Is your durable power of attorney powerless?

Just about everyone knows the importance of having a Durable Power of Attorney (DPOA). This key legal document allows you to name someone other than yourself to handle your financial affairs.  If you become incapacitated, having a DPOA can make the difference between having your attorney-in-fact smoothly handle your affairs, or your becoming the subject of a guardianship.

Unfortunately, "smoothly" is not how things always go in the real world, even if your DPOA has been drawn up by a competent estate planning attorney and every "t" has been crossed and "i" dotted.  The reason: Financial institutions subject the document to rigorous scrutiny and are notoriously reluctant to honor them. Astonishing as it may seem, in Florida there is no one, universally accepted, statutory DPOA form. Therefore, banks and other financial institutions can be as picky as they want. They may tell an agent that the DPOA was signed too long ago and is "stale"; that the bank has its own form that also needs to be signed; that the form you are presenting to them lacks certain language, etc.

A recent article in The New York Times, "Finding Out Your Power of Attorney is Powerless," catalogs the frustrations some have experienced when trying to use a power of attorney at their financial institutions. In one instance, college professor Claire Ullman approached a bank in order to manage the accounts of an elderly relative who had named Ullman as her agent three years prior. The bank rejected the DPOA, and requested that a new one be signed - an impossible task because Ullman's relative was no longer mentally competent. "People sign these anticipating incapacity. Once incapacity arrives, it's too late to sign another one," Ullman says.

It is easy to conclude that making an attorney-in-fact jump through all sorts of hoops is madness. But from the banks' point of view, there is a method to the madness, given the widespread incidence of financial elder abuse. Statistics show that it is not uncommon for an older person to be victimized by his attorney-in-fact - the very person who is authorized to handle his finances. Therefore, banks increasingly err on the side of caution, hoping it will protect themselves from liability as well as their customers from fraud.

This is not to say that the durable power of attorney is useless. It is not. It is vital. Everyone needs one. But in this day and age, you have to take some additional steps after the ink is dry, in order to ensure that when the time comes your agent will be able to use the document as you intend:

• Make sure your DPOA is drafted by an experienced and competent Florida elder law/estate planning attorney. Do not rely on generic pre-printed or downloadable forms! Although there is no one statutory form in Florida, the state still requires that certain items be included and certain formalities followed.

• Once you've signed your DPOA, take it to your financial institution(s). Request that the legal department review it and provide you with written assurance that your agent will be allowed to use it in the future. If it is not acceptable to the bank, find out why and check back with your attorney. Your financial institution has the right to not accept it, but it is obligated to tell you why.

• Be cautious about any bank-generated form you are asked to sign. Some of those forms contain arbitration clauses and other language that may not be favorable to you.

• If you are a client of The Karp Law Firm, call us. We can engage with the bank's legal department and often, work it out for you. If the bank insists it will not accept your DPOA, withdraw your funds and take them to a more cooperative institution. In fact, just saying you're going to do this will frequently encourage a balky bank to acquiesce.

Another route many of our clients choose is setting up a living trust. In contrast to your attorney-in-fact whose authority stems from your Durable Power of Attorney, a co-trustee or successor trustee under your trust is far less likely to encounter roadblocks when managing your trust assets.

You can read the original New York Times article on this subject here. 

Chronically ill seniors, others await Florida Medical Marijuana vote (updated 8-11-16)

Practicing elder law and estate planning in Florida, I naturally meet a good number of seniors with serious physical ailments. Many who endure chronic pain are closely watching this November's election: Not just for the outcome of this highly unusual presidential contest, but for the fate of medical marijuana in our state.

This year's ballot includes Amendment 2, the "Florida Right to Medical Marijuana Initiative." The constitutional amendment, which must be approved by 60% of voters, would expand the use of medical marijuana, giving 450,000 residents with certain debilitating illnesses access to full-strength cannabis. Proponents argue that the plant can help alleviate symptoms of certain illnesses more effectively than opioids and other classes of drugs. That's a viewpoint with which many of my clients seem to agree, as do most Floridians: A Quinnipiac poll conducted in May shows that 80% of Florida voters support the legalization of medical marijuana. Opponents of the amendment argue that medical legalization is a slippery slope that will lead to more widespread recreational use.

Currently, under Florida's Compassionate Medical Cannabis Act of 2014, the use of medical marijuana is very limited. First, the patient must be a permanent Florida resident. The physician must be state-approved to prescribe and must have been treating the patient for at least 90 days. Low-THC (non-euphoric) cannabis may be prescribed for a medical condition that cause seizures or muscle spasms, provided all other treatment methods have been exhausted. Full-strength cannabis is permitted only for those with terminal conditions who are experiencing pain and/or nausea. Read more at the website of the Florida Department of Health Office of Compassionate Use.

Medical concerns and compassion for the ill will surely be the paramount factors determining the fate of Amendment 2. However, there is an interesting economic factor at play here, too. A study by Health Affairs has discovered that from 2010 to 2013, where medical marijuana was legalized, Medicare Part D costs declined, presumably because patients' use of more conventional painkillers decreased. Moreover, if the Drug Enforcement Agency decides to reclassify cannabis as a Schedule II drug, as is currently under consideration, insurance will pick up more of the costs for patients who rely on it. Update 8-11-16: Today the Drug Enforcement Agency announced that it will keep marijuana as a Schedule 1 drug, stating, "The known risks of marijuana use have not been shown to be outweighed by specific benefits in well-controlled clinical trials that scientifically evaluate safety and efficacy."

Without a doubt, this election season has enormous ramifications for Florida, as well as for the nation. 

Felines and homebound seniors: A perfect match

My family and I have a serious soft spot for animals, so in this post I depart from the "legal stuff" to tell you about a lovely program that pairs seniors with furry feline companions. Consider it - ahem - a "fluff piece."

The humane society of Bay County, Michigan recently launched the Cats for Companionship program, which identifies homebound seniors who can benefit from having a pet and are capable of caring for it. The program provides the cat and everything else - food, toys, veterinary care - free of charge. For the adopter, the benefits of having a furry companion are well-documented: it eases stress and loneliness, reduces blood pressure, etc. And the cats, all hard-to-place older animals, get a loving home. A win-win situation.

I think this would be a wonderful program for our area, too. Of course the senior would have to reside in a place that allows pets, and not be allergic to cats. (My wife is, but we have one anyway - go figure!) Is anyone willing to take on creating such a program here?

If you have any doubt about the deep bonds that can exist between human and feline companion, check out this story of a cat that miraculously found its "missing" owner after the owner moved into a nursing home. 


Lastly, if you have a beloved pet and want to ensure its welfare if it outlives you, remember that Florida law permits your pet to be included in your estate plan. Contact our firm for more information.

Florida ABLE Accounts now available

Florida's ABLE program is now operational. Effective July 1 (with certain restrictions which I discuss below), an individual with a qualifying disability may preserve his/her eligibility for means-tested federal government benefits while retaining more than $2,000 in assets. Assets must be held in an ABLE account, a special type of tax-advantaged savings account authorized under the Achieving a Better Life Experience Act of 2014 (which I discussed previously here and here). A person who has established an ABLE account and who depends on vital government benefits such as Medicaid, SSI or SSDI will no longer be forced to remain impoverished to qualify for benefits, resulting in greater independence and better quality of life. Individuals who are able to join the workforce will be able to do so without fear of losing benefits. 

An ABLE account is a savings vehicle modeled on college savings plans. The disabled individual (or his/her parent, attorney in fact or other authorized individual) may open, contribute to and manage the account. The disabled individual is the owner and beneficiary. Growth is tax-free, and up to $100,000 of the account is considered a "non-countable resource" for Florida Medicaid eligibility purposes. Funds may be withdrawn tax-free for qualified disability expenses such as employment training, assistive technologies, transportation, special therapies, medical expenses, housing, education, etc. 

Visit ABLE United to learn more about eligibility requirements, how to open an account, types of investments available and more. Investment options may be chosen from pre-selected portfolios, or a custom portfolio may be put together from the options offered. 

As I noted above, there are some significant program restrictions:

• The individual must have developed the qualifying disability by his/her 26th birthday. (Advocates are hopeful that the age limit can be raised or eliminated in the future.)

• If the account owner has been receiving Medicaid benefits, the state must be paid back from any funds remaining in the account when the account-holder passes away. 

• No more than $14,000 per year may be contributed by any individual to the account. 

• Once the account reaches $418,000, no additional contributions can be made.

For these and additional reasons, families and individuals may still find a Special Needs Trust or a Pooled Trust a better choice, either in lieu of or in addition to an ABLE account. Unlike the ABLE account, there is no upper limit on contributions or total amount accumulated in a Special Needs Trust or Pooled Trust. 

Contact The Karp Law Firm if you wish to explore which option is best for your or your loved one's circumstances.

Surprise, it's ancillary probate

People who ask my firm to handle the Florida probate of a loved one's estate often have an inkling of what's ahead: just about everyone has heard horror stories about the probate courts, particularly the courts in Florida. This negative reputation is overblown in some respects, especially for simple estates. Still, it is fair to say that the probate process can be glacially slow, require mountains of paperwork, and incur significant administrative and legal expenses. Probate can be a tedious and frustrating process for a family trying to deal with its grief, resolve family turmoil, wrap things up and move on.

So you can imagine what happens when I have to tell a family that they face more than one probate. That there will be two. Or in some cases, three. Here's why: When a Florida resident owns real property in a state outside Florida, and that property is devised in a will (or if the decedent has died intestate), the out-of-state property must be probated in the state where it is located. This is called an ancillary probate. Ancillary probate is necessary because the Florida courts have no authority to transfer the title of real property to beneficiaries for property outside this state.  Ancillary probate entails retaining a lawyer in the other state and, of course, incurs additional fees and delays. 

This brings me to two related points. The first is that it is vital to be be forthright and thorough when discussing your assets with your estate planning attorney. This is not intended to be an infringement on your privacy. A competent attorney requires all this information to provide you with intelligent advice, including advice about possible ancillary probate. 

The second point is the danger of do-it-yourself estate planning. Many cases of unexpected ancillary probate I've encountered have their roots in the decedent's decision to create a plan using software or pre-printed forms, foregoing legal counsel. In my experience, more often than not this approach turns out to be a  penny-wise and pound-foolish. And, of course, once the will-maker has passed away, there is no going back to revise documents. 

So how can you spare your family the inconvenience of an ancillary, out-of-state probate? If you're married you may wish to co-own the out-of-state property jointly with right of survivorship with your spouse, so it can pass without the need for probate when the first spouse dies. You can also co-own property jointly with right of survivorship with an adult child, but that presents its own problems, exposing the property to your child's potential creditors.

For the vast majority of Florida residents who own out-of-state property, the simplest and most effective solution is to create a revocable living trust and to title the out-of-state property in the name of the trust. Properly done, this approach will allow your family to avoid an ancillary out-of-state probate, as well as avoid Florida probate.