Estate Planning at All Levels of Wealth

Don’t the Wealthy Deserve As Much Attention to Competence Planning As Those Who Seek Medicaid Planning?

One only has to read news stories like those about Doris Duke, Brooke Astor and Lilianne Bettencourt to understand that incompetence planning should be as important to those with financial means as it is to those without.  In fact, as the population ages and medical science advances, “Estate Planning” may need a new name, one that has a direct correlation to protecting oneself and one’s estate while still  alive.  The questions to ask are not only “Who will you leave your assets to?”  and “What will the estate tax consequences be?” but also “How will you protect yourself so that when you are no longer able to make your own medical and financial decisions, your wishes concerning your care and your assets will be implemented the way you intend them to be?”

Estate planning as we know it today evolved generations ago when people lived, became ill and died. What mattered was planning for death.  But now planning for the middle and upper classes, including the very wealthy, also needs to focus on planning for disability and incompetence in the same way that Medicaid planning and planning to preserve assets for the elderly on the lower end of the asset/income spectrum has evolved.

Questions and issues that need more attention from estate planning practitioners:  

In many estate plans, the three documents that affect the client’s issues are the living will and/or health care proxy, the durable power of attorney and the living, revocable trust. For the most part, the provisions in these documents are boilerplate. Very few clients have thought through how the documents work together and whether or not conflicts might arise. Therefore, estate planning practitioners should encourage their clients to consider the following questions:

Who is in charge of physical care? Who is in charge of financial assets? Are they different people or institutions? Is there any coordination between them? What is the system that fosters that coordination? How is the person designated to be in charge of the client’s physical care guaranteed payment for the choices that are made by either the attorney in fact, under the durable power of attorney or the trustee of the trust?  What if there is conflict? For example, what if the person in charge of care chooses at home care but has no authority over the money or vice versa? What if the person in charge of the money also stands to inherit when the client dies?

How can the client’s wishes concerning care of person and care of assets be made binding and coordinated? Should the client prepare a written memorandum which sets forth what s/he would want to see happen and how the care should be coordinated? This type of memorandum could be updated annually as life evolves and could play an important part in where the person lives, on what s/he expends money and what the standard of care is if s/he were to become disabled or incapacitated. Should there be a mechanism by which annual financial and physical care reports must be provided? Should it be mandatory that those who are making the decisions about physical care meet several times a year with those who are making the financial decisions?

Should there be life time “in terrorem clauses”? In other words, if the care that was expected is not received, or if funds were not paid for the care that was requested, is there a forfeiture of inheritance if the person making those decisions also stands to receive assets?  Could there be provisions drafted for trustee surcharge or penalties if the client’s intent was not carried out? Should there be a cause of action for tortuous interference with an inheritance?

The accounting provisions should not be standard boilerplate clauses. Care should also be taken as to whom the accounting should be made if the client is no longer able to review the transactions. The accounting clause is a standard clause in many documents. Perhaps it would be interesting to mandate accountings to other family members or friends who could review the actions taken to date and who have standing to object to them.  Should there be a clause in the trust which triggers irrevocability? What if that trigger is not just by a physician, but by a panel of people selected and well known to the client?

Next week, check back for the rest of this post – including…to what extent should planning be allowed after a person is clearly disabled or incapacitated?

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  For more visit:



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