JOY OF LAW

AVOIDING LEGAL PROBLEMS IN LIFE AND BEYOND: SEMINAR B

Professor Dagmar Halamka

dmhalamka@gmail.com

Today’s Topics

• First Overview of Seminar A• Three Techniques of Estate Planning (May Utilize Several)

• Wills• Trusts• Ancillary Living Documents

• Pre-post nuptial agreements• Separate property• Durable power of attorney for financial matters

(DPAFM)• Durable power of attorney for health care (Power

of Attorney and Living Will = Advanced Health Care Directive)

• Long Term Care• Reverse Mortgages (safer now?)• Factlets

ADVANTAGES OF A REVOCABLE LIVING TRUST

• Avoid probate• Other reason: Lifetime asset management

Living Trust Advantages

• Reduce/Eliminate Estate Taxes – With an A-B Living trust, you and your spouse can each use your $5.34 million federal estate tax exemption. This lets you pass on to your beneficiaries up to $10.68 million estate tax-free and with no probate. The highest estate tax is presently 40%.

• Provide for Surviving spouse – The surviving spouse has complete control over TRUST A. In addition, he/she can receive the income (and principle, if needed for certain living expenses) from TRUST B.

Living Trust Advantages (Cont.)

• Control For First To Die – After the first spouse dies and the common trust has been divided into Trust A and Trust B, no changes can be made to the provisions of TRUST B giving the first spouse to die complete control over who will eventually receive the assets in TRUST B.

• Estate Tax-Free Appreciation of Trust B – The assets placed in TRUST B are valued and taxed only when the first spouse dies. There will be no re-valuation or estate taxes paid on any appreciation of these assets later when the surviving spouse dies and the assets in Trust B are distributed to the beneficiaries.

Living Trust Advantages (Cont.)

• Protection Of Assets If Catastrophic Illness Strikes– In the event of catastrophic illness or injury of the surviving spouse, the trust can be written to protect the assets in TRUST B so only the assets in TRUST A will need to be “spent down” to qualify for valuable government assistance

• Does not affect the way you control or manage your assets

• Private• Revocable (by agent?)

Who’s In Charge?

Stay in Charge with Powers of Attorney

Two Questions You Need to Answer

• Who will speak for you?• How do you get decisions you want?

Staying in Charge of Your Finances

Durable Power of Attorney for Financial Matters (DPAFM)

Durability

• Called a Durable Power of Attorney for

Financial Matters

• Must be durable to last beyond loss of capacity

• Must include required language

Required Language

• “This power of attorney shall not be affected by subsequent incapacity of the principal.”

• Or similar language

DPAFM Powers

• Need to be spelled out – Read carefully

• Create, amend or revoke trust

• Make gifts

• Gifts to agent

• Loans to agent

• Change survivorship interests

• Change beneficiaries

DPAFM Powers (Cont.)

• Still need DPAFM if you have Living Trust

• Living Trust applies only to trust assets• Agent under DPAFM can be given power to

amend/revoke Living Trust

• Avoids conservatorship ($3,000)

Many Duties, One Purpose

• Agent’s Purpose─ Protect Principal’s interests

• Agent’s Duties─ Acts only in Principal’s interest─ Keeps assets separate─ “Prudent person” test─ Keep records─ More… should have financial savvy

• Agent right to reasonable compensation

Durable Power of Attorney for Health Care

• Provides for the appointment of an agent/attorney-in-fact

• Principal must be of sound mind and 18 years of age• Allows for a statement of medical treatment

preferences• Effective upon the Principal's mental incapacitation• Properly witnessed, dated and signed• Usually does not require services of an attorney• As of January 1', 1992' effective indefinitely

Durable Power of Attorney For Health Care (PAHC)

• Health Care Directive (Living Will) = Advanced Health Care Directive (in CA)

• ADVANCE HEALTH CARE DIRECTIVE: CALIFORNIA POWER OF ATTORNEY FOR HEALTH CARE (Appointing an Agent to Make Health Care Decisions)

Choosing Your Agent

• Will this person─ Communicate well with you?─ Ask questions and get answers?─ Make choices you would make?─ Stand up for You?─ Be available?

• Agent must be at least age 18 and have legal capacity

• Co-agents?

What Does Your Agent (or successor agent) Do?

• Duties─ Makes decisions for you─ Follows your instructions and wishes─ Cannot make decisions you disagree in

Changing Your Mind

• Can revoke part or all─ Principal must have capacity

• Divorce or annulment

Handout – Statement of Desires

Statement of Desires, Special Provisions and Limitations for Durable Power of Attorney for

Health Care• Discuss with physician or social worker for hospital• “If I develop any incurable, progressive, or degenerative disease

stated to be terminal with respect to outcome (not with respect to time) and no cure is available and treatment only prolongs dying, I request that my physician follow my guide regarding life support and life sustaining intervention listed below. If my desires are not known and life sustaining or life support procedures are utilized in an emergency situation, I request that my desires be respected and followed once they are known to my professional care team. I do not want to be kept alive in a vegetative state.”

Handout – 25 Suggested Topics to Discuss With Your Health Care Agent• “Before having your health care agent sign any forms, you

should discuss your beliefs and wishes with him or her. When instructing your health care agent about your wishes in the event you become incapacitated and he/she needs to make health care decisions, we suggest you consider the following questions. We suggest no particular answers. Each person should answer these questions based on his/her own beliefs and convey those beliefs and wishes to his/her health care agent. Any other wishes or desires that you feel your health care agent should know should also be given to him/her so that they can carry out his/her responsibilities as you would wish.”

Factlets

1. Pensions earned in California are taxable in state of residence at time of receipt of pension

2. Internal Revenue Code Section 529a) A plan operated by state or educational institution to

promote saving for college (ex: child or grandchild or anyone)

b) Earnings are NOT subject to Federal Tax and usually NO STATE TAX

c) Withdrawals now include the cost of the purchase of any computer technology and internet access for beneficiary of account while in school

3. No 3 day rule

Factlets (Cont.)

4. Implied warranty of merchantability

5. Home deliveries

6. Landlord-Tenant Law

7. Take wine home from restaurant

8. Written estimate for auto repairs signed by YOU

Factlets (Cont.)

9. Joint and several liability vs. joint liability

10. Renters insurance

11. Paid in full

12. Employee or independent contractor?

13. Extended warranty – buy or not?

Handout: Statement of Desires Life Support

For each procedure, choose ‘Yes,’ ‘No,’ or ‘Uncertain’• Pacemaker – Any device that substitutes for the normal

heart beat• Peritoneal Dialysis/Kidney Dialysis – alternative means

of filtering poisons from the body when the kidneys fail• Respirator – A breathing machine attached to a tube

inserted into the lungs through the nose or mouth• Cardiopulmonary Resuscitation (CPR) – Intervention

given by man, machine, or drugs when the heart and/or lungs stop working

Handout: Statement of DesiresLife Prolonging or Life Sustaining Procedures

• Feeding Tube for Food or Fluid• Hypodermoclysis for Nutrition or Food• Intravenous (IV)• Antibiotics• Cancer Therapy – Radiation and Chemotherapy• Transfusion• Medical Treatment• Surgery• Paramedic• Uniform Gift Act – Organ Transplant• Autopsy, complete or selective• Participate in research

Handout: Statement of DesiresLife Prolonging or Life Sustaining Procedures

• Feeding Tube for Food or Fluid – A tube placed into the stomach or bowel to give fluid and/or nutrition

• Hyperdermoclysis for Nutrition or Food – Placing fluid under the skin outside a vein with a needle. The body will absorb this fluid

• Intravenous (IV) – tubes for feeding and hydration• Antibiotics – to treat pneumonia or any other infections• Cancer Therapy

─ Radiation – X-ray treatments given for tumors or cancer─ Chemotherapy – cancer medicine given by mouth or

intravenously• Transfusion – blood or blood products given into the vein

Handout: Statement of DesiresLife Prolonging or Life Sustaining Procedures

• Medical Treatment – Diagnostic Procedures and Tests – Further tests and procedures to monitor my failing condition

• Surgery – An operation only if it provides for my comfort and dignity• Paramedic – For transport to an acute hospital with CPR in progress• Uniform Gift Act – Organ Transplant – Donating body parts – specify

parts, if usable• Autopsy, complete or selective – To confirm my diagnosis (circle

one)• I consent to Participate in research; i.e., chemical studies, drug

studies and procedures approved by a Research and Human Subjects Review Committee, before or after death. Consent may be given by my Attorney-In-Fact.

Handout: Statement of Desires Other Concerns

I wish:1. Caring and supportive nursing and medical care to

relieve pain and suffering including narcotics to relieve pain even if respiration is depressed.

2. Food and fluids to be offered as long as I am conscious to take them by mouth and then moist sponges to moisten my lips to relieve the sensation of dehydration

25 Suggested Topics (Cont.)1. Do you think it is a good idea to sign a legal document that says what medical

treatments you want and do not want when you are dying? (This is called a “living will”

2. Do you think you would want to have any of the following medical treatments performed on you?a. kidney dialysis (used if your kidneys stop working)b. cardiopulmonary resuscitation, also called CPR (used if your heart stops

beating)c. respirator (used if you are unable to breathe on your own)d. artificial nutrition (used if you are unable to eat food)e. artificial hydration (used if you are unable to drink fluids)

3. Do you want to donate parts of your body to someone else at the time of your death? (This is called organ donation.)

4. How would you describe your current health status? lf you currently have any medical problems, how would you describe them?

5. If you have current medical problems, in what ways, if any, do they affect your ability to function?

25 Suggested Topics (Cont.)6. How do you feel about your current health status?7. lf you have a doctor, do you like him or her? Why?8. Do you think your doctor should make the final decision about any medical

treatments you might need?9. How important is independence and self-sufficiency in your life?10. If your physical and mental abilities were decreased, how would that affect

your attitude toward independence and self-sufficiency?11. Do you wish to make any general comments about the value of

independence and control in your life?12. Do you expect that your friends, family, and/or others will support your

decisions regarding medical treatment you may need now or in the future?13. What will be important to you when you are dying (e.g., physical comfort, no

pain, family members present, etc.)?14. Where would you prefer to die?15. What is your attitude toward death?16. How do you feel about the use of life-sustaining measures in the face of

terminal illness?

25 Suggested Topics (Cont.)17. How do you feel about the use of life-sustaining measures in the face of

permanent coma?18. How do you feel about the use of life-sustaining measures in the face of

irreversible chronic illness (e.g., Alzheimer's disease)?19. Do you wish to make any general comments about your attitude toward

illness, dying, and death?20. What is your religious background?21. How do your religious beliefs affect your attitude toward serious or terminal

illness?22. Does your attitude toward death find support in your religion?23. How does your faith community, church, or synagogue view the role of

prayer or religious sacraments in an illness?24. Do you wish to make any general comments about your religious background

and beliefs?25. What else do you feel is important for your agent to know?

25 Suggested Topics (Cont.)

If, over time, your beliefs in any area change, you should inform your health care agent. It is also wise to inform your health care agent of the status of your health when there are changes such as new diagnoses. In the event you are informed of a terminal illness, this, as well as the ramifications of it, should be discussed with him or her. How well your health care agent performs depends on how well you have prepared him/her.

Professor Dagmar Halamka dmhalamka@gmail.com