Tuesday, July 22, 2014
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Estate Planning 101

By Attorney Marlene S. Cooper

SECRETS THAT SHOULD BE TOLD

            One of the primary reasons that living trusts are favored is that, unlike a will, they are not subject to public inspection.  A will becomes a public document when it goes through probate.  On the other hand, a living trust is not subject to probate and thus the grantor can keep his or her affairs private.  Privacy however, can be carried too far.  It is important that a person creating an estate plan tell those who need to know (1) that an estate plan has been created, (2) the identity of persons appointed as successor trustees, agents under a power of attorney and health care directive, and guardian for minor children, and (3) where to find the estate planning documents.

The following situation illustrates what can happen if information concerning an estate plan is not disclosed to successor trustees and agents.  I once received an urgent call from a young lady who explained that her grandfather, whose estate plan I had prepared a couple of years prior, was in the hospital with a serious illness.  One of his daughters (her aunt) had been to the hospital and was “raising Cain” with the doctors and other family members.  This aunt had also tried to gain access to his house and assets.  The problem was that this aunt was a known drug addict and, in general, a “bad actor”.  Because she was legally the next of kin, however, she was seeking to assert authority over her father’s affairs.

            Fortunately for my client, he had foreseen the potential problems that this daughter could present.  He had created an estate plan that put control of his financial affairs and medical decisions in the hands of his mature, responsible granddaughter (the person that called me) through his living trust, power of attorney and advance health care directive.  The problem was, however, that he had never disclosed those facts to the granddaughter.  Had he told her about the power he had given her in his estate plan and told her where to find the relevant documents, a lot of chaos could have been avoided.

            On the subject of privacy, it should be noted that a relatively recent federal law concerning privacy of medical information may affect some existing estate plans.  Many common provisions in living trusts, powers of attorney and advance health care directives require that a doctor render an opinion as to a person’s mental and/or physical capacity in order for others to assume power over that person’s affairs.  However, under the federal law, called the Health Insurance Portability and Accountability Act (HIPAA), many doctors and health care providers will not provide the necessary opinions or access to medical information to third parties without an express waiver of the HIPAA privacy provision.  Thus, if you have an estate plan that is more than a couple of years old, you may wish to have a HIPAA waiver prepared and included in your estate plan.  © 2012 by Marlene S. Cooper.  All rights reserved.  (Marlene S. Cooper, a graduate of UCLA, has been an attorney for over 30 years.  Her practice is focused entirely on estate planning, estate administration and probate.  You may obtain further information at www.marlenecooperlaw.com, by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. , by phone at (626) 791-7530 or toll free at (866) 702-7600.  The information in this article is of a general nature and not intended as legal advice.  Seek the advice of an attorney before acting or relying upon any information in this article).

Category: Investments


 

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