Attorneys, like other professionals, rely on complete and accurate facts in order to make appropriate recommendations to their clients. No one would expect a doctor to make a diagnosis without running the appropriate tests and a lawyer cannot give proper legal advice without the proper fact-finding. This article will discuss things that your estate planning/elder law attorney is likely to ask and why he or she is asking so many questions.
Perhaps the most important question to ask any client is, “Why did you come to see me?” The attorney is trying to establish the client’s goals with respect to her estate plan. Is she coming in because her will is 25 years old and she thinks it is about time to update it? Did the client recently receive an unfavorable medical diagnosis, such as cancer or early-stage dementia? Does the client want to change his beneficiaries? Does she have a child that needs special attention, such as a special needs child, a child going through divorce or heading towards bankruptcy? When an attorney knows why the client contacted her, she is in a better position to formulate a plan that will accomplish the client’s goals.
The attorney will want to know something about the client’s health. This could be a very important question. For instance, if the person has recently been diagnosed with early stage Alzheimer’s disease, the attorney knows that the client may need long-term care in the not-too-distant future. There are only three ways to pay for long-term care:
2. Long-term care insurance; and
The attorney will want to look at the resources that the client has to pay for the considerable expense of long-term care and devise an appropriate plan. For most middle-class clients this will include Medicaid planning.
The attorney will also ask questions about the client’s children. How old are they? Are they in good health? Are they appropriate to act as executors, trustees and agents on behalf of their parents when the need arises? Also, the attorney will be interested to find out if the child has any issues that need to be addressed in the estate plan. The attorney will also want to know about the client’s grandchildren and how they will be factored in to the client’s plan.
The attorney will also wish to look at documents that have been previously prepared for the client. Some of the questions that will enter the attorney’s mind are: When was the will prepared? Are the executors and trustees named in the will still appropriate? Should the client be considering a revocable or irrevocable trust? Does the client’s power of attorney have all of the powers that should be contained in the document? Are the power of attorney agents still appropriate to handle the client’s affairs?
It is very important for the attorney to understand how the client’s assets are titled and whether the beneficiary designations are up-to-date. By way of example, Mary came to see an elder law/estate planning attorney. She told the attorney that she had three children and she wanted them to receive equal shares of her estate. She wanted the attorney to draft a will to reflect her wishes. The children’s names are Susie, Johnny and Lorenzo. The attorney looked at her assets and discovered that her house is in a life estate and upon her passing the house will pass to Susie. The house is worth $500,000. Johnny is a joint owner of her bank accounts and thus, he will receive all of the bank accounts. The bank accounts are worth $100,000. Susie and Johnny are the beneficiaries of Mary’s life insurance policy that is worth $100,000. Lorenzo is not listed on anything.
In this scenario, nothing will pass through Mary’s will. Although Mary has stated that she wants her children to be treated equally, Susie will get the house worth $500,000 and $50,000 of Mary’s life insurance. Johnny will get $100,000 from Mary’s bank accounts and $50,000 from the life insurance. Lorenzo will get nothing. Although this is admittedly an extreme case, it is not uncommon for the client’s actual estate plan to deviate from the estate plan that the client wishes to have. It is very important for the attorney to look at how assets are titled and to have the client check her life insurance and qualified retirement plan beneficiaries. The client should get confirmation of her beneficiaries in writing so that if the paperwork gets lost by the institution, she has confirmation.
There are other ways in which an estate plan can go awry. Mark set up a trust in his will for his special needs child, who is receiving SSI and Medicaid. When he went to the attorney, his bank accounts were in his sole name. However, subsequently Mark’s banker advised him that he is better off setting up his accounts to be transferable upon death (a TOD account). The banker told Mark that this would allow him to avoid probate. Unfortunately, avoiding probate means that nothing will pass through Mark’s will and his special needs child will not have her assets placed into the special needs trust created in the will. Thus, she will receive the bank accounts outright and her Medicaid and SSI benefits will be placed in jeopardy. If Mark subsequently went to an elder law/estate planning attorney, the attorney could see that his accounts are transferable upon death and the appropriate action to remedy the situation could be taken. The TOD designation could be taken off the accounts. In the alternative, if Mark wants to avoid probate, the assets could be placed into a trust that would provide for a special needs trust for his daughter upon Mark’s passing.
The creation of an appropriate estate plan requires that the attorney asks a lot of questions and that he thoroughly understands the client’s situation. Through the careful and thoughtful obtainment of information, the attorney can make sure that the client’s estate plan is suitable to her needs and objectives.