01:32:40 Sunday 18th February 2018

Potential Protection from Estate Plan Issues and Elder Abuse

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Estate Planning

There is a trend of increasing estate plan challenges as Baby Boomers age.  Spouses, sons, daughters and family members report a rise in the number of cases of estate planning fraud, and physical, verbal and mental abuse of loved ones who are no longer in a position to handle their affairs and independently take care of themselves.  In fact, the rise in reported cases and lawsuits has created a growing body of law to address such issues, now known as Elder Law.    

Family members nationwide are now seeking legal counsel in a variety of areas related to their elderly relatives.  An Estate Plan is so important, particularly once one is in need of medical treatment or hospitalization.  Estate Plans in most states will include, at a minimum: A Living Revocable Trust, A Durable Healthcare Power of Attorney and Pour Over Will, which provide basic protections of elder relatives whenever misfortunes may occur in their affairs and/or health.    

One of the most often reported situations is where an elder relative may be hospitalized, which created the necessity for decisions about patient care by an authorized Patient Advocate.  In the absence of a Durable Healthcare Power of Attorney, the medical practitioners and the hospital administrators are at a loss, because no one is authorized as the Patient Advocate to make vital decisions about treatment and care. 

Issues concerning ownership and transfer of Real Property held in ownership by elder relatives may require costly Probate proceedings and effectively “freeze” assets indefinitely, as the time when liquidity is most needed to assist to defray mounting medical bills and long-term care costs.  An Estate Plan that includes The Living Revocable Trust helps to minimize family conflict and frustration about assets that are not available to fund the care of the elder relative.  

Estate Planning is a tool that individuals and families may use to avoid a multitude of challenges in handling the personal affairs and assets.  The most common Estate Planning mistakes are also listed for reference.  


#10: Failure to Consider Use of Life Insurance

Life insurance can serve many important, practical functions in your estate plan and the administration of your estate, including a source of liquidity (cash) to pay cash bequests or to pay off debts.

A properly prepared Irrevocable Life Insurance Trust can take life insurance out of your taxable estate and reduce estate taxes due from your loved ones.

#9: Failure to Consider Protective Provisions for Possible Dysfunctional Beneficiary Issues

Your trust may include protective provisions in case someone you may leave property to, or a contingent beneficiary, may have (or develop in the future) issues that make it inappropriate for them to have unrestricted control of money.  These provisions would authorize the Trustee to restrict distribution of monies consistent with the beneficiaries’ best interests.

#8:  Choosing the Wrong People for Fiduciary Responsibilities

This important issue may need to be addressed by updating a trust that has already been established. Although you select trustees and successor trustees with great care when creating your trust, as years go by and relationships change, it may be appropriate to change those persons originally chosen.

#7: Failure to Consider Estate and Gift Tax Issues

Federal estate taxes may be due in the settlement of your estate. Your beneficiaries and heirs will be responsible for these taxes.  Persons of great wealth will want to be pro-active about estate tax liability with an estate plan.  Also, U.S. citizens who were not born or naturalized in the United States need to know how their estate may be taxed, and plan accordingly.

#6: Failure to Plan for Contingent Beneficiaries

You may be certain about your intended beneficiary.  You may also be confident that your first named trustee will make decisions and distribute your assets according to your wishes.  However, specifying contingent beneficiaries is important, particularly if your intended beneficiary is no longer available or appropriate by reason of health, age, mental fitness or even death.

#5: Leaving Assets Outright to Primary and/or Contingent Beneficiaries

It may be advisable to leave assets for distribution to beneficiaries in installments rather than in a lump sum in order to preserve the assets.  Although it may be hard to contemplate, your primary beneficiary may not be alive to receive a lump sum.  Therefore it is important to consider distribution in installments to contingent beneficiaries. Thinking through myriad possibilities is very important in sound estate planning.  

#4: Not Preparing a Health Care Power of Attorney and Medical Directive

Every person 18 years of age or older needs a Healthcare Power of Attorney, clearly identifying and empowering their intended patient advocate, and identifying alternates who may make medical decisions on their behalf.  Privacy laws have greatly restricted release of patient medical information unless clear authorization is present. Obviously, this is critical in the event of an accident, illness or hospitalization of your loved ones.

#3: Not Following-Through with Funding the Trust

A trust can only govern property that is actually transferred into the trust.  Property that is not transferred into your trust by deed of title, assignment  or other documentation will not convey subject to the terms set out in the trust.  This is critical with real property, bank accounts, investment accounts and financial assets.

#2: Not Having a Revocable Trust

Assets in your estate that are not held in a trust at the time of your death will require a probate proceeding.  Probate is costly, takes time, may create stress for your loved ones, and is entirely avoidable.  A revocable trust allows you to make changes at any time; adding or deleting provisions or beneficiaries.  Therefore, the revocable trust is the recommended vehicle for good estate planning.

#1: Not Having an Estate Plan at All

You don’t want to leave your loved ones with frozen assets, family strife, and courts making decisions about your estate. In addition to expense and time, without a trust or a will, the courts where you resided at the time of your death will make decisions about your assets, and those decisions will be based on the laws of that jurisdiction.   Clearly, those decisions may not necessarily follow your wishes in regard to distribution of assets.

This article, Potential Protection from Estate Plan Issues and Elder Abuse, was written by Attorney Richard P. Bourne-Vanneck of St. Thomas, U.S. Virgin Islands. © Copyright 2014 Law Offices of Richard P. Bourne-Vanneck. All Rights Reserved

Richard P. Bourne-Vanneck is a graduate of Yale University Law School, and a licensed attorney in the State of New York and the U.S. Virgin Islands.

Attorney Bourne-Vanneck is a member of the American Bar Association, the ABA Section on Taxation, and the ABA Section on Real Property, Trust and Estate Law, member of the Virgin Islands Bar Association, National Academy of Elder Care Attorneys. He has presented cases before the United States Supreme Court, the United States Tax Court, the Virgin Islands Supreme Court and courts of jurisdiction.

Trusts & Estate Planning, Business & Corporate Law, Tax Law & Planning, Elder Law, Real Estate Transactions. 

Law Offices of Richard Bourne-Vanneck

9800 Buccaneer Mall Suite #9
St. Thomas, U. S. Virgin Islands 00802

Call 340-777-5849 or 866-679-3689

Email: richard@rpbvlawoffices.com

“Estate Planning is about helping families to care for loved ones, to preserve and to transfer assets in their estates.”

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