Sunday, June 21, 2009

Getting the Show on the Road!

Having established my blog weeks ago, it's Father's Day and I'm finally ready to start posting. My hope with this blog is to keep readers up-to-date regarding developments and trends in estate planning, elder law and related topics. I also intend to offer commentary on interesting current events, political issues and cultural trends. I certainly hope to spur conversation and debate.

A short introduction: I am a partner with Blustein, Shapiro, Rich & Barone, LLP, a 10-attorney law firm in Middletown, New York. Our firm is soon to be moving to a brand-new building at 10 Matthews Street in Goshen; we anticipate a move sometime in early fall. I'm particuarly excited about the move because in our new space we will have a dedicated classroom where we will hold estate planning and elderlaw workshops for clients, the general public, and professional advisors. The classroom will comfortably host 22 people, and I anticipate that it will be used frequently.

Our firm web site is My practice is concentrated in the areas of estate planning, elder law and business planning (e.g. forming business entities and designing effective and practical business "exit" strategies for business owners).

The big news among the New York trusts & estates and elderlaw bar is the impending implementation of a new general durable power of attorney form. The new form, to be effective September 1, 2009, presents a sweeping overhaul of the existing statutory "short form" power of attorney. The new form includes an optional "major gifts rider" that is required to be signed by the principal if he or she wishes to authorize the agent to make gifts of the principal's assets. Such gifting powers are frequently used in "crisis Medicaid planning," and are, in my view, an essential feature.

While powers of attorney are useful planning tools, our preference is for dealing with a person's incapacity is for a well-drafted and funded revocable or irrevocable trust. Trusts simply provide more flexibility and planning protection than a power of attorney. Perhaps most important, trusts can include a "disability panel," of individuals who are authorized by the Trustmaker to declare the Trustmaker as "disabled," and transfer authority to a successor Trustee named by the Trustmaker. Powers of attorney have no mechanism for removing a principal's authority or control, often leading to scenarios where a person who suffers from "diminished capacity," may act irrationally. In but one recent example, a woman told me that her father, who sufferred from moderate dementia, has been going to the bank and giving his new healthcare aide substantial cash gifts. Even though the daughter is the agent under the father's power of attorney, there is no power to take away the father's authority and prevent him from continuing this pattern of financially harming himself. The only alternative is a costly, stressful and potentially contentious court guardianship proceeding.

If instead the father had in place a revocable living trust with a disability panel mechanism, the panel could have determined that the fahter is incapable of managing his financial affairs, with legal authority automatically transferred to a successor Trustee designated by the father in the trust document. All in all, a far better plan that leads to a more satisfactory result.

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