead of trying to learn about all of the paperwork needed by each corporation’s stock transfer agent.
If your sister owns a home, then it will probably have to pass through probate upon her death. She could put her home into joint tenancy with you, but as a general rule, we do not recommend this. If you were on the deed to her home, it would become subject to the claims of your creditors. Also, if she wanted to sell her home, you would have to sign the deed too, and it’s possible you could refuse. So if we were writing to her instead of you, our advice to her would be to stick with her will, and let her estate be subject to probate, or create a revocable trust to avoid probate and make things easier for you upon her death.
Len & Rosie
Dear Len & Rosie,
In 1993 my late husband and I went to an attorney and requested a family trust be drawn up for our family. My husband and I owned stock in a large corporation, and in 1993 the stock was retitled in the name of my husband and I as trustees of our trust.
A few weeks ago I called the corporation to change my address and notified them that my husband is deceased. I asked them to remove his name from the stock certificate. They said they would send me a form to fill out and have my signature “medallion guaranteed,” and that I had to send the form, along with a certified copy of my husband’s death certificate, back to them. They also said I had to send the stock by registered mail, insured at two percent of the stock’s value.
My question is why? We had the trust drawn up to cover all of this.
You have fallen victim to what I call “The Living Trust Myth”. You would be surprised how many others find themselves in the same situation. Many people believe that if they have a living trust drawn up, there will be no work to do when they die. This is simply not true.
After the death of one or both of the trustees, there is much to do. At the very least, title to all trust assets must be changed to remove the dead spouse’s name as trustee. The corporation wants you to fill out their paperwork and get a medallion signature guarantee (available at most banks) because that’s what they always require to transfer stock certificates. You had to do the same thing when you put the stock into the trust, and the same paperwork would have been necessary if your husband had a will. A broker can complete the paperwork for you if you need help.
You should review your trust with an estate planning attorney. Your trust may be an A/B trust that requires a split between a survivor’s trust and a decedent’s trust upon the death of the first spouse to die. If so, it is essential that you get everything appraised, prepare an accounting, and fund the various subtrusts to help shelter your assets from federal estate tax. You may also have to file a federal estate tax return for your husband, if the gross value of his assets is worth more than $2,000,000.
This should not turn you off on the idea of having a trust. The real advantages of a living trust are that it saves time and almost always saves money. Assets held in a trust do not have to go through probate, which can take as long a nine to fifteen months to complete. Attorney fees in probate are set by statute as a percentage of the value of the estate and are very expensive compared to the cost of administering a trust.
Len & Rosie
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 996-4505, or on the Internet at lentillem.com. Len also answers legal questions each weekday on The Len Tillem Show, a podcast available via iTunes, Facebook, www.spreaker.com/user/lentillem and lentillem.com.