Estates in Jeopardy
Each year thousands of nurses, hospice, social workers and doctors work with patients who are terminally ill. It is not their job to attend to the legal needs of these patients, but they can do a great service to the patient and their family by identifying the problem.
Jim was 53 years old when the doctor diagnosed him with stage IV cancer. At the time, he was mentally alert, but physically declining. He was married and had two teenage children. Jim had always been in good health, and so estate planning was never a priority. After his diagnosis, the family was coping with treatment options and not eager to think about meeting with a lawyer. He died without a will.
It was only after his death that his realized the consequences. Many of their assets had been in Jim’s name and the banks would not allow her to access them. She had to borrow from her parents to pay for Jim’s funeral. In order to get some money to live on, she had to hire a lawyer to open up a probate estate. The lawyer told her that by law, 50% of the funds would go to their children. Since they were under 18, however, the money could not be paid to them directly. Instead, she would need to hire a lawyer to open a guardianship estate for them. To use the money to pay for their care, she would need to ask permission from the court each year. The legal steps needed after a person dies can be daunting, and it can be worse when the family has not done any planning.
It didn’t need to be this way
This example is familiar to all probate and estate lawyers. As a lawyer, it is frustrating to be the one who has to tell a grieving widow about all the legal difficulties she faces. Care providers are in a unique position to help them avoid these headaches. In recent years, hospice agencies, and many other professionals have begun to embrace caring for the family as a vital part of their mission.
Planning can be a tremendous benefit for the surviving family, but is often a relief for the patient as well. Often the dying patient experiences a great deal of anxiety over the future of his family. Taking steps to assure them that things have been handled, can give them peace of mind.
So, how can you recognize the danger signs for a patient at risk? And what can you do about it?
Here are some things you can watch for:
People with children under 18
People often don’t know about the “50% surprise” described in the example at the top of this article. If a person dies without a will, the state statute provides that 50% of the estate goes to the surviving spouse and 50% goes to the children. Although the goal is to protect children, it is contrary to the choice most people would make. Most people choose to leave everything to the surviving spouse so that they can use all of the funds to care for the family in the way that they see fit. What makes this problem worse, is that money left directly to a child under 18 must typically be administered through the guardianship courts. This means that the surviving parent must obtain court permission for expenditures, hire a lawyer and provide annual accountings.
The problems are magnified for single parents, because there is no spouse to make decisions for the children. Without a will, the deceased parent does not even get the opportunity to give their opinion on who should care for the children. When that decision is made by a court, the guardian still must spend money pursuant to court instructions.
Patients who have outlived their families
Only children and others with small families can often outlive their relatives. Without an estate plan, a person who dies with no family runs the risk that her estate may “escheat” to the state. Even if it is possible to track down a distant relative to receive the estate, it may pass to a relative that the patient barely knew. Even clients who do not care about who gets the money when they die, usually are adamant that they do not want it to go to the state. Some clients get a lot of pleasure out of selecting a charity or individual to receive their estate. Free from the concern that they will outlive their money, some of these patients are able to truly enjoy using the money in their final days.
Patients who are estranged from family
Patients who have become estranged from their families can also be at risk for an estate disaster. There is a risk that their estates may pass to people that they expressly do not want to receive it. For some, estate planning is way to bury the hatchet and indicate that they really do wish to remember a relative with some gift or remembrance. These patients also may not be able to count on family members to make funeral arrangements or burial plans.
The fight-waiting-to-happen family
With some families it is clear that there will be a fight about the estate. Often the fight becomes apparent even before the patient dies. A poor estate plan can virtually guarantee a long and messy fight after death. This kind of fight is often the very last thing that the parent wants. It is not always possible to avoid these fights. Nevertheless, clear directions from the dying patient and accurate documents can serve to minimize conflict. A lack of directions and paperwork almost always has the opposite effect.
People often believe that dementia patients cannot make an estate plan. This is not always true. Depending on the degree of the dementia, it may be possible to create a plan which will save the patient and family endless headaches. If a patient in early dementia is able to sign a power of attorney for health care and property, they can often avoid the need for a guardianship. A properly drafted power of attorney may even allow an agent to protect some assets from Medicaid for the benefit of a community spouse.
What Can You Do?
Identifying these people is good, but the goal is to actually help them. Fortunately, almost every problem described in this article can be avoided with fairly simple and inexpensive planning. So, how can you make a difference? Here are 3 things you can try:
Ask if they have a will or trust agreement
People are often confused about what they have and don’t have. They may have signed a power of attorney when they entered the hospital, but they don’t really know if they were supposed to do something else. This is the time to ask them (or better yet a spouse) to dig out the documents and see if they are in order. Family members are often hesitant to ask about these things because they don’t want to seem like they are interested in the money at a difficult time. But an outsider can ask the question without seeming greedy.
Maintain a list of excellent estate lawyers
Your list should include people who can respond on short notice, who are willing to come to the patient, and who are trustworthy. Ideally, you should suggest several attorneys rather than just one. The client can choose the lawyer that works best for them. Also, if one is not available, the family will have other options.
Encourage them to get it done
Procrastination does not stop at a certain age. Care providers are often in a position to recognize the urgency of the situation even when the patient does not. Gentle encouragement can make the difference.
People often do not want to discuss estate planning because they believe it is about death. Really, though, estate planning is about the living. Making a plan can give a measure of peace and even happiness to a dying person. It can save the surviving family from a financial headache on top of the grief they are already experiencing. And it can serve as a remembrance of the person who passed away. In short, the process is about the same things that we value during our lives.
Eric Parker is a partner at the law firm of Stotis & Baird Chartered. He practices law in the areas of estate planning, probate, elder law, litigation and guardianship. His office is in Chicago, but he also routinely meets with clients outside the office if it is difficult for them to get downtown. He frequently speaks to community groups on end of life care issues. If you are interested in having Eric speak to your organization feel free to contact him at firstname.lastname@example.org