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.