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Georgia Springing Durable Power of Attorney

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					Don’t Get Buried in the
      Paperwork
      Joan Koonce, Ph.D., AFC®
       Associate Professor and
Extension Financial Planning Specialist
      Presentation Overview
• What is Estate Planning?
• Why People Fail to Do Estate Planning.
• Documents and Strategies used in Estate
  Planning.
  – Documents Used to Transfer Assets.
  – Documents Used to Handle Other Estate
    Planning Issues.
      What is Estate Planning?
• Accumulating Assets
  – Saving and investing
• Protecting Assets
  – Managing risks
  – Purchasing insurance
• Distributing (Transferring)
  Assets
  – During life
  – After death
 Why People Fail to Do Estate Planning

• Estate planning is needed by the elderly and
  wealthy people only.
• A simple will lasts a lifetime.
• The state has laws to protect my estate.
• Joint ownership with my spouse (for married
  people) is a practical substitute for an estate
  plan.
• Estate planning is too expensive.
Documents and Strategies Used in Estate
              Planning
• Documents and Strategies Used to
  Transfer Assets
  –   Property Titling
  –   Beneficiary Designations
  –   Trusts
  –   Gifts
  –   Wills
              Property Titling
• Transfers by Title (Non-Probate)
  – Joint Tenancy With Right of Survivorship
    (JTWROS)
  – Tenancy By The Entirety (TE)
• Transfers via Will or State Law (Probate)
  –   Fee Simple (Sole Ownership)
  –   Tenants in Common (TC)
  –   ½ Community Property
  –   Personal Property
     Beneficiary Designations
• Transfers by Contract (Non-Probate)
  – Life Insurance
  – Retirement Accounts (IRAs, 403(b)s, 401(k)s,
    Annuities)
  – Pay-on-death (POD) accounts
    • Bank Accounts
  – Transfer-on-death (TOD) accounts
    • Investments (Mutual Funds, Stocks, Bonds)
• Can have one or more primary and
  secondary beneficiaries
                   Trusts
• Trusts (Non-Probate)
• The title to a person’s assets are
  transferred to another party for the
  benefit of others.
• Parties
  – Grantor (Creator): Person who creates the
    trust
  – Trustee: Person who manages the trust
  – Beneficiaries: Persons who benefit from trust
    assets
                     Trusts
• Two Classifications of Trusts
  – Inter Vivos (Living) or Testamentary Trusts
  – Revocable or Irrevocable Trusts
• Purposes of Trusts
  –   Manage assets for another
  –   Protection from creditors
  –   Split assets
  –   Avoid probate
  –   Avoid estate taxes
                    Gifts
• Gifts are taxable, but there are exclusions
  and exceptions that can prevent taxation.
• No Gift Tax Transfers
  – Annual Exclusion = $13,000 per person, per
    year
  – Lifetime Exclusion = $1,000,000
                  Gifts
– Qualified transfers to educational and medical
  facilities
– Child support
– Alimony and property settlements of
  divorced couples
– Gifts to spouses
– Charitable gifts
                       Wills
• Legal document providing you (will maker) the
  opportunity to control how your property
  (assets) is distributed at death
  – Distribute your property to your heirs
  – Appoint an executor or executrix
  – Appoint a guardian for your children
• Prevents your property from be distributed
  according to state laws (intestacy laws)

• Property passed via will or state law goes
  through probate.
Legal Requirements for Wills in Georgia

• You must be at least 14 years old.
• You must be of sufficient mind and
  memory that you are creating a document
  to distribute your property after you die.
• The will must be in writing.
• The will must be signed by you and
  witnessed by at least two people who are
  not recipients of property distributed via
  the will.
             Dying Intestate
• What does it mean?
  – Dying without a valid will or
  – Dying with a will that does not provide
    instructions for distributing all of your
    property
• If you have a valid will when you die, then
  you have died testate.
• When would your will be considered
  invalid?
            Intestacy Laws
• What are Georgia’s intestacy laws?
Distribution Based on Georgia Intestacy
                 Laws
• www.mystatewill.com/states/GA/GAintcalc.htm
Disadvantages of Dying Intestate
• Your assets may be distributed equally between
  your spouse and children.
• Your surviving spouse may give assets to their
  family (your in-laws).
• Your children may be given an equal amount,
  but their needs may be different.
• Probate court decides who will be the
  administrator or administratrix of your estate.
• Probate court decides who will be the guardian
  of your minor children or other dependents.
               Will Limitations
• Disinherited parties can still contest your will.
• Courts can invalidate certain restrictions or
  sections of your will if deemed necessary.
• State statutes may override parts of a will (i.e.,
  a Year’s Support award for spouse and minor
  children).
            Will Limitations
• Will does not supersede automatic
  transfers after your death (i.e., contract or
  title).
• Will does not eliminate the payment of
  debts from your estate.
            What Type of Will?
• Statutory Will
• Be aware of the advantages and
  disadvantages of a:
  – joint will and
  – mutual or reciprocal wills.
• Codicil
  – Supplement that modifies, explains and/or
    amends a current will
Documents and Strategies Used in Estate
              Planning
• Documents and Strategies Used to Handle
  Other Estate Planning Issues
  – Letter of Last Instruction

  – Power of Attorney

  – Living Will

  – Georgia Advance Directive for Health Care
      Letter of Last Instruction
• Provides details of your desires regarding:
  – the distribution of specific tangible items and
  – your funeral and burial instructions.


• Letter is not legally
  binding.
         Powers of Attorney
• Legal documents authorizing another
  person (agent) to act on the behalf of
  another (principal).
  – May be revoked
• Should your powers of attorney be
  durable?

• Your powers of attorney do not continue
  after you die.
     Advantage and Disadvantage of
         Powers of Attorney

• Advantage
  – You reduces the need for
    someone to go to court to get
    approval to make decisions
    on your behalf.
• Disadvantage
  – The person you choose can
    abuse their power.
   Types of Powers of Attorney
• Durable Power of Attorney for Finances
  – Appoints a person to manage your property and
    finances
• Durable Power of Attorney for Health Care
  – Appoints a person to make health care decisions


• You can also consider a springing power of
  attorney.
                Living Wills
• Also referred to as an Advance Medical Directive
  or Health Care Proxy
• Legal document expressing your desires
  regarding the use of life sustaining equipment if
  you are not able to make the decision
• Georgia Medical Consent Law
  – Emergency Situations
  – Non-emergency Situations
        Georgia’s New Form
• Combines Durable Power of Attorney for
  Health Care, Living Will and Guardianship
  in one form
• Georgia Advance Directive for Health Care
  – www.gabar.org/news/new_advance_directiv
    e_for_health_care_act_signed/
  Living Will: A Friend’s Response 

• MY LIVING WILL

 Last night, my friend and I were sitting in the
 living room and I said to her, “I never want to live
 in a vegetative state, dependent on some
 machine and fluids from a bottle. If that ever
 happens, just pull the plug.”

 She got up, unplugged the TV, and threw out my
 wine.
   Estate Planning Documents Needed
                Scenario
• Carlos (age 42) and Tatyanna (25) are married with 3
  minor children (1 child from Carlos’ first marriage).
• Carlos’ net worth equals $450,000
• Carlos’ complications with his
  diabetes has left him in a coma.
• Carlos’ lifetime health insurance
  benefit of 1 million dollars has been
  reached.
• Hospital costs are between $5,000
  and $14,000 per day.
• Carlos has no estate planning
  documents.
   Estate Planning Documents Needed
                Scenario
• No living will: Carlos’ net worth will be depleted
  soon.
• No Power of Attorney: Wife has to go to court
  to get approval in order to make decisions on
  Carlos’ behalf.
   – What if Tatyanna is a stay at home mom with no
     income or assets?
• No will: Carlos’ assets may not be distributed
  according his wishes particularly with a child
  from a previous marriage.

				
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