Sunday, November 30, 2014

Now and Later: Power of Attorney Authority in Iowa

When I was younger, I used to love Now and Later candy, despite the "workout" it gave my mouth/teeth.  You can enjoy the candy as a hard candy, and continue to enjoy it later when it is soft and chewy. It was like having having a different piece of candy, all in one piece.

When I discuss a power of attorney document with a client, one of the questions that I go through is whether they want the authority to be a springing power or an immediate power.  For example, do you want the person you identify to have authority to act on your behalf only when your doctor says you don't have sufficient capacity? Or, alternatively, do you want that person to have authority immediately, regardless of your capacity level?

For many clients (and for many attorneys) the initial thought/answer is 'why would you give someone power over your assets when you don't need any help?'  Here are my three responses:

1.  You may have sufficient capacity, but you aren't around.  Some examples work best.  You are on vacation in a remote location where you don't have access to modern communications.  Lake in northern Canada.  Cruise.  Mars.  You get the idea.
2.  Good Days - Bad Days.  With many forms of dementia, it is a gradual deterioration and not a "black and white" diagnosis.  Thus, when you are at a doctor's office, it may be a better day and your doctor may not be willing to cooperate in determining whether you are incapacitated or not, even though your family members are observing your struggles on the bad days.
3.  Convenience.  Sometimes it may just be easier to have someone sign documents on your behalf because you can't get away; or you are traveling for work.
4.  Trust Issue.  For me, this is the clincher/closer.  If you trust someone to act on your behalf when you are incapacitated, surely you would trust them to act in your best interest when you have your full capacities?  More importantly, if you don't trust this person for any reason, then we really need to look closer at your nominee.

Iowa recently enacted the Uniform Power of Attorney Act this past summer, which incorporated the prevailing preference by the members of the Uniform Law Commission, making the authority an immediate power (i.e., regardless of capacity) as the default provision.  If the document is silent, the statute provides the power is an immediate power.  You can still make the authority a "springing" power by a specific inclusion in the document.

The immediate power gives you the ability to use the powerful authority not only now when you have your capacity, but also later if you don't have your capacity.  You really can't beat that flexibility, in my opinion, although that brings up some discussion points for another post about the potential for abuse.  

Sunday, November 16, 2014

Basic Estate Planning Checklist for Aging Parents

I have previously posted previously pretty much on all of these items separately, but I thought I'd commit to the "checklist-mania" and add my own checklist.  For individuals that are helping out with an aging family member, this can be a quick guide to get you started.  (If you are taking advantage of an aging family member, then you need to get a conscience and turn yourself into the authorities.) While this list can be used for pretty much anybody, young or old, this can be a helpful guide for those assisting a parent/grandparent with planning.

  1. Power of Attorney (health) - This document enables health care decisions, such as medicine, doctor, facility, therapy, etc. to be made by a selected individual.  While more than one can be named, it is typically preferred to name one responsible individual.
  2. Power of Attorney (financial) - This document provides for someone to handle financial matters.  Iowa's recently updated statute provides significant changes to this position.  This can be the same person under health powers, but need not be the same person.  Again, normally better to just have one individual in this position.
  3. Living Will - This document is one that will provide final instructions should the individuals life deteriorate to the point where their existence is continuing only with the help of life-support.  (Not a DNR.  Different topic for another day.)
  4. Declaration for Final Disposition of Remains - Following someone's death, several "permanent" decisions are made as to who will make decisions on the disposition (burial, cremation, other) of the body.  Nothing uglier than fights at the funeral home when it should be a time of memories.
  5. Last Will and Testament/Revocable Trust - The Will only has the authority after death and after it has been admitted to probate.  It will provide directions over are the assets are distributed and who is in charge.  A revocable trust is similar to a Will, but handles things a little differently.
  6. Beneficiary Review - Frequently overlooked (or unable to locate) are beneficiary designations of retirement accounts, life insurance, annuities or other assets.  Hey, even I admit that I myself have neglected to keep up on all of my beneficiary designations.   Remember, that these beneficiary designations take priority over the provisions in a will or trust (unless they are the beneficiary listed). 
  7. Ownership Review - Also frequently overlooked, a common "culprit" are bank accounts where someone is intended to be listed as simply able to sign checks, but is listed as a joint owner instead.  
While not exhaustive and certainly not to be considered legal advice, hopefully this will allow you to be prepared to review and discuss the basic provisions.

Sunday, November 09, 2014

When Your Biological Child is Not Your Child, According to the Iowa Court of Appeals

For the most part, I think our appellate courts do a pretty good job of deciding cases and justifying their rationale.  I may not always agree with the result, but I can at least understand the reasoning.

But in a recent ruling from Iowa Court of Appeals (Mohr v. Langerman and Mohr, No. 13-1422, Oct. 15, 2014), I'm left scratching my head.  As always, the facts are "interesting".  Put all those pieces together and you have a case that makes you go hmmm.

Facts: Jerry Mohr was married for 24 years.  But, while he was married, he (1) intentionally had intercourse with another woman for the purpose of having a child and (2) lived with yet another woman and helped raise her child.  While Jerry lived in Arizona, he died owning some property in Iowa.  And, of course, he apparently didn't feel the need to have a will.  Duh.  So when the end came for Jerry, he left behind quite the legal mess.  Following his death, the biological relationship was conclusively established in Arizona between Jerry and the son that he had with the woman he had one relationship with for that purpose.  You know, that DNA testing that gives you a nearly 100% confidence level.  You know, a court ruling by a court and that whole full faith and credit clause of the US Constitution.

Iowa's intestate laws provide that if someone doesn't have a will, and they die with a spouse and children that are not children of that surviving spouse, the spouse and the children will divide the estate.  (Probably need to update the intestate law summary for this blog...another day.)  In particular, Iowa Code § 633.222 provide that a biological child inherits from their father if there is paternity evidence or the child has been recognized by the father.

Seems simple enough.  Code says if there is paternity evidence or recognition, and since we have DNA evidence, end of story.  Not so fast my friend.  Although pretty much every person 5 years of age or older knows what "or" means, our court feels that they can't give a plain English interpretation of "or".  What the Iowa Court of Appeals basically said was 'while we think we know what "or" means, because the Iowa Supreme Court says that "or" doesn't mean "or" in these circumstances, we are stuck with that ridiculous position.'  What????

Keeping in mind that this statute was originally written decades ago before we knew what DNA was or what we can do with DNA, and realizing that once statutes are written, it is a slow and difficult process to amend a statute, the court still maintained that the legislature needs to amend the statute to prevent our Supreme Court's ridiculous ruling from over a hundred years ago.  Another reason why judges and lawyers get a bad rap, should anyone care to read this probate case.

Now, in all fairness, the Court eventually comes around and determines that the son is actually Jerry's son, but it does so via an awkward, backdoor analysis that contorts itself to fit on the page it was written.  Maybe they felt they were constrained by ancient rulings and couldn't establish/correct the proper rationale, so they wanted to get the right result in another method.  Basically they relied on the testimony of the mother of the child and her basically self-serving statements that Jerry "recognized" their child as his son.  Never mind that we have this fantastic DNA evidence that can conclusively establish that it was his son, we're going to follow this testimony of a mother trying to get an inheritance to her son.  Good grief.

The morale of the story: if you have a biological child out there that you want to disinherit, and you don't want to spend a minimal amount of money to have a will written, you can just refuse to recognize that child as in fact your child and, according to Iowa courts, that child will not inherit from you.

Sunday, September 28, 2014

New Law in Iowa Involving Joint Ownership Designation and Deeds

Effective January 1, 2015, a new law will go into effect that can be effective and useful in several situations.

Deeds with married couple, joint tenants or survivor language - As I've written before, there can be issues (and have been many issues) where the way ownership of real property is listed on the deed can have serious impact on estate plan.  Tenants-in-common, joint tenants with full rights of survivorship, etc.  It used to be if you had a deed that transferred ownership to two or more people (such as a couple) without the magic language of "joint tenants with full rights of survivorship and not as tenants-in-common" it was presumed to be tenants-in-common which can have a significant different intended result.  Soon, that will no longer be true.  NOW, straight from the Iowa legislature, that rule is changed. Iowa Code §557.15 will soon provide that IF a deed fits under any of the following descriptions: (a) identifies two grantees as married to each other at time of instrument; (b) says "joint tenants" or something similar; or (c) includes language such as "or their survivor", the presumption is that ownership is with full rights of survivorship and NOT as tenants-in-common.  This can be a significant benefit to property owners (in the future) that may be a little lax in using legal services.

Sunday, June 22, 2014

Post-Marital Agreements in Iowa - Inching Closer?

Iowa remains one of the few (if not last) hold-out state that doesn't permit post-marital agreements.  (Agreements that allow a married couple to plan the division of their assets by their own agreement and separate from some default protective rules.)  However, the Iowa Supreme Court has finally allowed enforcement of a post-marital agreement.  Sort of.

Herbert and Velma were married in Florida.  While they lived in Florida, they signed post-marital agreement which included certain limitations on rights of each spouse at the death of the other.  Florida permitted post-marital agreements.  After 14 years, they moved from Florida to Iowa.  (Quick aside: Really? I love Iowa and all, but moving to Iowa from Florida in the retirement years seems a little backwards.)

After moving to Iowa, Herbert passed away and Velma tried to do an "end around" the post-marital agreement and take a spouse's elective share.  I don't feel like going into an extensive analysis of the Iowa Court's ruling, but basically they said the contract was validly made in Florida and should have Florida laws applied to it and that there wasn't an Iowa public policy argument that should prevent the application of the post-marital agreement.  One of the key points to keep in mind here is that they lived in sunshine state for 14 years after they signed the agreement.

What was especially interesting in the Court's ruling were some of the comments that the court made that clearly indicated that they would like to see Iowa move to a point where post-marital agreements are allowed.  Unfortunately, there are a few key Iowa lawmakers that have refused to allow this change in Iowa law.

As we continue to have more and more second marriages, the role of a post-marital agreement can become even more important for couples choosing to make their own decisions and arrangements.  Refusing to allow adult couples the freedom to make these decisions needs to be changed.

Thursday, April 10, 2014

Governor Branstad Signs New Uniform Power of Attorney Bill in Iowa

Well, it was a long time coming, but following unanimous passage in the Iowa House and Iowa Senate, today Governor Branstad signed the Uniform Power of Attorney bill into law.  The Uniform POA is a substantial and long-overdue replacement to the current power of attorney statute (Iowa Code chapter 633B). The statute is applicable to ALL power of attorney documents, whether signed before or after the effective date of July 1, 2014.

Some key points from the Uniform act: (1) provides for improved remedies in event of abuse/misuse of authority; (2) clear guidance for agents; (3) addresses powers involving co-agents; (4) specific and general authority of agents; and (5) statutory form to use for individuals without attorney access.

Sunday, March 16, 2014

How to Own Land in Iowa...Let Me Count the Ways

Well, in the past week, I had 3 different calls involving issues of how land was owned and resulting problems when one of the owners passed away.  It is not unusual, apparently, for individuals to prepare their own deeds or to not have deeds provided to them not reviewed by experts (and no, realtors and bankers don't necessarily qualify as experts in this area).  Sometimes, even attorneys have problems with these issues.  (Probably those attorneys that graduated from the University of Iowa.)  (Sidenote to realtors, bankers and Iowa law grads - please enjoy the good-natured humor.  For the Iowa law grads, ask a Drake law grad to read these big words to you.)

Listed below are the more common options on ownership of real property in Iowa that could be placed on a deed with joint ownership.  Note two things I just indicated:  these comments apply to real property (you know, land, dirt, back 40...not your car) and land located in Iowa.  These same rules may not apply in Louisiana, or any other state.  Also, I have a previously blogged about some possible concerns with joint ownership.

  • "John Smith and Mary Smith" or "John Smith and Mary Smith as joint tenants" or "John Smith and Mary Smith as tenants-in-common" - The result of this type of ownership (sometimes kind joint tenants or tenants-in-common) provides that upon the death of one of the joint owners, the other joint owner continues to own a 1/2 undivided interest, and the estate of the deceased owner will handle the other 1/2 interest.  Thus, if John dies first, his will (if he has one) or the intestate statutes (if he doesn't have a will) will dictate the ownership of his half interest.  Mary may be surprised/upset/concerned with who she is owning the property at that time after John dies.  Or, it is possible that Mary may be the only beneficiary and becomes the sole owner of all of the property.  HOWEVER, just because Mary is the surviving spouse of John does not guarantee that she will receive John's 1/2 share at his death.  Also, using "and" or "or" doesn't make a difference. 
  • John Smith and Mary Smith, as joint tenants with full rights of survivorship and not as tenants-in-common - This type of ownership provides that upon the death of one of the owners, the other owner automatically becomes owner of the entire property.  This applies regardless of what the will provides and regardless of whether John or Mary really wanted it that way.  However, this specific language must be used in the deed in order to have the property owned with such a result.  This may not always be desired, as maybe you want to control what happens to that property at your death.  For example, if you and a friend own property together, do you want that property to go to your friend or to your family?
  • John Smith, life estate, with remainder to Mary Smith - This form of ownership basically gives John the ownership of the property for his life, with full ownership passing to Mary at John's death.  John and Mary basically share rights during their lives.  I won't dig into the buried neurons from law school in my little brain to explain the potential variations and issues associated with this form of ownership.  (e.g., what if Mary isn't living at the time of John's death?)  Suffice it to say this is just another method to title real property.
  • NOT - Transfer on death or "Lady Bird Deeds" - "But my cousin's brother-in-law from (insert state other than Iowa) said that his barber's neighbor titled his property as "transfer on death" to his brother.  Can I do that in Iowa?"  No.  The life estate is close to that type of ownership, but Iowa does not recognize these types of deeds.  These are presented as ways to avoid probate in other states, but for several good reasons, Iowa does not recognize them.
The way that this property is owned can have an extremely important impact on the complete estate plan for individuals/couples.  Setting up the ownership is critical to be aware of and not taken lightly as part of the overall estate plan process.  This is one of those things that those DIY will plans may not provide full insight that an experienced estate planning attorney can provide guidance.

Sunday, February 23, 2014

Even the Rich and Famous Fail to Plan Properly

Philip Seymour Hoffman obviously had several demons involved in his life before its tragic premature ending, and maybe updating his estate plan wasn't at the top of his list.  However, the legacy he left his family and friends is probably not one that he would have wanted.  It does, however, give this trusts and estates lawyer an opportunity to demonstrate how each of us can learn from PSH's errors (besides not doing drugs).

As reported in Forbes, PSH's will was signed after his first-born, but was not updated when his next two children were born.  Now, like in NY, the laws will typically provide some protection for "after born heirs" (those kids born after a will) but with some missing language in PSH's, plus some other problems, the issue will not be clearly determined until the court's get involved.

In Iowa, a child born after the execution of a will and which they are not provided for under the provisions of the will, will receive the amount they would have received if their parent had died without a will (intestate) pursuant to the provisions under Iowa Code § 633.267.  However, what if you have specific requirements, conditions and provisions for the children.  If they are receiving their inheritance under § 633.267, then those same provisions may not apply and the kids will be subject to different provisions.

What lessons can we learn?
(1)  Periodically review your will and other estate plan documents - adding a child, grandchild or other family member is a logical change justifying a review and update.
(2) Include specific language in your estate planning documents to reference subsequently born children.
(3)  Don't do drugs.

Matthew Gardner