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I received a call the other day. It was from a woman whose father is in intensive care. Her father had gone to an attorney before he went in the hospital to have a power of attorney drafted and a new Will. While the power of attorney was prepared quickly, the Will was not. The attorney’s excuse was that his secretary was on vacation and therefore he could not prepare the Will. I still am not sure what that meant. Did it mean that the secretary drafted the attorney’s Wills or did it mean that the attorney could not type or use a computer? Either way, nothing happened, and the father went into intensive care. I reviewed the power of attorney. Though the father is a Maryland resident, the power of attorney does not comply with the new Maryland statutory power of attorney act (effective October 1, 2010). Moreover, there is no provision allowing for gifts to his daughters. The daughters are prohibited from self-dealing, which may or may not be a good thing, and are prohibited from changing the beneficiary designation of a retirement account. However, they could create and fund a trust, with any provision they desire. There is also a mention of a wife, while the father was not married. It appeared to me to be a form document that the attorney pulled off a computer or form book, without any thought whatsoever for the father’s particular situation. This would be a bad situation no matter what. But, in this case, with the assets involved, it will be a very expensive result, because there could have been some estate tax planning done at this time, which could save thousands of dollars, if not, hundreds of thousands of dollars, but without a gifting provision in the power of attorney, no gifts can made. And given that the father wanted to change his Will, the failure of the attorney to produce a document, while his secretary was on vacation, means that the father’s wishes may not be honored. The lesson: Planning at the last minute or in a hurry is never a good idea. The best estate planning is done when someone is healthy, well before any illness. That allows for time to consider all options and to make reasoned decisions without time pressure. It also allows for estate tax planning tools and techniques to be implemented, that can save hundreds of thousands of dollars, if not millions. And, I believe that estate planning is an evolutionary process. Your estate plan must be reviewed and revised as your situation changes, or when your assets grow, or when the law changes. |