Episode 104: Where There’s a Will, There’s a Way

Speaker 1: You are listening to Your Practice Made Perfect; support, protection, and advice for practicing medical professionals brought to you by SVMIC.

J. Baugh: Hello, everyone. And welcome to today's episode of Your Practice Made Perfect. My name is J. Baugh, and I will be your host for today's episode. Today, we have Jean Byasse with us today. Jean, welcome.

Jean: Thank you for letting me be here today.

J. Baugh: It's good to have you here. Before we get started with our topic today, which is estate planning, Jean, can you tell us a little bit about yourself, your background, where you work? That sort of thing.

Jean: Well, I work with a small firm, and I have over 30 years of experience in healthcare law. I began to realize when people came to me to talk about their wills or estates that they were involved in, there was a very interesting process that related a lot to the medical power of attorneys and powers of attorneys for your stuff that I'd already been dealing with.

J. Baugh: Right. As we launch into this broad topic of estate planning, let's narrow it down to begin with, and let's talk a little bit about a will. Why should I have a will?

Jean: Well, there are four documents that you need for estate planning: a will, a power of attorney, a healthcare agent, and a living will. A lot of people in the medical industry have living wills, and maybe a medical power of attorney or healthcare agent.

J. Baugh: Right.

Jean: But they're putting off getting a will, because they think maybe they won't die ... which as far as I know the rules, that's not a very effective plan.

J. Baugh: Yeah. I don't think that's an option that you should rely on.

Jean: Right. Or they want to wait until they're older.

J. Baugh: True.

Jean: But it's something that should be done now, even for young people. You want to pass along the assets you've accumulated during your lifetime to the people you want to have them, whether your family, friends, charities, causes that you like. The default is that the state will control the line of succession for people dying without a will. That probably is not what you want.

J. Baugh: Yeah. Probably not.

Jean: It's estimated that 2/3 of Americans don't have wills, even though it's not a very difficult or expensive process. What I do, and what most attorneys do these days, is an initial email form prior to a meeting, which just allows you to think about who you would want to do what in your estate plan, including who you would want to be guardian of your children. That's something particularly important, of course, if you have minor children. I was amazed that as an example of some of the unintended consequences of dying without a will, people are surprised to learn that a spouse does not inherit your property alone. If someone has children.

J. Baugh: Right.

Jean: With no will, the assets solely owned by the deceased can go as little as 1/3 to the surviving spouse, with the balance to the deceased children. While an ex-spouse doesn't inherit under a will, because that's the law in Tennessee, there are line of cases that if you've left an ex-spouse on your insurance, that they may inherit that. That's outside of requirements of a court order. But, your retirement program is something that you ought to look at and also a practice agreement, which often specifies who inherits the assets that you've built up in your practice.

J. Baugh: Well it sounds like there are a lot of issues that we should be concerned with in writing a will. Now, I remember back in the day we used to have CDs in which we would get our software. Our software would be on a CD. I remember seeing a CD in which you could write your own will if you bought this CD, and they would have the software, and you could download it. You could write your own will, and I'm guessing that there are probably online forms that some people might want to use to write a will. Is that enough to use a form that I can find online to write my will?

Jean: Well, you are seeing a lot of that. All I can say is it might be enough, but it might not. It's not quite like doing surgery on yourself. But consulting an estate attorney where you live, probate is governed by state laws, it's a safer alternative to make sure they take care of your unique situation. And also, whether or not it's geared to your state. Online advertisements say, "Oh, it's state-specific." But, that's not always true for the ones that I've reviewed just as a matter of interest. They may not know the required language in all cases, or may add in language that's not appropriate for your situation. That if it's a term of art for a will, it's something that you may not know you should take out or add in.

It doesn't also deal with future consequences. When I draft a will, I try to make it as flexible as possible. I try to look out for anything that might happen to you in the future. For example, I had a family where the man had done his own online will, and they'd left one house to his daughter, and then a house to a friend prior to his death. But no language in the will dealt with changes in circumstances. In that case, unfortunately, the daughter inherited nothing under his model will that he had downloaded.

Tennessee also requires a very certain form of will signed in a certain way to be valid. As a matter of fact, just printing it out wrong and signing it wrong could invalidate the will. The self-made wills I've seen and heard while I'm sitting in probate court being probated, often do not meet this standard. That puts the estate back into passing as an intestate, an estate without a will.

J. Baugh: Right. In that situation then, the state law governs how the assets are distributed.

Jean: Exactly.

J. Baugh: Because it's as if the person died without a will, because it wasn't done properly. Is that right?

Jean: That's correct. And J, it doesn't mean that people are not going to have their family inherit, but it may be someone that they didn't want to inherit. It may be your group of children have children, grandchildren, that you don't approve of, and you're not very close to. Or in an estate I recently closed, the lady didn't think she was going to die so quickly, and she did without a will. Some very remote heirs in California who had never contributed to her care, inherited a substantial part of her estate, to the detriment of the people locally who had taken care of her in her last days.

J. Baugh: One of the goals in writing a will, as I understand it, is the ability for you to decide who will inherit the assets of the estate once you pass away. I'm wondering if there's a way that I could leave my assets to maybe only some of my children.

Jean: You can. You can leave them to only some of your children if you specify that in a will. Usually, I have a client mention the ones that you are excluding in the will, and perhaps even the reason for it. If you just want to leave it to your children as a bunch of heirs, if you don't name your children, then their children are going to inherit under your will. Same thing with insurance. If you say "insurance to my children" or "to my five children," one of them predeceases you, then their children are going to inherit.

J. Baugh: Oh, okay. Well, is there a way that I could leave insurance proceeds to my children, but make sure that it doesn't pass to their children? If I want to do that, how can I make that happen?

Jean: Well, insurance, like the assets that I'd mentioned about your retirement plan, your savings in retirement vehicles, or maybe your practice document, is considered to pass outside probate because that's governed by the contract with the insurance company. Therefore, you need to specify that only certain children will be beneficiaries and the proceeds should be shared equally by only the surviving children if any of them predecease you. It's so common that you may not want to benefit everyone in your family. It's good to review your insurance beneficiaries yearly, as you may want to change them. You may want to take off a former spouse or someone you've lost contact with, because the proceeds would still pass to that person you listed through the company's forms that you originally filled out.

J. Baugh: We've talked a little bit about the purpose of a will and what it is able to do. Is there anything that a will does not cover that I should be concerned about?

Jean: Wills do not deal with the insurances we'd mentioned, a retirement plan, like a 401k, or practice assets usually have someone you've designated in a different format. If you've ever designated a payable on death beneficiary on your bank account, and it's a good idea to do that, then that's who your bank account will go to. Same thing with a 401k. You've probably designated a beneficiary.

If you belong to a practice group, there's likely payout language in your original operating agreement that you've probably forgotten about since you've been building your practice over the years. A trust may have been made by someone else to benefit you during your lifetime. You may benefit from a parental or grandparent trust, but that would be a stream of income that would not be able to be passed along usually by your will, unless the document governing it allows you to so pass it.

J. Baugh: So, how often do I need to update my estate plan?

Jean: It really should be done whenever you have life changes, such as selling a house, children leaving the house for college or jobs, inheriting or bonusing a large sum of money. Of course, that might not be the best time. You could just note to yourself whenever you do your taxes that you might want to think about your estate planning.

J. Baugh: Yeah. That's a good idea to take something that you don't normally think of doing regularly and connecting it with something that you do regularly, which is your taxes. That gives you a reminder to go back and look at the estate plan. I think that's a great idea. One of the things that you can put in your will that's outside of how your assets will be distributed, would be about who would take care of your children in the event that you would pass away. What do I look for in selecting a guardian for my children?

Jean: First, who you designate in your will as a guardian for your children, if they have no parents left, should be someone your children know and who has hopefully parenting experience. As a parent, I say that. It might be a family member, but it doesn't really have to be. I've had a lot of clients who ask friends who they feel have their same values and may live in the same area, to be the guardians of their children. The guardian doesn't have to be the same person as you pick to be trustees for financial assets for your minor children.

That's, of course, very important to pick someone who controls the assets. You don't want minor children to inherit assets in their own names. It may be that a guardian who would be the best person to raise your children might not be the best money manager. You can name two different people for those purposes. That's something that you need to think about, but don't delay doing your will just for that reason. I have some clients who have put off for 20 years finishing their wills because they can't decide who would help with their children.

J. Baugh: And that's interesting. I've also heard a term described as a living will. What is the difference there? What is a living will, or maybe it's called a healthcare directive? What are those documents all about?

Jean: Well, living will is what I call basically a gift to your family, because you tell them what you would want done if you could not make medical decisions yourself. You're laying in a coma in a hospital somewhere, and some other doctor is coming up and saying, "Well, this could be happening or this. What would you want to do?" Living will has already told your family how you feel about certain things, or if you have particular things you don't want to happen. I had a client who was an emergency room doctor who had some very specific things that he did not want to wake up and having had occur. It could be a very personal thing that you can make your own.

J. Baugh: When thinking of a will, we often think about the fact that assets are distributed. But what about debts? Who will be responsible for my debts when I pass away?

Jean: No one is responsible for your debts except your estate. Whoever is your executor in your will has to take the assets that you have and pay them off to the extent that they can. If you have a jointly owned house with your spouse, that's not an asset that's available for your debtors. One large debt that's often discharged if you don't have assets left in your estate, is federally guaranteed student or medical school loans.

Again, that's if the debt is solely in the student's name and not guaranteed by anyone else. When your estate goes through probate, your known creditors will be notified. There's a publication in general in the area where the probate is opened to notify creditors, which may not be known to your executor. Your solely owned real estate might be able to be brought into the estate if there are inadequate funds to pay off the creditors.

J. Baugh: Okay. Let's think a little bit about this scenario. Let's say that my mother is unable to make decisions for herself because of the health situation that she finds herself in. If my mother is unable to make decisions for herself, how can I assume that responsibility for her?

Jean: Well, the easiest and least expensive way is for your mother, your parent, to have signed a power of attorney designating you to act for him or her before they're incapacitated. It's very sad to have someone brought into the office who just has no idea where they are or who they want to act for them. And in that case, you have to do what's called a conservatorship action.

It's, again, done in the probate court. It is an action where a preferred person gets to act for their relative to manage their affairs, to decide where they live, how their money will be spent, and also to take the actions where they might need someone, a public agency, to pay for their long-term care. The court in a conservatorship action will attempt to put into place the least restrictive alternative on an individual's right to allow them to be cared for, or their resources to be used for only their benefit.

J. Baugh: Okay. I know that sometimes in the practice of law we tend to use words that sound similar, but we know that they have very different meanings. And maybe someone who doesn't practice law, here's two words that sound similar and they think they're the same thing. But I suspect that a conservatorship and a guardianship to most people would sound similar, but they're really two different things. How are they different from each other?

Jean: Well, in Tennessee, and again, it's one of those things that are dealt with by the probate court. It may be called something different in other states. But, a conservatorship is someone making decisions for an adult who needs help in managing their affairs. A guardianship is over a minor, which allows a responsible adult to manage that minor's money and healthcare decisions. Both of these positions are what we call fiduciary positions that require the name guardian or conservator to use the assets designated only for that ward. They're considered to step into the shoes of that individual whose assets are being managed, and to use them only for their benefit. They're overseen by the courts based on financial accountings that you have to submit every year.

J. Baugh: If I find a situation in which I think someone that I know needs a conservatorship, what do I have to prove to show that a person actually needs a conservatorship?

Jean: You may notice that your parent is making erratic decisions, for example. They may be giving away their money to new friends who may suddenly be their roommate as well, or their unexplained payments from their accounts. They may be giving away money online. We're seeing that much more today.

J. Baugh: I'm sure that's true. Yes.

Jean: There's several cases of fraud online against elders. Of course, the basics. They may not be eating enough to sustain themselves. They make odd irrational medical decisions, and they don't maintain their house. They may engage in hoarding activities. The attorney who drafts a petition for conservatorship will attach an affidavit, which is required by the court, filled out by the physician who has seen that elder within the last 90 days, and saying that their condition is such that they need a conservator.

J. Baugh: Okay. As we bring this episode to a conclusion, are there any last minute tips or advice that you would like to leave with our listeners?

Jean: Well, it's a really corny expression, but we always say, "Where there's a will, there's a way."

J. Baugh: That's true.

Jean: Try to get that done.

J. Baugh: Yes, absolutely. Well, Jean, thank you for being here today. You've given us some very practical and helpful advice when it comes to estate planning, and we thank you for your time.

Jean: Thank you.

Speaker 1: Thank you for listening to this episode of Your Practice Made Perfect with your host, J. Baugh. Listen to more episodes, subscribe to the podcast, and find show notes at SVMIC.com/podcast. 

The contents of this podcast are intended for informational purposes only and do not constitute legal advice. Policyholders are urged to consult with their personal attorney for legal advice, as specific legal requirements may vary from state to state and change over time.