Maine Taxes, Wills & Estate Planning Blog

Making a Will in Maine

September 6, 2010 in Estate Planning, Taxes, Wills

FIVE GOOD REASONS TO MAKE A WILL

Having a Will Ensures that Your Wishes will be Honored. In Maine, if you do not have a Will, State law will determine how your property will be distributed and who will manage your estate upon your demise. With a Will, you are the one who decides to whom and how your assets will be distributed and who will take care of your financial affairs.
A Will May Be Your Main Estate Planning Document. In simple estate planning situations, a Will may be the main document in your estate plan. In more complex estate planning situations, you may want to use a “Revocable Trust” as the main document in your estate plan. In this situation, your Will “pours over” any assets which you did not transfer to the Revocable Trust during your lifetime to the Trustee for the Trust to administer.
A Will Can Be Drafted to Reduce Your Estate Taxes: Your Will can take advantage of estate tax planning options to lessen the estate tax impact such as charitable gifts, marital deduction gifts, and credit shelter gifts. Your Will can include instructions on how to administer specific properties, including estate and income tax elections.
A Will Can Provide for the Care of Your Children and for Those You Care for Who are Disabled: If you have minor children or are responsible for the care of disabled persons, you can appoint in your Will a guardian to have custody and care for them, and a conservator or guardian of the property to be responsible for administering property for them. You may also provide for any share of your estate passing to a minor or disabled person to be held in a trust.
With a Will, You Decide Who is Your Personal Representative: Your Will also designates a Personal Representative (or Executor) to handle your affairs after your demise. The Personal Representative collects your assets, administers your estate, settles claims and tax obligations, and arranges for distribution of your estate to those you have selected to be your beneficiaries.

HOW TO MAKE A WILL IN MAINE:

In Maine, any person 18 or more years of age who is of “sound mind” may make a Will. The “sound mind” standard means you can identify the natural objects of your bounty and be able to identify, in general terms, your assets and liabilities.

In Maine, you must be the person signing the Will, or someone can sign in your presence and at your direction. Your Will must also be signed by at least 2 persons who witnessed your signing or your acknowledgment of your signature. Standards may vary in other states and countries.

WHAT SHOULD GO INTO YOUR WILL:

Will drafting is not recommended as a “do it yourself” exercise. You should always obtain knowledgeable counsel and advice to be sure that your Will is properly prepared and executed. Here are some points that your counsel will address.

Declaration and Publication. A Will should contain:
1. A statement that you are making your Last Will, revoking all prior Wills and Codicils. A “codicil” is an amendment or modification of an existing Will.
2. A declaration of your domicile or legal residence, which is helpful in defining where the Will should be offered to a Court for “probate”. (“Probate” is a term derived from the Latin word meaning “to prove” and a Will which has been accepted for probate has been “proved” to be the last Will.). The declaration also defines what State laws, including State estate tax laws, apply to your estate.
3. A statement of family relationships: Identifying spouses and other family members by name helps to define your legal heirs and demonstrate your knowledge of the likely objects of your bounty.
Direction to Pay Debts and Taxes. Although your Personal Representative is responsible to pay to your debts and tax obligations, you may identify in your Will how these expenses will be paid and identify the source of funds for payment of debts and taxes.
Disposition of Tangible Personal Property. You may give specific directions about who will receive tangible items such as automobiles, household possessions and family heirlooms. In Maine, you can either make gifts of personal property in your Will or you can make reference to a separate written memorandum.
Specific Gifts. You can provide for gifts of cash or specific items of property to beneficiaries of your choice. Be sure to provide alternate dispositions in case the original beneficiary does not survive you or declines to accept the gift. Also bear in mind the possibility that the specific item in question may be sold or disposed of or given away by you during your lifetime or that an investment may change in form as a result of mergers or acquisitions, so you can provide for this possibility.
Charitable Gifts. You can provide for specific gifts of money or property to charitable organizations. Be sure to verify the correct name of the charitable organization and confirm that the organization has, in fact, been recognized as a charitable organization by the Internal Revenue Service. Alternate provisions should be included in case the organization changes its name or ceases to exist or no longer qualifies as a charitable organization.
Tax Qualified Gifts. If you plan to use the Will as the principal document in your estate plan, you may include marital deduction qualified gifts and credit shelter qualified gifts in your Will. Estate taxes can be quite complicated and you will want to be sure to work with your counsel to meet statutory requirements so as to minimize estate taxes.
Residuary Gift. All well-drafted Wills contain a “residuary gift” to specify how any of your remaining or “residual” assets are to be distributed. In drafting a Will, you will want to plan carefully about what will happen to the share of a residuary beneficiary if he or she predeceases you. In cases where you use a Revocable Trust as your principal estate planning document, the residuary clause will “pour over” into the Trust. A “Revocable Trust” is a written agreement between you and a “trustee” in which your trustee agrees to manage the property in accordance with your directions and instructions. A “Revocable Trust” can be “revoked” at any time during your lifetime so that you are always in control of your assets. The “Revocable Trust” can be a helpful way of passing assets without the involvement of the probate court, protecting family privacy, and providing for management of assets if you become ill or disabled.
Trust Provisions. In addition to “Revocable Trusts” you can also create trusts in your Will. These arrangements are called “Testamentary Trusts.” If you provide for the creation of trusts for beneficiaries (such as a marital deduction trust, credit shelter trust, or trust for minors), you will want to include provisions to govern the Trustee’s duties and responsibilities in administering the trust fund. This might include a reference to the trustees’ powers under State law or a detailed recitation of the Trustee’s powers.
Personal Representative Powers. A “Personal Representative” (sometimes called the Executor or the Administrator) is the person whom you designate to settle your affairs, collect your assets, pay your bills and expenses, and distribute your assets to your chosen beneficiaries. You may want to specify in detail the powers of your Personal Representative, either by referring to the powers of the Personal Representative under state law or by listing these powers in the Will. Your Will can include directions to the Personal Representative about exercising various tax elections.
Nominating Guardians and Conservators. If you have minor or disabled children, you should nominate persons to serve as guardians and conservators. Guardians are responsible for personal care needs of the individual. Conservators are responsible for managing and controlling property of a minor or disabled person.
Nominating Personal Representatives. You should nominate the person who you wish to be responsible for administering your estate.
Execution and Acknowledgement. Traditionally, a Will concludes with an “attestation” clause in which you declare the document to be your last Will and sign it in the presence of the number of witnesses required by state statute who will sign the Will in your presence. Wills may be typically “self proved” through a procedure by which you and the witnesses sign in the presence of a notary public and complete a “self proving” affidavit.

Special Forms of Wills

Nuncupative Wills. A nuncupative Will is an oral Will. Under certain circumstances, typically involving a soldier or sailor in a war zone or emergency, it may be possible to establish an oral Will. These are not recommended due to the difficulty of proof.
Holographic Wills. A holographic Will is one which fails to meet the execution requirements imposed by law (typically due to the lack of appropriate witnesses’ signatures). Such a Will is valid regardless of whether or not witnessed if the signature and material provisions are in the handwriting of the testator. These are not recommended due to problems of proving the validity of the handwriting and the lack of witnesses who can testify about the circumstances of signing the Will.
Statutory Form Wills. Maine has an official statutory form of Will which can be obtained from the Registers of Probate. The form is somewhat difficult to complete and should not be used without appropriate instruction.

Planning Ahead Will Help You and Others.

If you need legal assistance in preparing any of the documents discussed here, including a Will or Trust, you can refer to my Phil Hunt webpage at www.perkinsthompson.com for more information about me. I would be happy to assist you with this, or with any other estate planning or elder law matter. I can be reached at (207) 774-2635 or phunt@perkinsthompson.com for more information.

End-of-life Decision Planning

August 1, 2010 in Elder Law, Powers of Attorney, Wills

IN MAINE, YOU CAN MAKE YOUR OWN END-OF-LIFE DECISIONS, FROM MEDICAL CARE TO DISPOSITION OF REMAINS

HERE’S HOW:

In Maine, you are in charge of your medical and end-of-life decisions. By planning ahead and making your wishes known through medical care directives, you can provide for your own peace of mind, and help your loved ones know what to do, in the event of your illness or injury. Such planning can avoid hasty decisions being made with inadequate information, and can avoid family disputes about your proper care and your preferences.

Maine law gives you the legal right to accept or reject medical care. You can not only refuse medical treatment, but also intrusive and invasive nutrition and hydration. You have the right to direct your medical care and treatment in detail and to the end, under a statute enacted by the Maine Legislature called the Uniform Health Care Decisions Act (Title 18-A M.R.S.A. Sections 5-801 to 5-818). Under the statute, your health care instructions are paramount: You can define the scope of health care instructions as broadly or narrowly as you choose. You can also designate someone else to be your health care agent to direct your medical care if you cannot make medical decisions on your own.

Below are typical kinds of medical care and end-of-life directives you can make:

HEALTH CARE DIRECTIVES AND DESIGNATING A HEALTH CARE “AGENT”

Health Care Agent. You can appoint a health care agent to make decisions on your behalf when you are incapacitated, or issue a health care directive either orally or in writing. A written health care power of attorney or advance directive will normally be preferable to properly demonstrate your wishes. A health care power of attorney or advance directive must be in writing and signed by you and two witnesses. The Maine Health Care Decisions Act suggests a form of written directive for you to use. This form is generally available at hospitals and health care agencies and can be found on line. It is only a suggested form and you are free to draft your own.
“Surrogates”. Maine’s statute also establishes a priority list of “surrogates” who can make decisions for you if you become incapacitated but have not appointed a health care agent or given a health care directive. A surrogate may make health care decisions for you if your primary physician finds that you lack capacity and no agent or legal guardian has been appointed or is reasonably available, and you are in a terminal condition or persistent vegetative state. A surrogate may make other health care decisions for you when you are not in a terminal condition or persistent vegetative state, but may not deny surgery or medical procedures which are lifesaving and medically necessary.Section 5-805 of the statute establishes a priority for appointment of a surrogate:
(1) spouse (unless legally separated); (2) adult who shares an emotional, physical and financial relationship with you similar to a spouse; (3) an adult child; (4) a parent; (5) a sibling; (6) an adult grandchild; (7) an adult niece or nephew related by blood or adoption; (8) an adult aunt or uncle related by blood or adoption; (9) another adult relative, related by blood or adoption, who is familiar with your values and is available for consultation; and (10) an adult who has exhibited special concern for you, who is familiar with your values, and who is reasonably available.

A person who chooses to serve as a surrogate decision maker must notify the health care providers and family members.

In all cases, the surrogate is to make decisions in accordance with your directions and instructions to the extent known, and in good faith and in your best interests.

Where more than one member of a priority group is available and willing to serve and the members cannot agree on a health care decision, the law provides a means for resolving disputes, which may include referring the dispute to a neutral third party or the Probate Court.
Recording Availability of Your Directive. Section 5-807 of the Maine Health Care Decisions statute states how health care decision providers are to comply with your health care instructions. They must verify the medical decision with you, and promptly record your health care records information about the existence or revocation of a health care directive or the designation of a surrogate or your capacity or lack thereof. They must also comply with your instructions or the instructions of your authorized agent or surrogate. The statute explains how to resolve a health care provider’s dispute with a directive for reasons of conscience or otherwise.Section 5-808 makes clear that a health care agent or surrogate has a right to your health care information.
Duty to Comply With Your Directive. Section 5-809 of the statute provides protections and immunities for health care agents, surrogates and health care providers or institutions who act in good faith to carry out your directions.To assure that your wishes are honored, the statute provides for damages awards against health care providers or institutions that intentionally violate the statute’s requirements and also against any person who falsifies, forges, conceals, defaces or obliterates your medical directive or revocation or who coerces or fraudulently induces you to give, not give, or revoke a health care directive.

Do Not Resuscitate Orders.

A “Do Not Resuscitate” Order is a direction given by a physician who authorizes first responders or other medical personnel to refrain from administering emergency treatment to resuscitate you. These types of orders are often appropriate for patients in a terminal or vegetative state.

Anatomical Gift Instructions. In 2009, the Maine Legislature enacted the Revised Uniform Anatomical Gift Act. This law allows you to make an anatomical gift (i.e., an organ donation) if you are 18 years or age or older, an emancipated minor, a minor over the age of 16 authorized to apply for a driver’s license, the parent of an unemancipated minor, an agent acting under power of attorney (unless the power of attorney provides that the agent does not have this power), or the donor’s guardian. The gift may be made by a provision in your will, in which event the gift is effective upon death regardless of whether the will is offered for probate or declared invalid. You can also provide for the gift by a separate document, but it must be signed by you as the donor (or by someone else at your direction and in your presence), and in the presence of two witnesses who must sign the document in your presence. The gift may also be made by a statement on your driver’s license or donor card. The law also provides for you to modify or revoke the anatomical gift and even to expressly elect not to make an anatomical gift.The law also provides for the making of anatomical gifts after death. Gifts of a decedent’s body or organs may be authorized by (1) an agent appointed under a power of attorney; (2) a spouse; (3) a registered domestic partner; (4) adult child; (5) a parent; (6) an adult sibling; (7) an adult grandchild; (8) a grandparent; (9) an adult who exhibited special concern; and (10) the former guardian of the decedent. Where more than one person is eligible, but there is disagreement over a gift, the law establishes procedures for dispute resolution.
The law states who is eligible to receive an anatomical gift, such as hospitals, medical and dental schools, colleges, universities, organ procurement organizations, eye or tissue banks, and appropriate research organizations.

The law also defines the rights and duties of a recipient with clear rules for the use of organs and body parts when no specific purpose is specified.
Disposition of Remains Instruction. Issues sometimes arise over who is entitled to custody of the remains of a deceased person. In Maine, this issue is addressed by a Maine statute in Title 22 M.R.S.A Section 2843-A. The person with first priority to take custody of remains is the person you have already designated in writing. Otherwise, the priority is (1) surviving spouse (unless estranged); (2) domestic partner; (3) adult children; (4) parents; (5) adult siblings; (6) adult grandchildren; (7) adult nieces and nephews; (8) maternal grandparents; (9) paternal grandparents; (10) aunts and unless; (11) adult first cousins; and (12) other adult relatives by order of descent. If more than one person is eligible and disputes arise, the Probate Court may appoint a suitable person and may make decisions if those persons who are entitled to custody cannot agree.
Funeral Instructions. You have a right under Maine law to specify in writing what funeral arrangements you want, which are binding on the next of kin if you have adequate funds set aside in a proposed burial plan or other funding agreement. The procedures are set forth in 22 M.R.S.A. Section 2843-A(5). Some people also provide for burial instructions in their Wills, and the Probate Code expressly authorizes the person designated as Personal Representative to carry out such instructions. Insofar as the Will may not be filed for probate for several days after death, the use of a separate written instruction is more desirable.

Planning Ahead Will Help You and Others.

If you need legal assistance in preparing any of the documents discussed here, including Health Care Instructions, Health Care Power of Attorney, Appointment of Health Care Agent, and End of Life Directives, you can refer to my Phil Hunt webpage at www.perkinsthompson.com for more information about me. I would be happy to assist you with this, or with any other estate planning or elder law matter. I can be reached at (207) 774-2635 or phunt@perkinsthompson.com for more information.

Durable Powers of Attorney in Maine

July 2, 2010 in Powers of Attorney

What is a Durable Power of Attorney:
A power of attorney is a document in which one person, the “principal”, appoints another person, the “agent”, to act on his or her behalf, conferring authority on the agent to perform certain acts or functions on behalf of the principal. A power of attorney is “durable” if it continues in effect even if the person who created it becomes disabled or incapacitated.

Durable Powers of Attorney are for Everyone:
All should plan for the possibility that they may become disabled or injured, and their spouses, children, or other loved ones will need legal authority to manage their property, transact their business, and pay their bills.

Durable Powers of Attorney are Simpler and Less Costly than Conservatorships:
Although Maine law does provide a means of managing a disabled person’s property through a court ordered and supervised conservatorship, the legal requirements for setting up a conservatorship are complex and time consuming. The conservator must also post a surety bond and file annual reports or accounts with the Court, which can be costly and time consuming.

A durable power of attorney can avoid the cost and complexity of guardianship and conservatorship proceedings, as the agent can act generally without the need for court appointment and supervision.

There are Risks in Unlimited Durable Powers of Attorney:
There are dangers in granting unlimited durable powers of attorney because the agent may act in his or her own self-interest, and not consider the welfare or wishes of the principal. For example, with unlimited power, the agent could convert the principal’s property to the agent’s own use or treat the principal’s property and finances in a way that adversely affects the principal’s will or estate plan.

As of July 1, 2010, Maine has a New Law on Durable Powers of Attorney:
The Maine Legislature recently passed a law, effective July 1, 2010, 14 M.R.S.A. §§5-901 to 5-964, to better define the powers and duties of the agent acting under a durable power of attorney.

Powers of Attorney Are Now Presumed to be Durable:

Under the new law, a power of attorney is presumed to be durable unless it states that it is terminated by incapacity. This is a major change from prior law, which presumed that a power of attorney was not durable unless it expressly so provided.

Powers of Attorney Now Require the Principal’s Signature:

The new law also requires a power of attorney to be signed by the principal, or signed in the principal’s presence, by someone directed by the principal to sign the principal’s name. This is a significant clarification which expressly allows someone other than the principal to physically sign the document. A power of attorney must be notarized to be effective in Maine.

As under prior law, powers of attorney in Maine must still contain specific language providing notice to the principal and notice to the agent warning both principal and agent of their obligations and liabilities under Maine law.

A power of attorney is presumed to be effective when it is signed and acknowledged unless it states that it will become effective on a future date or upon the occurrence of a contingency such as incapacity or disability.

In Some Cases, the Power of Attorney is Now Effective upon a Doctor’s or Other’s Statement of Disability:

The principal may designate an individual to determine whether the disabling event or other “contingency” has occurred to trigger the power of attorney. Where powers of attorney become effective upon incapacity or disability, if the principal has not stated otherwise, the power of attorney becomes effective when a physician, attorney, judge or other governmental official states in writing that the principal is incapacitated. This is a substantial change in the law.

In Some Situations, the Power of Attorney will Now Terminate by Law:

The new law also states when a power of attorney terminates. For example, the filing of an action for annulment, legal separation or divorce will terminate the authority of a spouse designated as the agent under a power of attorney. Marriage or entry into a domestic partnership will also potentially terminate the authority of the agent.

The Agent Acting Under Power of Attorney is Now Entitled to Compensation:

The new law makes clear that an agent acting under power of attorney is entitled to receive reasonable compensation and be reimbursed for expenses. Compensation is determined under the same standards as apply to personal representatives.

The new law also allows for two or more persons to be co-agents, acting either jointly or singly, and for successor agents, and it more clearly defines the rights and obligations of a successor agent.

The Agent Acting Under Power of Attorney Has Broad Fiduciary Duties:

A very important feature of the new law is §5-914, which defines the duties of an agent acting under power of power attorney to include the duty to act in good faith, be loyal to the interests of the principal, avoid conflicts of interest, act with care, competence and diligence, keep accurate records of all receipts and disbursements, cooperate with holders of health care authority, and endeavor to preserve the principal’s estate plan. These powers are very significant, imposing some broad fiduciary duties on the agent very similar to those imposed upon trustees under the Maine Trust Code. The new law defines precisely the extent of the agent’s liability for a breach of the agent’s duty.

Third Parties Who Accept and Act Upon the Agent’s Power of Attorney Now Have Greater Statutory Protections:

The Maine power of attorney act contains an important new feature with respect to the obligation of third parties to accept and act upon a power of attorney. This addresses a problem which often arose under the old law by which a financial institution or other third party refused to accept the authority of the agent to act for the principal. In addition, third parties who accept the authority of an agent acting under power of attorney now have greater statutory protections.

The Kinds of Transactions an Agent May Enter Into are Now Specified in Detail:

The core of the new law appears in §§5-931 through 5-947, which define in great detail the kinds of specific transactions into which an agent may enter. This allows the drafter of the power of attorney to define specifically what transactions an agent may undertake, such as dealing with real estate, tangible personal property, stocks and bonds, commodities and options, banking and financial institutions, operating business entities, insurance and annuities, estates and trusts, claims and litigations, personal and family matters, governmental benefits, retirement plans, taxes, and gifts.

If explicitly stated, a power of attorney may authorize the agent to create, amend or revoke an inter vivos trust (i.e., a trust created during one’s lifetime), make a gift, create or change rights of survivorship, change beneficiary designations, waive the principal’s rights under an annuity plan, disclaim property or exercise fiduciary powers on behalf of the principal. The new law allows the drafter to pick and choose the powers granted and may include all powers or only limited powers. The explicit statutory statement of powers will make it easier for a third party to be sure that the agent is authorized to engage in a particular transaction.

Anyone who wants to take advantage of Maine’s new durable power of attorney statute should contact his or her lawyer to have a new power of attorney prepared.

Welcome to my Maine Estate Planning and Elder Law Blog, beginning July 1, 2010

July 1, 2010 in Elder Law, Estate Planning, Powers of Attorney

Perkins Thompson receives many inquiries on estate planning and elder law issues. Because I handle many of these, and have been editor of Maine Probate Laws and Maine Probate Procedure and Adjunct Professor of Estate Planning at the University of Maine School of Law, my partners thought it would be useful to clients and readers to post a series of essays on these issues on our firm’s website.

The first topic (below) is on Durable Powers of Attorney in Maine. Maine’s statute on durable powers of attorney changed on July 1, so I thought this would be timely.

The next 5 monthly topics will be: Health Care Powers of Attorney/Living Wills; Wills; Revocable Trusts; Federal Estate Taxes; and State Estate Taxes.

Topics in 2011 will include: Life Insurance; Retirement Plans; Beneficiaries with Disabilities; Guardianships and Conservatorships; Planning for Personal Residences; Planning for Vacation Residences; Planning for Dispositions of Business Interests; Lifetime Gifts; Charitable Gifts; and Probate Administration.

You can refer to my Phil Hunt webpage at www.perkinsthompson.com for more information about me. I would be happy to assist you on any estate planning or elder law matter.