Who Are The Necessary Parties Involved In An Estate Plan?
The critical parties to an estate plan are the attorney and the client. The attorney-client relationship is of paramount importance, with conversations and other interactions subject to privilege and confidentiality. The client should feel comfortable telling the attorney everything they need to know, without other parties in the room, or elsewhere, influencing their decisions.
When I work with a client, I will schedule a meeting to talk with client by themselves, without anyone else present (with the possible exception of a spouse), so I understand what the client’s hopes, wishes, and aspirations are for their estate plan and/or for any other work we are going to do with them.
As the work progresses, we will be in contact with other members of the client’s “team,” such as their spouse, financial advisor, insurance agents, or anyone else the client trusts for advice to manage their money and long-term planning.
There other people who should be aware that the estate planning process is taking place but are not necessarily part of the estate planning decisions. Depending on the situation, they should be aware that there is an estate plan being put in place. For example, the proposed Executor of a Last Will and Testament should be aware that they have been nominated for that role, but beyond that, they do not necessary need to be informed about every single decision my client makes about who benefits from their estate plan until the final documents are completed.
In certain situations, having some family members, caregivers, or close friends of the client involved creates pressure on the client. Any time there is a risk that the beneficiary is sway my client to make a certain person part of their estate or to pressure them to do anything they are uncomfortable with, I will get involved and attempt to separate that person from the process. I do not want a situation to exist undermines the client’s free will to do what they would like with their assets and their planning.
Do Most People Make Provisions For Mental Incapacity In Their Estate Plan?
For the most part, I would say no. Mental incapacity is something that, even more than death, does not get talked about enough. To clarify, mental incapacity occurs when a person lacks the capacity to make decisions about their personal care and their assets. This can occur in many ways, but the most common I see in my practice, is through a physical condition that creates unconscious or a longer term decline due to a dementia. Dementia might be brought on by multiples causes such as a nutritional issue, medication side effect, or a degenerative condition such as Alzheimer’s. In those situations, having a plan in place before mental incapacity occurs is critical.
The legal dangers of the mental incapacity are twofold. One, is that they are now incredibly vulnerable to financial predators. This occurs in many ways. Often someone outside the family trying to con the victim them out of money or trying to get the victim to invest in fraudulent schemes. I have seen cases where someone previously unknown to the victim will come of the woodwork, convince the victim to marry them, and then use that marriage as a platform to take their money.
This financial abuse often happens within families as well. I have seen cases where children or other close family members will take that person and execute a power of attorney, even when the person has a mental incapacity robbing them of the ability to understand what they signed, and enter into their bank accounts and slowly empty out victim’s money. Even without a power of attorney, the family member can take the victim’s debit card and enrich themselves at the victim’s expense. They will withdraw large sums of money and make large purchases. By the time it is discovered, it is often too late. Once fraud is discovered, the victim’s accounts might be completely drained, and the person who drained them out has probably already spent it. It is often very difficult to ever recover that money.
It is critical to plan early. One common approach is to execute a power of attorney and appoint a person you trust to manage your finances in case of incapacity. It is not perfect for several reasons. The person acting on behalf of the mentally incapacitated person has no obligation to make reports to the family members or to the court. While convenient, there are few ways to tell if the person holding the power of attorney is abusing the power of attorney.
Another planning tool is for the client to setup a trust with a provision that is triggered upon the client’s mental incapacity, as determined by two or more doctors. At that point, another trustee, typically a spouse, close family member, or a financial institution, will step in and manage those trust assets. In this situation, I recommend a neutral trustee, such as financial institution or professional trustee, to minimize the chance of fraud.
Finally, should the person have a long-term and irreversible incapacity, it is often necessary to have a court appoint someone as a conservator. This may be a family member, friend, or a person chosen by the court. In Georgia, this person must post a bond as well as make reports to court about the person’s finances, in order to minimize the chance of fraud.
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