Pinnacle Estate Planning

By JASON GRAY

Pinnacle Law PLLC

   Many married couples make a simple assumption about estate planning: “If something happens to me, my spouse can just take care of everything.”

    It sounds reasonable. You are married, you share a home, you may share bank accounts, and you have probably made important financial decisions together for years. Surely your spouse automatically has the legal authority to handle everything if you become incapacitated.

    Unfortunately, that is not always the case.

    Marriage provides important legal rights, but it does not automatically give one spouse unlimited authority over everything belonging to the other. This becomes particularly important when a spouse is alive but unable to make decisions because of an accident, illness, dementia, or another medical condition.

    Consider something as ordinary as a financial account held solely in one spouse’s name. The other spouse may know the account exists and may even know exactly what should be done with the money. But knowing what to do and having the legal authority to do it are two different things. Financial institutions have rules about who can access accounts, sign documents, sell investments, or make other financial decisions.

    Real estate can create similar problems. If documents need to be signed to sell, refinance, or otherwise deal with property, an incapacitated owner’s signature cannot simply be replaced by a spouse’s signature because they are married. Without appropriate planning, the family may discover that legal authority must first be established.

    This is one reason a durable financial power of attorney is such an important part of a comprehensive estate plan.  It allows you to decide in advance who will have authority to handle financial matters if you are unable to handle them yourself. For many married people, the first choice is naturally their spouse, but the important point is that the authority has been properly documented.

    Health care decisions present another reason to plan ahead. Most people have strong opinions about who they would want communicating with doctors and making medical decisions if they could no longer speak for themselves.  Proper health care directives allow those wishes to be documented rather than leaving family members and medical providers to determine what authority exists during a crisis.

    Trust planning can add   another layer of continuity. When assets are properly owned by a revocable living trust, a successor trustee can generally step in according to the terms of the trust if the person currently managing it becomes unable to serve. This can allow bills to continue being paid, investments to be managed, and property to be handled without having to reinvent the financial system during an emergency.

    The problem becomes even more significant when both spouses are affected at the same time. A serious automobile accident, for example, can leave both spouses temporarily or permanently unable to manage their affairs. An estate plan that simply assumes one spouse will always be available to help the other has not addressed that possibility.

    This is also why estate planning is about much more than deciding who receives property after death. For many families, the documents dealing with incapacity may become important years before any inheritance is distributed.

    Without adequate planning, families may sometimes need to seek court involvement to obtain authority to manage the affairs of an incapacitated loved one. That can mean additional expense, delay, paperwork, and court oversight at precisely the time the family is already dealing with a crisis.

    Good estate planning attempts to solve those problems before they happen.

    None of this means married couples should expect the worst. Estate planning is not about being pessimistic. It is about making sure the person you already trust has the legal tools necessary to help you when you need them.