Power of Attorney Concept - paperwork representing a Power of Attorney, with a magnifying glass over, highlighting Power of Attorney.

What Your Family Needs to Know About Powers of Attorney

Powers of Attorney Concept - paperwork representing a Power of Attorney, with a magnifying glass over, highlighting Power of Attorney.

In this series, I will get right to the point about what I think your family needs to know about important topics in elder law, estate planning, and estate administration. My goal is to provide information so that you can make more informed decisions and clarify your estate planning goals. In this article, the topic of discussion is Powers of Attorney. 

What is a Power of Attorney?

A Power of Attorney is an agreement that someone called a “principal” signs to allow another person or entity, called an “agent,” to make certain decisions for them.

There are Different Types of Powers of Attorney

There are different types of Powers of Attorney. In Pennsylvania, different sections of our law cover types of Powers of Attorney. Chapter 54 of the Decedents, Estates and Fiduciaries Code covers Health Care Powers of Attorney while Chapter 56 covers Financial Powers of Attorney. 

In my office, I prepare separate documents for these. In the past it was common to see these powers combined and I still review a fair amount of documents that were drafted that way. 

I like these to be separate because you may wish to choose a different people to manage your health care decisions and financial decisions, and, as stated above, the standards for both documents are governed by different sections of law. 

Powers of Attorney are Essential for All Adults

I cannot overstate the importance of having Powers of Attorney. Every time I review a client’s estate plan, I review these documents to make sure they are in order. 

Married couples are often surprised when I tell them that they need Powers of Attorney and that they may not be able to make important financial decisions for each other without them. Here’s a simple test – ask yourself, do you have a retirement account (an IRA or 401k for example)? If you answer yes, you need a Power of Attorney so that your spouse can make important decisions involving that account in the event you become unable to do so yourself. 

Young adults are also surprised to learn that it is wise for them to have Powers of Attorney as well. Even if young adults do not have an accumulation of financial assets to plan for, it is important for them to name the people they trust the most to make medical decisions for them in case they become incapacitated in the future.

You Do Not Lose Power to Manage Your Affairs

When you sign a Power of Attorney, you allow someone else to make decisions for you. You do not give up the power to make these decisions for yourself while you can. You are simply allowing someone else to step in and help you. It is important to understand that in this case, you are not limiting your own power by giving someone else power. 

Some Documents are Better Than Others

As I have alluded to earlier in this post, not all Powers of Attorney are written the same way. They are not all of equal quality. I have to draft new Powers of Attorney for clients because their current documents do not grant their agent enough power to protect their assets in the event of a nursing home crisis. 

Pennsylvania law has specific criteria that must be met in the document in order for the agent to be able to gift, or transfer assets out of the principal’s name. Most documents that I review allow the agent to make what we call limited gifts but in order to execute most plans to protect assets, we need the document to allow the agent to make unlimited gifts.

I have found trying to save a few dollars by purchasing do-it-yourself documents online or through big box office supply stores to be a particularly bad idea. These documents tend to lag behind important changes in the law because they aren’t updated frequently or quickly enough. The end result is that the client has to pay twice for an appropriate document and therefore has spent more than they needed to by trying to save money.

Trusting Your Agent is Key

The most important factor in choosing an agent for your Power of Attorney is trust. You need to have unwavering trust that the person you are choosing will make decisions that are in your best interest.

The law provides some safeguards regarding the behavior of agents by imposing certain duties on them when they act for you, however, this is no substitute for making sure that you choose someone you trust to fill this role. 

Banks May Not Accept Old Powers of Attorney

From a practical perspective, the ultimate goal of having a Power of Attorney is that it will work when your agent has to use it. In other words, you expect that when your agent provides your Financial Power of Attorney to the bank, the bank will put it on file and allow the agent to write checks for you and take care of other important banking activities. 

Banks and other financial institutions tend to be suspicious and require more intense scrutiny of documents that were not prepared recently. Powers of Attorney that are 5 years old, for example, may garner heightened scrutiny, and Powers of Attorney that are 10+ years old may be considered “stale.” Sometimes, after review by their legal department, banks choose not to accept these older documents. 

The best way to ensure that your Power of Attorney will be accepted is to have it reviewed every 5 or so years and to keep it updated when the law changes. This will ensure that when it is presented to the bank, the most current form is being used. 

Although age of the document should not matter because a Power of Attorney should be acceptable as long as it was executed according to the law at that time, it’s best to err on the side of caution here. Instead, focus on what’s important – getting the result that you want, which is making sure your document will be accepted when your agent needs to use it.

Portrait of a family with two young children posing together outside

New Blog Series: What Your Family Needs to Know About Estate Planning, Elder Law, and Estate Administration

As an attorney, I often walk a fine line between listening to my clients describe what they want and on the other hand, explaining to them what they need. It can be difficult sometimes to give meaningful advice and yet not steer the client to the decision I think they should make. 

In many cases I find that clients can initially be uncertain about what it is that they want. I attribute this to families not having access to information to help them understand key issues for their planning even before our first meeting. 

As I continue to grow in practice I also continue to further my commitment toward providing truly client-centered service. To me, client-centered service begins with clients sharing their planning goals with me so that I can show them the legal tools we can use to achieve them. My experience has revealed that education is the most effective tool to assist in bridging the gap between goals and reality, creating a plan with the client that accomplishes their goals and also meets their needs. 

It is because of my commitment to education that I decided to create this new blog series – What Your Family Needs to Know. 

In this series, I will get right to the point about what I think your family needs to know about important topics in elder law, estate planning, and estate administration. My goal is to provide information so that you can make more informed decisions and clarify your estate planning goals.

It is important to note that the contents of these articles are not to be taken as legal advice but rather to serve as a starting point in becoming educated. You should consult an attorney if you need advice on your specific matter. If you are located in northeastern or central Pennsylvania and would like to speak with Cardinal Estate Planning about your case, we would be happy to setup a free consultation.  

Probate vs. non-probate assets concept: Coin stack on international banknotes with house model on table.

Probate vs. Non-probate Assets: What’s the Difference and Why Does it Matter?

Probate vs. non-probate assets concept: Coin stack on international banknotes with house model on table.

One of the most common questions clients ask us is what is the difference between a probate and non-probate asset?

Most clients own a mix of assets that fall into both categories or would fall into both categories with the passing of their spouse. As you will see below, it is very important to understand the difference between these assets so that your plan functions as intended when you pass away. 

Probate Assets

Probate assets are the items that you own solely in your name and which do not pass by way of beneficiary designations when you die. These are called probate assets because when you pass away, they will pass through probate to your beneficiaries if you have a Will, or to whomever your state law names as your intestate heirs if you do not. 

Some typical examples of probate assets are as follows: bank accounts with no joint owner, real estate with no joint owners with the right of survivorship, and life insurance policies, retirement accounts, and other investment accounts that do not have valid beneficiaries named. Accounts that you have failed to name a beneficiary for, or have chosen to name your estate as the beneficiary for are also probate assets. 

Non-probate Assets

Non-probate assets are the opposite of probate assets because when you die they do not require probate to wind up in the hands of your beneficiaries. These assets pass directly to another person or entity when you pass away and are not subject to the terms of your Will or the law of intestacy.

Examples of non-probate assets include real estate held joint tenants with right of survivorship or tenants by the entireties, bank accounts with joint ownership, life insurance policies, retirement accounts, and other investment accounts with valid beneficiary designations, accounts that have transfer on death or payable on death designations, and accounts that are owned by a trust. 

Why Does it Matter?

In order to make sure that your plan works the way you want it to, it is critical that you understand what assets that you own will pass through your probate estate and which will not. 

A common mistake that I see is that clients take the time to draft a Will which names multiple beneficiaries, but then they add just one child onto a bank account as a joint owner. Typically, this is done so that the chosen child can write checks for them or otherwise help manage their primary bank account. The downfall is that they have innocently thwarted the estate plan they created by doing so because at death only the child with joint ownership of the bank account will have any legal right to benefit from it.

Another thorny issue is that a parent may owe inheritance tax on part of their own bank account if their joint owner child passes away unexpectedly before them. It is important to understand that in Pennsylvania, non-probate does not mean non-taxable for purposes of the Pennsylvania Inheritance Tax. Unfortunately, just as a child would have to pay inheritance tax on the inheritance they receive from a parent, a parent would have to do the same on what they “receive” from their child under these circumstances. 

Are You Ready to Plan?

As you can see, there are many issues to consider when crafting your estate plan. Whether you are creating your plan for the first time, interested in reviewing your current planning, or just have questions about estate planning we would love to meet you. Our goal is to help make your entire planning process as simple as possible. 

We recommend registering for one of our free workshops to get your questions answered and learn more about our process. 

Contact an Experienced Pennsylvania Estate Planning Attorney

If you have questions about probate vs. non-probate assets, contact an Estate Planning attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Senior Man In Dressing Gown Using Walking Frame Being Helped By Female Nurse With Digital Tablet

How to Choose a Professional Home Care Provider, Continued

Senior Man In Dressing Gown Using Walking Frame Being Helped By Female Nurse With Digital Tablet

When choosing a home care provider, it’s important to ask for references. Suitable references include doctors, discharge planners and other patients or their family members. Be sure to contact the references and ask questions such as:

  • Do you refer clients to this provider often?
  • Do you and the provider have a contractual relationship? If so, do you require that the provider meets special standards for quality care?
  • What feedback have you received from patients under the care of this provider?
  • Do you know if this provider has cared for people with conditions similar to those of my loved one? If so, can you provide me with contact information for these individuals?

To learn more about finding and choosing the right professional home care provider, visit the National Association for Home Care & Hospice website.

The cost of care.

Of course, one of the factors you must consider in obtaining professional care for your loved one is the cost. Here is a link to the Genworth Cost of Care Survey, which provides median costs for home care, assisted living care and nursing home care across the country.

Contact an Experienced Pennsylvania Elder Law Attorney

If you have additional questions or concerns regarding finding the right home care provider, contact the experienced Pennsylvania Elder Law attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Smiling senior patient sitting on wheelchair with home care nurse supporting her.

How to Choose a Professional Home Care Provider

Smiling senior patient sitting on wheelchair with home care nurse supporting her.

Perhaps you have realized that you simply can’t continue to provide adequate care to your loved one. Or maybe your loved one lives far away and your responsibilities at home won’t allow you to serve as caregiver. In either case, you may need to turn to a professional home care provider. The question is, how do you choose the right person for this important task?

How Do I Select the Right Home Care Provider?

The National Association for Home Care & Hospice (NAHC) has created a valuable checklist with questions you should ask providers and others who may be familiar with the provider’s history. Here are some of the questions NAHC recommends.

  • How long has the provider served the community?
  • Does the provider have literature explaining its services, eligibility requirements, fees, and funding sources? Does the provider have what is known as a “Patient Bill of Rights” outlining the responsibilities and rights of the provider, caregiver and patient?
  • How does the provider choose and train its caregivers?
  • Are therapists or nurses used to evaluate the patient’s needs? If so, do they consult with the patient’s family members and physicians?
  • Does the provider include the patient and members of his or her family in developing a care plan? If changes to the level of care are needed over time, are patients and family members involved in making these decisions?
  • Is the patient’s course of treatment documented? Does the patient receive a copy of this documentation, and do the caregivers update it as changes occur? Does the provider take the time necessary to educate family members on the care being provided to the patient?
  • Does the provider assign supervisors to oversee the quality of care patients receive in their homes? If so, how often do these supervisors make visits? Who can the patient and his or her family members contact with questions or complaints? How does the provider follow up on and resolve any problems that might arise?
  • What are the provider’s billing procedures? Does it furnish written statements explaining all of the charges? Are payment plans available?
  • What procedures does the provider follow in case of an emergency? Are the provider’s caregivers available 24 hours a day, seven days a week?
  • How does the provider ensure patient confidentiality?

Next time we’ll discuss the importance of asking providers for references, and what to ask them.

Contact an Experienced Pennsylvania Elder Law Attorney

If you have additional questions or concerns regarding finding the right home care provider, contact the experienced Pennsylvania Elder Law attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Side view of a happy senior woman smiling while drawing as a recreational activity or therapy outdoors together with the group of retired women.

Finding the Right Nursing Home: Don’t Rely Entirely on the Five-Star Quality Rating System

Side view of a happy senior woman smiling while drawing as a recreational activity or therapy outdoors together with the group of retired women.

The Five-Star Quality Rating System was created in 2008 by the Centers for Medicare and Medicaid Services (CMS). It has become a popular tool for families to find a quick summary of a given nursing home’s overall level of quality. CMS posts its ratings on the medicare.gov website.

Unfortunately, the accuracy of this rating system is open to question. An investigation by the New York Times, in particular, reveals a number of shortcomings. Let’s begin by looking at how the system operates.

Ratings are based on a combination of self-reported data from 15,000-plus nursing homes, as well as on-site examinations conducted by state health inspectors. A nursing home’s overall score, its star rating, depends on the results of the inspection, the amount of time nurses devote to residents, and the quality of care received by residents.

To evaluate the rating system’s reliability, the New York Times created a database with millions of payroll records to analyze the amount of hands-on care residents actually received in nursing homes. The Times also examined 373,000 reports by state inspectors, and the financial statements 10,000-plus nursing homes submitted to the government. Additionally, The Times was able to access data that is not readily available to the public.

This investigation revealed that nursing homes had submitted inaccurate information, thereby making themselves look safer and cleaner than they actually were. Other erroneous information included exaggerated levels of staffing, underreporting the use of potentially hazardous antipsychotic drugs, and minimizing the number of health problems and accidents among residents. Worse, when even highly rated nursing homes were inspected by CMS investigators in person, they were just as likely to fail the inspection as pass it; information submitted by nursing home operators and owners was rarely audited; nursing homes may have been tipped off before unscheduled, impromptu inspections; and inspectors frequently minimized violations they discovered at highly rated nursing homes, which allowed these facilities to maintain their stars.

All of this is troubling, to say the least. It suggests that a nursing home’s five-star rating should be taken with a grain of salt, or perhaps even a shakerful. It also reminds us of the importance of closely scrutinizing every aspect of a given nursing home oneself. AARP provides a detailed checklist to help you evaluate a nursing home on a wide range of crucial criteria.

Contact an Experienced Pennsylvania Elder Law Attorney

If you have additional questions or concerns regarding finding the right nursing home, contact the experienced Pennsylvania Elder Law attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Senior couple getting married at the beach

Five Estate Planning Tips for Couples Marrying Later in Life

Senior couple getting married at the beach

Here are some factors to consider when marrying, or remarrying, later in life.

Should You Have a Prenuptial Agreement?

In most situations, the answer is yes, particularly if you and your betrothed have children from previous marriages, a disparity in financial resources, or substantial assets. When couples marry, assets and income typically become community property. A prenuptial agreement makes provisions for dividing assets if the marriage ends. You should discuss your prenuptial agreement well in advance, and each party should have their own attorney. 

Consider Trust Planning

When couples marry later in life, it is not unusual for each spouse to have their own ideas about who should inherit their assets. Without wills that are “mirror image” of each other, substantial wealth could be passed to the family of the spouse who dies last. 

Even when a collaborative plan is put in place, mirror image wills may not be a complete solution. Trusts can help in this situation if they become irrevocable at the death of the first spouse. Couples who marry later in life should consider trust planning to ensure that their intentions are carried out. 

Update Existing Estate Plans

It is important to update your estate plan when you get married, whether you’re marrying late in life or not. Doing so helps ensure your assets will be distributed according to your wishes when you pass away. You’ll want to review your powers of attorney, of course, and pay particular attention to your beneficiary designations on all legal and financial documents. If your ex-spouse is still named as beneficiary on, say, your life insurance policy or retirement plan, the ex could inherit these assets rather than your current spouse.

At Cardinal Estate Planning we recommend that you review your estate planning documents every five years, however, in the case of life changing event such as a remarriage, it is important to review your planning right away.

Protect Income Streams

Marriage can impact your income from Social Security, Medicaid, the Veterans Administration, alimony, and more. If you have a dependent loved one with special needs, his or her eligibility for public benefits could be impacted as well. 

Don’t Ignore the Possibility of Needing Expensive Long-Term Care

Most of us will require some form of long-term care after age 65. For couples marrying later in life, the obvious question is who will pay for it. If you and your future spouse are creating a prenuptial agreement, you may want to include language requiring each of you to purchase long-term care insurance (assuming such policies are affordable in your case). With the annual cost of a private room in a nursing home averaging over $175,000 in Pennsylvania as of the writing of this article, you can’t afford to ignore the possibility that one or both of you will eventually need long-term care.

Contact an Experienced Pennsylvania Estate Planning Attorney

If you have questions about marrying later in life or, contact an Estate Planning attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Shot of a senior couple working on their estate plan at home

The Benefits of an Irrevocable Living Trust

Shot of a senior couple working on their estate plan at home

An Irrevocable Living Trust generally cannot be modified or terminated except under certain limited circumstances. It requires the grantor to transfer assets into the trust and give up his or her rights of ownership to these assets. So why would you want to create an Irrevocable Living Trust, as opposed to a Revocable Living Trust? 

Irrevocable Living Trusts, when properly designed and implemented, can provide an almost unsurpassed level of asset protection from the high cost of long-term care. And, like Revocable Living Trusts, they spare your family the delays, frustration and expenses of the probate process. Other reasons to utilize an Irrevocable Living Trust include:

  • Tax minimization
  • Avoiding the risks of placing assets in the name of your children
  • Protecting assets against predators, creditors and lawsuits

While many different types of Irrevocable Living Trusts are available, in essence all of them retitle your assets. Assets placed in an Irrevocable Living Trust can include a business, cash, investments, life insurance policies, and more.

Why is an Irrevocable Living Trust better than a Revocable Living Trust at protecting assets against the cost of long-term care? 

Under current Medicaid laws, assets in a Revocable Living Trust are not fully protected. Why? Assets in a Revocable Living Trust are available to the Grantor. Medicaid may determine that those assets be used to pay for long-term care. This is not the case with an Irrevocable Living Trust, as long as it is properly designed and implemented to take into account the latest laws governing Medicaid eligibility. 

How does an Irrevocable Living Trust protect your children’s inheritance?

When you transfer assets directly to your children, they typically become outright owners of the assets. They also become responsible for the risks associated with owning the assets. A properly drafted and implemented Irrevocable Living Trust will avoid:

  • Loss of inheritances due to lawsuits, divorce, remarriage, or the inability of your children to manage money on their own
  • Gift tax liability 
  • Income tax consequences for your children
  • Problems with getting financial aid to cover educational and other expenses for your grandchildren

Contact Us

To determine if an Irrevocable Living Trust is right for you and your family, contact the experienced Pennsylvania Estate Planning attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Senior couple meeting with elder law attorney

The Difference Between a Living Will and a Health Care Power of Attorney

Senior couple meeting with Estate Planning attorney

Many people are confused about the difference between a living will and a healthcare power of attorney. A living will specifies life prolonging treatments you do or do not want in the event you either suffer from a terminal illness or are in a permanent vegetative state. It does not become effective unless you are incapacitated and, generally, requires certification by your doctor, and another doctor, that you are either suffering from a terminal illness or have been rendered permanently unconscious. So if you suffer a heart attack, for instance, but do not have a terminal illness or are not in a permanent state of unconsciousness, a living will does not have any effect. You would still be resuscitated, even if you had a living will indicating that you don’t want life prolonging procedures. A living will is only used when your ultimate recovery is hopeless.

For situations where you are incapacitated and unable to speak for yourself, but your condition is not dire enough to make your living will effective, you should have a health care power of attorney or health care proxy. A health care power of attorney is a legal document that gives someone else the authority to make health care decisions for you in the event you are incapacitated. The person you designate to make these decisions on your behalf will do so based upon what you would want, so of course you must be sure to talk with them in great detail about your wishes. 

Another way to think about a living will.

We sometimes refer to a living will as a Love Letter. What do we mean by that? By making your health care wishes known and clearly describing them to your family, you not only ensure your desires will be carried out, you also spare your loved ones the trauma of having to make a critical medical decision on their own. Even though your ultimate recovery may be hopeless, making critical medical decisions can lead to infighting and permanently damage relationships between family members; stressful battles between hospital staff and family; and haunt your loved ones with guilt for years to come. 

In effect, a living will is a final, thoughtful expression of love for your family and your hopes for their emotional well-being in the future. Of course, a living will can’t do any good unless your physician and loved ones know about it. This may be a very difficult conversation to have, especially with your family, but letting them know what you want, and why, truly lessens their burden and helps them come to terms with your desires in advance and with minimal stress. We have the experience and understanding to counsel you on the best ways to begin such a conversation, and then, design an effective living will capable of ensuring your wishes are carried out and protecting your family emotionally.

Contact Us

If you have additional questions or concerns regarding living wills and health care power of attorneys, contact the experienced Pennsylvania Elder Law attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.

Head shot portrait happy three generations of women hugging, touching cheeks, smiling little girl sitting on couch between young mother and mature grandmother, posing for family photo at home

Why Do People “Put Off” Estate Planning?

Head shot portrait happy three generations of women hugging, touching cheeks, smiling little girl sitting on couch between young mother and mature grandmother, posing for family photo at home

The statistics are rather alarming. In 2005, 50 percent of Americans had a will; today, only 32 percent of us have one. Meanwhile, only one in three Americans over the age of 55 has a durable power of attorney, and a mere 41 percent of this same demographic has advance health care directives. 

Why is this? According to statistics culled from a range of sources, Americans lack estate plans for the following reasons:

  • 47 percent say “they haven’t gotten around to it”
  • 29 percent think they “don’t have enough assets to leave to anyone”
  • 49 percent don’t believe their assets are worth enough to worry about estate planning

Other common explanations include being too busy, thinking estate planning is only for “old” people, and not wanting to think about the inevitability of death.

In truth, proper estate planning isn’t just about what happens to one’s assets after death, it’s about taking control of one’s life. Everyone can benefit from having an estate plan. At the very least, your plan should include all of the following documents:

Last Will and Testament

A last will and testament allows you to accomplish a number of important goals. You can name your beneficiaries and specify the assets you want them to receive; name a guardian for your minor children; and choose the person you want to settle your estate (known as the Executor). 

Power of Attorney for Health Care

Also known as a health care proxy, this important legal document allows you to name a person you trust to make health care decisions on your behalf if you are no longer able to make them on your own. 

Power of Attorney for Finances

A power of attorney for finances is similar in concept to a power of attorney for health care. It allows you to designate another person to make decisions about your finances, such as income, assets, and investments, when you can longer make them yourself.

Living Will

This allows you to express your wishes regarding what medical treatments you want, or do not want, in an end-of-life situation. A living will differs from a power of attorney for health care in that it details your specific wishes, whereas a power of attorney for health care allows someone else to make health care decisions for you. 

HIPAA Release

A HIPPA release lets you choose who can receive information about your medical condition. Hospitals and medical providers can be prosecuted for violating the Health Insurance Portability and Accountability Act (HIPAA) if they reveal your medical information to people not named in your HIPPA Release. 

Estate planning can help you accomplish many other goals as well. For example, trusts can protect your privacy and enable your estate to avoid the delays and frustration of probate. Trusts can also stipulate when and under what conditions your heirs will receive their assets, which is helpful if you think your children are not mature enough to manage an inheritance. An irrevocable trust can protect your assets against threats like long-term care costs, divorce, creditors, lawsuits, and more.

As you can see, proper planning allows you to seize complete control of your affairs while you are alive and after you pass away.

Contact Us

If you have additional questions or concerns regarding estate planning, contact the experienced Pennsylvania Estate Planning attorney at Cardinal Estate Planning by calling 570-252-9043 to schedule an appointment.