Far too many people think that it is easy to execute a legally binding document using tools that you can get online. In fairness, a layperson can create a document that would stand up in court using DIY tools, but the this may not be a good thing.
Power of Attorney Dispute
Sometimes you come across a story that is instructive from an estate planning standpoint, and we have learned about a case that was resolved in Pennsylvania last year. A woman named Mercedes Goosley was getting up in years, and she decided to create a power of attorney.
She wanted to give her son, Joseph, the ability to make decisions on her behalf. To this end, she obtained a boilerplate power of attorney online, and she filled in the blanks. After it was completed, she took it to a notary to get it notarized.
After the power of attorney was executed, Joseph assumed that he had the legal right to act for her, and he exercised the right when necessary. The document was created in 2013, and in 2015, Mercedes began living with Joseph full-time, but she owned her own home.
In 2017, she felt ill, and she went into the hospital. When she was released, she required a level of care that only a nursing home could provide. She entered a nursing facility, and Joseph put her home on the market because she would not be returning to it.
He found a buyer, and the contract was signed, but his brother, William, had other ideas. William was living in the home, and he filed a lawsuit contending that Joseph did not have the legal right to consummate the sale.
The plaintiff pointed out the fact that the power of attorney that was signed by Mercedes Goosley was a springing durable power of attorney. As a result, it would not go into effect unless the grantor was declared incompetent by a court.
This never happened, but Mercedes wanted Joseph to have the power immediately after she signed the document. However, her mistake led to this costly and acrimonious legal battle.
In the end, the court found in favor of Joseph and Mercedes because of her actual intention, but this was a very messy situation that could have been avoided.
Understand Your Options
Interestingly enough, Consumer Reports conducted a study into the efficacy of DIY estate planning a number of years ago. They brought in three prominent legal professors to examine wills that were created using boilerplate templates.
The legal scholars found flaws, and they stated unintended negative consequences can come about when laypeople use these tools. This is clearly demonstrated by the Goosley case.
In addition to the fact negative outcome factor, there is another dimension to consider. As a layperson, you are simply not going to understand all the options that are available and why you should use one instead of another.
For example, a lot of people think that a will is the asset transfer that should be used unless you are very wealthy, but this is patently false. A revocable living trust can be a better choice for a number of reasons.
When you have a living trust, you would be the trustee while you are living, and you empower a successor that would assume the role after your passing.
This person or entity would be able to manage assets on behalf of a minor child if necessary. They can also be given the ability to administer the trust if you become incapacitated late in your life.
Inheritors receive lump sum bequests all at once when a will is utilized. This can be a source of concern if you are leaving money to someone that is not ready to handle it. When you have a living trust, you control the nature of the distributions.
The trust would become irrevocable after your death, and the beneficiary would receive distributions in accordance with your wishes. If you want the trust to provide limited distributions incrementally for years until the beneficiary reaches a certain age, you can dictate those terms.
Another advantage is the avoidance of probate. This is a costly and time-consuming legal process that would enter the picture if you were to use a will as your asset transfer vehicle.
A living trust is one option, but there are other possibilities, and the ideal course of action will depend on the circumstances.
We Are Here to Help!
When you choose our firm, we will explain all your options so you can make fully informed decisions. If you are ready to get started, you can schedule a consultation at our Bluffton, SC estate planning office if you call us at 843-815-8580.
There is also a contact form on this site you can use if you would prefer to send us a message.