June 30, Business Matters–Those Darn Necessary Documents

Professional advice key in estate planning

By Deborah Tompkins Johnson

Special to the Gazette Packet

Many of the experiences I had with my dad, especially about the support he needed with healthcare advocacy and living arrangements the last four years of his life, continue to come to mind following his death in December 2019 at 91 years old. I wrote previously here about realizing later in my life that my dad showed his love through generosity and that I came to appreciate generosity as his love language. I also wrote about lessons I learned as his main caregiver.

In this article I share personal stories as well as tips from professionals on business matters related to banking, legal and medical documents we all need.

Accounts with Financial Institutions

Dad made me a joint owner (with rights of survivorship) on most of his bank accounts several years before his passing and even before he became ill. The decision to add me to his accounts helped me to ensure dad’s bills were paid and deposits made in a timely manner. We were actually very fortunate this worked out for us and the rest of the family as naming a person as joint owner with survivorship is not always the best fit for a family.

Burke & Herbert’s Executive Vice President Joe Collum pointed out that, “The challenge with a joint account with right of survivorship, is when the original account owner dies, all those assets transfer to the joint owner, bypassing the will. So, you must have a good understanding within the family as to whether that is what was intended and best for everyone.”

A joint owner has total access and rights to the funds in the account. The joint owner with survivorship could also deplete the account and close it. So family dynamics and trust are important, Collum stressed.

Collum more often recommends having a joint owner without survivorship. The joint owner can assist with account handling to assist the main owner. The funds can still be accessed after the primary owner has passed. However, the funds would be administered per the deceased’s last will and testament.

Another option for the account owner is to designate a trusted person as an agent under power of attorney (POA). The POA designation can be shown on bank forms and accounts.

Collum explained further that some families have a separate account with enough to take care of routine expenses and have a joint owner with survivorship on that account. The other account(s) with more assets could show an account owner without survivorship, or a power of attorney or beneficiary(ies). A pay-on-death beneficiary does not have rights to use the account while the loved one is living, but the funds transfer upon death and can be accessed quickly, if needed, by presenting the death certificate. Besides being on dad’s banking accounts, he named me as his agent in his Power of Attorney.

Power of Attorney

A power of attorney document names someone (called an agent) to handle financial matters when one cannot. It is important to note that when someone passes, the POA expires. Many people do not realize that, says Collum.

Deborah Matthews, an estate planning attorney based in Old Town Alexandria, recommends having the power of attorney prepared by a legal professional. She adds, “Giving someone authority over our finances is important yet not without risk. Hiring legal counsel for our protection is the smart and safest way to handle and protect our assets. It has also been quipped, “The only thing more expensive than paying a lawyer to do something is paying a lawyer to fix something.”

Matthews recommends reviewing the Consumer Financial Protection Bureau’s publication for POA agents in Virginia. (Help for agents under a power of attorney in Virginia)

Medical Directive

Discussing the advanced medical directive and having dad make his decisions and sign it went easily. As Dad approached end of life, his medical directive expressed his choices and named me to make decisions for him when he could not. Having documents prepared before they are needed can allow time to create additional protection and ease of access.

Matthews explained that a medical directive communicates the kind of health care our loved one wants and authorizes an agent to make medical decisions if the person cannot communicate. Once you have the document, Matthews says it is important to make sure all health care providers have a copy. “They cannot follow your directions if they don’t know them.”

Last Will & Testament

Now to the will, which of course is used after death. The will is not effective until the court accepts it as a valid document, said Matthews.

Then, when the will needs to be acted on, you need to go to the court to have it filed (probated) with the clerk and become qualified to administer the estate. The court will provide a “Certificate of Qualification” that will be used when you are asked for proof that you are the personal representative (executor) of the estate.

These are difficult but necessary discussions. If you have a family member who does not have the documents discussed here or has not taken actions with financial institutions, please encourage them to do so — and we would do well to do so ourselves. The advice above just scratches the surface. Early discussions with family and then with respected professionals are key starters. Stay in contact as changes occur in life and keep documents current.

Collum and Matthews agree early planning and continuous follow-through will make it better for everyone involved.