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Memento Mori Minute
The stuff that has your clients calling you first. (If Tom Hanks could survive for four years on that island, then I can wait. WILSON!)
by Doug Harvey
Hello friends.
This week's theme: The part of estate planning that gets ignored because it isn't about dying. Most clients think of estate planning as the documents that handle what happens after they're gone. For a meaningful share of clients, the documents that handle what happens during a period of incapacity end up doing more of the day-to-day work than the documents that handle the ending. We're going to talk about those.
If you have a client who tells you they "have a will, so they're set," reply "ALIVE" and I'll send you a short blurb you can copy-paste to them.
— Doug Harvey
In This Issue:
① Estate Planning 101 — Why a Living Trust Does Some Things a POA Can't
② Steal This Line — For the Client Who Thinks the Will Is the Plan
③ If This, Then Refer — Four Conversations Worth Having Before They Need to Happen
④ Quote of the Week — Marcus Aurelius (plus, naturally, me)
EP 101
Why a Living Trust Does Some Things a POA Can't
A client's father has a stroke. The family has the financial Power of Attorney he signed eight years ago. Properly executed, statutorily compliant. They take it to the bank.
Sometimes the bank refuses. Even when they don’t, the bank usually wants to look at the document for a while first. A front-line employee follows the internal procedure: a copy of the principal's driver's license, an explanation of his current condition, possibly the original document instead of a copy. More questions. More time. The bank’s caution is understandable: The employee at the counter is deciding whether to hand over control of an account to a stranger. Not an enviable position.
Texas law requires the bank to honor a properly executed POA. When they don’t, the family then has to bring in an attorney to remind them. Invoking that law takes time and energy the family does not have, during weeks when they are also, separately, dealing with a parent who just had a stroke.
The financial POA is a powerful, necessary document. Every estate plan needs one. The problem is not the document. It is the institution holding the assets.
The revocable living trust avoids this for a structural reason. The bank is not being asked to determine whether an agent has authority to act on behalf of an account owner. The trustee is the account owner. The trust holds the account. The trustee shows up, presents the trust certification, and acts. Sophisticated plans typically use both: the trust for what can be retitled in advance, the POA for what can't.
Steal This Line
For the Client Who Thinks the Will Is the Plan
Estate planning has a branding problem. Clients hear the phrase and picture the documents that handle the day they die: the will, the trust, the beneficiary designations. They don't picture the documents that handle the years before that day.
This is the line that helps put their lifetime planning into perspective:
USE THIS!
"If something happened to you tomorrow and you couldn't manage things yourself, are you confident the right people could?"
If This, Then Refer
This Week’s Trigger: The Incapacity Gap
IF YOU HEAR
THEN
"My POA was done a while ago, but it should still be fine."
Refer for a review. Old POAs are technically valid and practically a hassle. Banks scrutinize them harder the older they get.
"I’m fine, I have a Will and powers of attorney."
Refer for a conversation about whether a revocable trust would do some of the work better. For many clients, the answer is yes. For some, it isn't. The point is to know which.
"We're planning a long trip overseas."
Refer for a check-in. The conversation worth having before a long trip is who steps in if both spouses are unavailable at the same time, and whether the existing documents would actually work.
"My parents are getting older and we're starting to handle some things for them."
Refer. Children stepping in informally is the most common version of incapacity planning, and also the least likely to hold up at a bank.
Quote of the Week
"It is not death that a man should fear, but he should fear never beginning to live."
- Marcus Aurelius
“Incapacity…fear that too.”
-Me