San Jose Elder Law – The Appropriate Use of Magic Words

When many of us were children and wanted something, a parent or other adult often asked, “What’s the magic word?” That was usually the cue that we were supposed to say, “Please.” Well, in our everyday world, we’re still confronted with particular words and the grouping of particular words. Attorneys prepare legal documents every day that have their own “magic words” to get things done properly. In estate planning, these words may not be read and interpreted for years to come, and then people realize too late that it should have been written differently.

While you’re alive and well, documents can be changed. If you’re incapacitated or deceased, other people have to go by the words in your estate planning documents.

I review a lot of documents for people, and I often find that the documents are not clear, or they do not express what the client wanted, or they place the agent or trustee in a very difficult position where the person can’t really do what is needed to act properly. Sometimes the wording can create an unnecessary burden on the surviving spouse after the first spouse passes away.

When a couple prepares a trust to distribute their assets, they do their best to look into the future and think about how they want their property distributed after they both die. Frequently, however, there isn’t a lot of thought given to how the property will be handled after the death of just one spouse. Estate planners have had several ways of addressing this issue over the years, and it frequently came down to an attempt to reduce or avoid any estate tax. ­— But over the last several years, we’ve had numerous tax law changes that affected the estate tax.

The situation that estate planners often find now is that clients who had their estate plan prepared several years ago are sitting with a valid plan that is not the appropriate plan for the tax laws that are in effect today. What’s the result? The plan may severely limit what the surviving spouse can do, and in many cases this wasn’t what was intended. Can it be changed? Yes, as long as both spouses are still mentally competent and they take action.

If you have a trust, take it out and read it carefully to see what it says. If you aren’t comfortable with your own ability to understand the trust, take it to an estate planning attorney to have them look it over and tell you how the assets will be distributed. What is the intent? Are the assets joint assets from a lifetime of hard work? Were the assets inherited by just one spouse? Is this a second marriage? Do either of you have children from a prior marriage? Has your planner bypassed the difficult conversations that need to take place?

What about your durable power of attorney? It’s one of the most powerful documents you have — if it has the powers you need. The same thing goes here. Have it reviewed by a knowledgeable attorney. I have seen durable power of attorney documents that range from two pages to thirty pages. Many of these documents, however, just don’t get the job done. They lack the “magic words” for the agent to take care of the person who signed the document and gave the powers to the agent. This is particularly the case when it comes to elder law. The majority of power of attorney documents are insufficient for elder law planning.

If you don’t have an estate plan in place, get it done now. If you already have an estate plan, have a qualified attorney review your trust, durable power of attorney, and other documents to make sure that they have the magic words that you need.