A lucky winner recently won $320 million in the lottery. This article looks at an example of a prior winner’s mistakes. The next article in the series will examine strategies for lottery winners.
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You may already be familiar with the basic concept behind a Power of Attorney. In fact, you may have already executed a Power of Attorney (POA) and/or been named as the Agent under a POA for one reason or another. Unfortunately, a Power of Attorney is also one of the most frequently abused legal documents. One reason for that is that all too often the person creating the POA does not truly understand the power and authority conveyed in the document.
Power of Attorney Basics – What Is a Power of Attorney?
At its most basic, a Power of Attorney is a legal document that allows you (referred to as the “Principal”) to grant another person (the “Agent”) the authority to act on your behalf in legal matters and transactions. The type and extent of the legal authority you grant to an Agent depends on the type of POA you execute. Failing to understand the extent of the authority granted in a POA is a common, and potentially very dangerous, estate planning mistake.
General vs. Limited Power of Attorney
A POA can be either general or limited. A general POA grants your Agent almost unlimited power to act on your behalf. This means that your Agent may be able to do things such as withdraw funds from your financial accounts, sell property and assets owned by you, and even enter into contracts in your name. Although the law places some limits on the actions of an Agent with a general POA, you should never give someone a general POA if you have any doubt about their trustworthiness.
A limited POA only grants to your Agent the limited, and specific, authority enumerated in the POA. For example, you might grant an Agent the specific power of attorney to act on your behalf during the sale of your vehicle while you are out of the state on a business trip.
Durable Power of Attorney
You also need to know the distinction between a traditional and a durable Power of Attorney. Historically, the authority granted to an Agent in a POA automatically terminated upon the death or incapacity of the Principal. As you may well imagine, however, the possibility of becoming incapacitated is a common motivation for executing a POA. In other words, many people create a POA specifically to ensure that their Agent named in the POA has the authority to act on their behalf if they suffer a period of incapacity. That doesn’t work, however, if the POA terminates upon the incapacity of the Principal. To resolve this problem, the concept of a “durable” POA evolved. When a POA is made durable it simply means that the Agent’s authority survives the incapacity of the Principal.
Springing Power of Attorney
Another aspect of a Power of Attorney to understand is a Springing POA. Both a general and a limited POA can be a Springing POA. A Springing POA has special language in it that causes the Agent’s authority to “spring” into action at a specific time or upon the occurrence of a specific event. For example, you might create a general POA that does not actually go into effect unless you have been missing for more than 48 hours or until you have been declared incapacitated by one or two physician(s).
Power of Attorney for Health Care
One of the limits placed on a general POA is the authority of the Agent to make health care decisions for the Principal. If you want to give someone this authority you need to execute a Durable Health Care Power of Attorney. A Durable Health Care POA is a type of advanced directive that allows you to appoint an Agent to make health care decisions for you if you lack the ability to understand the nature and consequences of your health care decisions or the ability to make and communicate your health care decisions yourself.
It is also recommended that you execute a Mental Health Care Power of Attorney, Living Will and Health Insurance Portability and Accountability Act (HIPPA) form to allow those you trust to have access to your medical information and ensure your wishes are carried out.
Contact Estate Planning Attorneys at Morris Hall PLLC
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about a Power of Attorney or other estate planning related questions, contact the experienced Phoenix estate planning attorneys at Morris Hall PLLC by calling 602-249-1328 to schedule your appointment today.
Stan Lee – Hero of Marvel Comics
Born in 1922, Stan Lee became a comic hero legend. Beginning in New York in the early 1960s, Lee’s tenure at the top of Marvel Comics spawned Spider-Man, Black Panther, and the X-Men. As the chairman of Marvel Comics, Lee took the company from a small division of a publishing house to a large multimedia corporation. Sadly, Lee may now need his own hero to prevent him from becoming the victim of elder financial abuse.
A Los Angeles judge recently granted a temporary restraining order against Keya Morgan, Lee’s manager and business partner, who has been acting as his “caregiver” since the passing of Lee’s wife last July. The petition in support of the order was filed by Tom Lallas, Lee’s former attorney who was abruptly fired last February. The petition alleges, among other things, that Morgan has been unduly influencing and isolating Lee.
The Controversy
In a complaint, Lee’s former attorney stated that there are multiple ongoing criminal investigations regarding potential financial elder abuse by Morgan. A police report attached to the complaint indicates that a detective observed that Lee suffers from a short-term memory impairment and is “heavily influenced” by Morgan. The complaint lists the bizarre actions of Morgan.
For example, on being denied entry to Lee’s home by a security guard because law enforcement and Adult Protective Services were conducting a private interview with Lee, Morgan allegedly proceeded to make a false call to 911 claiming there were three burglary suspects inside Lee’s home, despite being told that Lee was with detectives. In another instance, Morgan once again made a false call to 911 accusing a security guard of assault with a deadly weapon against himself and Lee after the security guard refused to sign a non-disclosure agreement. Morgan was arrested for a false report of an emergency on June 11, 2018, and an emergency protective order was issued to protect Lee from him. Morgan allegedly hired a security team to keep out Lee’s family members and others that have helped Lee in the past. More recently, the complaint alleges that Morgan moved Lee from his longtime family home to a condominium in what may be another attempt to further isolate him.
Lee’s daughter and only child, J.C. Lee, is also part of the legal maneuvering. At a recent hearing, J.C. asserted that she has the authority to speak for her father and argued that Morgan should be prevented from coming near her father.
The Court Decision
At a recent court hearing, a judge sided with Lee’s daughter on both counts, finding that J.C. Lee has the authority to speak for her father and that Morgan should be restrained from coming near Lee, Lee's daughter, and Lee's brother. The request for the order alleges that Morgan attempted to interfere with Lee's ability to contact caregivers, doctors and family members; attempted to alienate Lee from his daughter; and is embezzling or misappropriating millions worth of Lee's assets. Authorities are currently conducting an elder abuse investigation.
Sadly, elder abuse in the United States is a very real, and very troubling, problem that impacts all of us. Elder abuse is not a new problem, but societal awareness of the prevalence of elder abuse has increased considerably in recent years, due in large part to the rapid growth in the older population in the U.S. As evidenced by Stan Lee’s experience, no one is immune to the possibility of becoming a victim of elder abuse.
You can be the “super” hero that your family members or neighbors need by being vigilant and reporting any suspicious actions toward elders to Adult Protective Services.
Contact Living Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about who to appoint as the Trustee of your trust, contact the experienced living trust attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.
Comedian Richard Pryor was a fairly controversial character when he was alive, so it may come as no surprise that his death in 2005 triggered a family feud that continues to make headlines to this day. Pryor’s life included multiple marriages, a failed attempt at a blended family, deteriorating health that led to claims of incapacity, and even a secret marriage. Litigation started even before Richard’s death and continued for many years after he was gone. A recent interview given by Quincy Jones ignited the feud between Pryor’s widow and several of his children once again. Was poor estate planning to blame for the litigation that followed Pryor’s death?
Pryor’s Unconventional Family
Richard Pryor was known for being over the top. He loved to shock audiences, and he apparently loved to get married – so much so that he tied the knot seven times to five different women! Jennifer Lee-Pryor was both Richard’s fourth wife and seventh wife, making her his widow at the time of his death. Her final marriage to Richard lasted from 2001 until his death in 2005. Although Richard and Jennifer did not have any children together, Richard had seven children from six different women. Both before and after his death, at least three of the children -- Richard, Jr., Elizabeth, and Rain – did not get along with Jennifer. The bickering turned into full-blown litigation after Richard’s death.
The Family Feud Leads to Litigation
Pryor was diagnosed with multiple sclerosis in the 1980s. By the early 1990s, his condition had deteriorated to the point where he needed live-in help. In 1994, he hired Jennifer to oversee his caregivers and act as his personal manager. At the time, they had been divorced for years but remained close friends. Jennifer moved from New York to Los Angeles in 1994 to take care of Richard and manage his affairs, in exchange for a salary and rent.
Richard, Jr., filed for conservatorship of Pryor in 2000, alleging that his father had deteriorated to the point that he could no longer make decisions for himself and complained that Jennifer limited access, at times refusing to allow Richard, Jr., to see his father. Jennifer fought back that Pryor had picked her and an accountant to make his decisions as agents under power of attorney documents, and also as co-trustees of Richard Pryor's Trust. She contended that Pryor was well-cared for and a court-appointed conservator was not needed. The probate judge overseeing the case ruled in Jennifer's favor.
In 2001, Richard and Jennifer married for the second time; however, they applied for a "confidential" marriage certificate, meaning the certificate was not made a matter of public record. Pryor's children were never told about the marriage. Afterward the marriage, Pryor amended his trust, naming Jennifer as the primary beneficiary and the person with the right to control all of his intellectual property -- including his name and image rights, and royalties from his comedy albums and performances. These changes to the trust left Jennifer in complete control, both before and after Pryor died. He passed away from a heart attack in 2005 at age 65. Estimates placed the total value of the Richard Pryor estate at around $40 million at the time.
In 2006, Richard’s daughter Elizabeth filed suit against Jennifer, accusing her of elder abuse, fraud, forgery, and taking advantage of Richard's weakened mental and physical state. Due in large part to the fact that she was Richard’s widow, Jennifer prevailed in the probate court litigation. Elizabeth then appealed to the California Court of Appeals. She argued that the marriage was the product of fraud and should be annulled. She also invoked California's statute prohibiting gifts and bequests to caregivers. The Court of Appeals ruled that Elizabeth did not have standing to seek an annulment, because under California law, such a legal proceeding could only go forward if one of the spouses had filed the case before death. Therefore, the marriage was upheld as valid. This ruling allowed Jennifer to use an exception to the law prohibiting gifts to caregivers if the caregiver was a spouse. Because Jennifer was legally married to Pryor, any gifts or bequests he made to her, through his trust or otherwise, were protected.
Had Elizabeth been able to convince the court that Pryor lacked sufficient mental capacity to make the changes to his trust, that the changes were brought about by undue influence from Jennifer, or that the documents were forged, Elizabeth might have prevailed; however, it appears that Elizabeth lacked sufficient evidence to prevail using any of those allegations.
Was Poor Estate Planning to Blame for the Litigation?
Amazingly, it is either poor estate planning, or a complete lack of planning, that often triggers probate litigation following the death of the “rich and famous.” Despite the resources with which to create a well thought out and comprehensive estate plan, many wealthy individuals fail to do so. That was not the case with Richard Pryor’s estate. Although his children, and others, may forever remain suspicious and skeptical about Pryor’s state of mind during the years leading up to his death, his wishes appear fairly clear and consistent. He sought out Jennifer’s assistance over a decade before his death. True, the secret marriage is somewhat unusual; however, in and of itself it doesn’t prove that the changes Richard made to his estate plan after the marriage were fraudulently made or coerced. Jennifer’s status as Richard’s spouse, coupled with the fact that Richard initially sought out her assistance long before his mental capacity deteriorated, gave Jennifer the advantage in the litigation. The estate planning lesson to be learned here is: plan early and plan well.
Contact Phoenix Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about estate planning, contact the experienced estate planning attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.
The recent tax law temporarily doubled the estate tax exemption. That doesn’t mean there’s no need for estate planning. Estate plans consider many important aspects, not just estate taxes. This article examines some of the many considerations besides estate taxes.
The new tax law brought a cap of $10,000 on federal deduction for state and local taxes. People are trying different ways to get around the cap. Some of the ways work and others could land you in hot water. Read the article to find out more.
Trusts have many uses. Perhaps the most important is that they can provide privacy at death. Garry Shandling is thought to have used a trust to provide privacy for those he left behind.
A well-rounded estate plan will focus on achieving a number of inter-related goals and objectives. Not surprisingly, a variety of estate planning tools and strategies must be utilized to make a comprehensive estate plan successful. Among the most common additions to any estate plan is a trust. If you choose to include a trust in your estate plan, you will need to appoint a Trustee for your trust. You may be wondering if you can appoint yourself as the Trustee of your new trust. The living trust lawyers at Morris Hall PLLC explain when you can be your own Trustee and when you should appoint someone else.
What Is a Trust?
A trust is a legal relationship where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the "Settlor," "Trustor," or "Grantor." The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust's beneficiaries, also named by the Settlor. The overall job of a Trustee is to protect and invest trust assets and to administer the trust terms found in the trust agreement. Trusts all fall into one of two categories – testamentary or living trusts. A testamentary trust is activated by a provision in the Settlor’s Will at the time of death, whereas a living trust activates once all formalities of creation are in place and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts. Because your Will can always be modified up to the point of your death, a testamentary trust is always revocable.
Trust Administration -- Trustee Duties and Responsibilities
The Trustee of a trust is responsible for managing the trust assets as well administering the trust using the trust terms created by the Settlor. Among the numerous and varied duties and responsibilities of a Trustee are the following:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the “Prudent Investor Standard”
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Approving or denying distributions if given discretionary authority
- Keeping detailed trust records
- Preparing and paying trust taxes
When Can You Be Your Own Trustee?
The real question is when should you be your own Trustee, not when can you. The answer depends on the estate planning goal you hope to achieve using the trust. If death and incapacity planning is your goal, for example, you should be the Trustee of the revocable living trust you create. After naming yourself as the Trustee, you then name the person you would want to take over control of your assets in the event of your incapacity or death as the successor Trustee. Assets are then transferred into the trust. As the Trustee, you continue to have access to, and control over, those assets just as you did before creating the trust. If, however, you become incapacitated or pass away, your successor Trustee takes over as the Trustee. As the Trustee of the trust, your chosen successor now has control of the trust assets without the need to involve a court or do anything else. In this case, it is beneficial to be the Trustee of your own trust.
Conversely, if your goal is asset protection, naming yourself as Trustee of your own trust is counter-productive. When asset protection is the goal, an irrevocable living trust is used because assets transferred into an irrevocable living trust become the property of the trust once the transfer is complete. As such, the Settlor no longer has a legal interest in or control over the assets held in the trust, which means that the assets are not accessible by creditors of the Settlor, a spouse in a divorce, or others who might threaten the assets. This only works, however, if you are not the Trustee. As the Trustee, you would still have access to the asset held by the trust.
Contact Living Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about who to appoint as the Trustee of your trust, contact the experienced living trust attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.
This article examines the transfer of frequent flyer mile accounts to beneficiaries. It looks at Anthony Bourdain’s will and its disposition of his miles. The article points out that these are contractual rights and you may or may not be able to transfer them at death.
This article examines the deaths of two people who died from doing very typical things. You never know what risks might be around the corner, even in seemingly safe endeavors, so you should be prepared. The article looks at the elements of a basic plan.
