Power of attorney protects family finances

Dear Bruce: In your answer regarding a mother’s finances being handled by her son, you wrote, “If your mother becomes unable to handle her own affairs due to mental deficiency, unless she’s executed a power of attorney, there may be a need for a conservatorship that you can contest in court.” It is my understanding that the purpose of a power of attorney is to do what the person wants. The reader did not indicate why the mother was in a nursing home, but if it is because of mental deficiency and the brother is suspected of taking advantage of the mother, it would be prudent to ask the court to appoint a conservator. It’s amazing what some folks talk the elderly into doing under such conditions. My oldest brother even tried to turn our father against our mother, as well as against three of us siblings. — R.W. Cedar Falls, Iowa

Dear R.W.: Where you and I differ is in the purpose of a power of attorney. A full power of attorney can be exercised while a person is in complete command of their faculties. Often, the reason that this or a durable power of attorney is executed is to have a document that allows someone else to act on your behalf when you are not capable of doing so. It is a far less expensive way of accomplishing that goal than a conservatorship; in many situations, the process of granting a guardianship is very demeaning. If we have someone in our life that we trust, we should execute either a full power of attorney or a durable power of attorney properly drawn by a lawyer. I have done so. If you think about it, it’s truly an act of love. It causes so much less hassle for those you leave behind. In situations where there is family acrimony, as you have indicated, I suspect money is involved. Greed frequently changes people.

Dear Bruce: My mother died last fall. Another member of my family is the executor of her will. After going by her wishes to sell the house and everything in it, the process came to a standstill. Any money remaining after expenses was to be divided among the children. None of this went through the courts, so nothing should be left to take care of except to disburse the money. The executor has neither contacted at least two family members nor will he take a call from them. This has been going on for nine weeks. Am I being inconsiderate of how long we should mourn before going on with the last part of this process? I love my mother very much and did all that I could possibly do for her in her last years. I think she would want this person she chose to take care of things and go ahead and get it done. — B.J., via e-mail

Dear B.J.: Nine weeks is pretty quick to get rid of the house and all of its contents. It would seem that things are moving along. You say that none of this went through the courts, but in order to have official standing as an executor, the will had to be filed for probate with the probate court. The executor has obligations under the law, and if you are not sure that he’s following them, then your first redress is with the clerk of the probate court or the surrogate. It’s their job to see that he follows the rules and wishes of the testor, your mother. There are formalities that he has to adhere to, and the court will see that he does that. Bear in mind that a couple of months is pretty quick. If he has sold the house and had the proper standing, then the will has been filed for probate. If he is not willing to talk, your next stop should be the probate court.

Dear Bruce: I’ve separated from my husband and want to move on with life. We had no real property between us. I want to purchase a home. I understand that legally we are married in the eyes of the state, but no joint funds are being used to make the purchase, and it will be 100 percent financed. I have been told by two separate sources that I will need a quick-claim deed from him to remove him from the mortgage. Another source said no, that it is up to the real estate lawyer I use, and that how they are bonded will make a difference. Which is the correct answer? — J.A., Alabama

Dear J.A.: You’ve asked a whole lot here, and you have, I believe, mixed up a couple of terms that you need to be careful of. If you are just separated from your husband, you are married, period. You’re married everywhere. You must go through a legal divorce to get unmarried. When you refer to a “quick claim,” I think you mean a quitclaim deed, and that isn’t appropriate because your husband has no interest in the property that you are purchasing. Were it me, the first thing I would do is concentrate on getting a divorce, pure and simple. In the event that you are bound and determined to purchase a house before the dissolution of the marriage (I think that is foolish), check with your attorney to be certain that your husband will not have any claim on the property should it appreciate in value and should he decide that he will not grant you a divorce. Other things being considered, get the divorce first.

Dear Bruce: I have received offers, sponsored by attorneys, to attend lectures about living trusts. Being a widower and having one son, I don’t feel the necessity of a will or living trust. My son and I have a joint checking account. He is the beneficiary on two individual retirement accounts and we have a special savings account together. I have recorded a quitclaim deed on my home to my son. Do I really need a will or a living trust? — J.S., Las Vegas, Nev.

Dear J.S.: Everyone should have a valid will. A simple will leaving everything to your son will be sufficient, but have it executed according to your state laws. Nothing that you have told me tells me that a living trust is to your advantage. The major advantages of a living trust are that it avoids probate and it is private. You have worked out most of your assets with a way to have them pass quickly to your son. In the event that there is a snag or one of these accounts is declared invalid or a million other things that can pop up, a properly executed will simply leaving everything to him with your son as your executor will save him a great deal of heartache.

Dear Bruce: My 90-year-old widowed, childless sister has a $3 million estate. How best can I transfer at least $2 million of her estate to my children and myself to get her estate down to $1 million? I have power of attorney and take care of her business. — R.H., via e-mail

Dear R.H.: The bad news is that you having power of attorney will not allow you to make these transfers to you or your children. I assume that in your sister’s will these monies are being left to you and your children, or you are the only surviving relative if she dies having made no valid will. The answer on how to get that money tax-free is to have your sister live until 2009, when there will be no estate tax. As the years leading up to 2009 pass, the exemption is increasing so your tax obligation will decrease.

Dear Bruce: My house has a “special deed” that was prepared by my attorney when my husband died eight years ago, which transferred the house to me. It is my understanding that, upon my death, my attorney will prepare and record an “affidavit of death, final life tenant” document. This document will immediately deed the house to my beneficiaries. After that, my total assets are less than $100,000. — Reader, via e-mail

Dear Reader: I’m not at all certain what this “special deed” that you refer to conveys. Assuming the home is properly transferred to you, who would determine who your beneficiaries might be? In a will you determine who will receive your estate, but it doesn’t follow that all of your children should or would. It is possible to have a piece of property in more than one name or in other names so that it is clear where the ownership would lie. If it were me, I would sit down with an attorney now and have him explain this document. There may be facts that you have inadvertently neglected to tell me. Given what you have told me, I could not accurately tell you if this is sufficient. It is so much less expensive to do these things during your lifetime rather than have potential beneficiaries hassle over them after the fact. It may be that the house is in someone else’s name and you have life tenancy, but I’m only speculating. See an attorney now.