BIKE LAW 101 - THE BLS FOR THE TOURING CYCLIST - Part TWO - ESTATE PLANNING

BIKE LAW 101

THE B.L.S. [1] FOR THE TOURING CYCLIST: Part TWO – ESTATE PLANNING

By Steven M. Magas, The Bike Lawyer[2]

Last month I ventured away from safety, accidents and riding the bike to consider the BLS – Boring Legal Stuff – related to insurance and bicycling. This month the second [and last] BLS installment: Estate Planning.

Why does the bicyclist need to worry about “Estate Planning?” What the heck IS “Estate Planning” anyway? Sounds rather vague and morbid! Why should a BICYCLIST worry about Estate Planning for a few minutes instead of cleaning her/his trusted steed?

“Estate Planning” for most of us [us NON-millionaires, that is] consists of getting a will prepared, as well as possibly a trust and, even more important for the bicyclist, a couple of “Powers of Attorney.” For most people, their estate planning goals are to provide financially for their surviving spouse, protect their assets, insure that their children are physically and financially cared for, minimize cost, taxes and delay and insure that their plan for the distribution of their life’s work is done the way they want it. Other goals may include providing for children of a prior marriage, making sure that business interests are taken care of, providing liquidity to pay bills and taxes and avoiding family conflict and strife!

Here’s a little “12-Step” program for getting the BLS done in YOUR life!

1. Make a will.

2. Consider a trust.

3. Make health care directives.

4. Make a financial power of attorney.

5. Protect your children's property.

6. File beneficiary forms.

7. Consider life insurance.

8. Understand estate taxes.

9. Cover funeral expenses.

10. Make final arrangements.

11. Protect your business.

12. Store your documents.

YOUR WILL & TRUST

We all would like to live forever, or at least long into our “golden years.” It seems that many adults fear “making a will” more than death or dealing with a life insurance agent! The thought of talking about “end of life” issues scares many people and prevents them from getting their will done. However, the legal effect of NOT dealing with these issues should scare you even more!

Everybody Needs a Will

In a will, you state who you want to inherit your property and name a guardian to care for your young children should something happen to you and the other parent. If you have small children you should have a will – no question about it – you are committing “Parental Malpractice” if you don’t! Under Ohio law, if you have no will, then the Probate Court Judge determines who will take care of your children until they are 18 years old. Without a will advising the court about who you want to inherit your property, Ohio law tells you exactly who gets it. Without a will or trust in place, your young children take possession of your entire estate, including all life insurance proceeds and such, at the tender age of 18. Failure to have a will or trust prepared can cause your estate to incur taxes of expenses which could be avoided.

What is a Will?

A Will is a legal document in which you:

· Name the Guardians of your children, as well as alternative Guardians if your first choice is unavailable.

· Describe who you want to inherit your property.

· Name the “Executor” or “Executrix” of your estate – the person responsible for gathering up your assets, paying your debts, and seeing your estate through the Probate process such that your property passes to the appropriate people.

· Provide for passing assets to a Trust.

Not just any writing listing your wishes can be a legal will. Ohio law is very specific about how the will must be signed and witnessed. Failure to follow these rules exactly can cause your wishes to be ignored by the Court.

Trusts: Not Just For Millionaires

A Trust is also a legal document. However, trusts can be extremely diverse in what they do. Today, though, we’re going to limit our discussion to a very basic form of trust – one that holds your assets for your children and distributes when they are a little older – say 22 or 25 or 30! During the estate planning process we ask people to look at the life insurance they have purchased, or have available through work, their retirement holdings and all other assets, and determine how much money could be available to their children in the event of their death, or should both spouses die. Often, this ends up being a rather considerable sum of money – more than most people feel like dropping into the laps of their children at age 18!

This is where the Trust comes into play. In your will, you can leave the majority of your estate to a Trust or Trustee, should your spouse be unavailable. In the Trust, you designate when you want your children to have these funds and how you want the Trustee to handle those funds. This distribution can be written in just about any manner that makes sense to you. Want to encourage or pay for college? Your trust can provide for that. Want to give the children a specific sum each year until they reach 25 or 30? Your trust can provide for that. Want to give your Trustee discretion to distribute money to meet each child’s specific needs? Your trust can provide for that. In essence, you figure out what works for you and your lawyer can write a Trust to make it work!

POWERS OF ATTORNEY

What are POA’s?

A Power of Attorney [“POA”] is a legal document that gives someone ELSE the power to make decisions for you. POA’s are of CRITICAL importance to the bicyclist. If you are in a crash and are unconscious or unable to make decisions, a POA gives another person the legal right to make those decisions. The “catch?” A POA must be signed by you BEFORE you are unconscious or incompetent and must contain particular language to be valid after you become incompetent. More importantly, if you do not have health care POA’s in place before you are hurt, your family could be in a “Terry Schiavo” situation, where no one has authority to make medical or end-of-life decisions for you.

Financial POA

In Ohio, a “durable” power of attorney is one containing particular language set forth in the Ohio Revised Code such that the POA will continue in force in the event of the incompetency or death of the person signing the POA. “Incompetence” here means that the mental status of the person signing the POA has changed due to illness or medical condition, injury or otherwise, such that the person is incapable of handling his own affairs. For the bicyclist this usually means an accident-caused head injury which renders the rider unconscious, comatose or in an altered state of consciousness.

In a financial POA, the person you choose will have the power to pay your bills or do anything else financially that YOU could do. A POA can be very broad – the power to everything you could do. Most people are more familiar with a very narrow and limited POA– the pink forms at the BMV which permit you to give somebody else the power to get your license plates or sell your car.

The financial POA must be signed when you are competent. If a motorcycle crash renders you unable to make financial decisions, it is too late to create a POA – your assets may be frozen, unavailable to your spouse or family, and your bills might go unpaid or your credit could be damaged.

The Schiavo Case & “Advanced Directives” in Estate Planning

The Terry Schiavo case was a real medical and legal wake-up call for many Americans. The case provided a public window into an Estate Planning “Worst Case Scenario” – a person who was unconscious, but not “terminal,” who had never prepared any written instructions advising health care providers as to how she wanted to be treated. Today, so-called “advanced directives,” such as a special POA for Health Care and a Living Will, can take care of those issues.

A “Durable Power of Attorney for Health Care” is a legal document that authorizes another person of your choosing to make health care decisions for you if you are unable to make informed decisions on your own.

A “Living Will” is a document that contains your written wishes and instructions for care at the end of life. You can state your preferences regarding aggressive life-prolonging treatment.

Ohio law now specifically provides for “Living Wills” and “Health Care Powers of Attorney”. In fact, a simple Google search reveals numerous websites on which forms for both, approved by the Ohio State Bar Association, The Ohio Hospice & Palliative Care Organization and others, can be found. While you can prepare these forms without counsel, you must read them extremely carefully, fill in the blanks appropriately and insure that the witness and notary requirements are followed exactly. Failure to do so can render the forms worthless at a time when you need them the most!

SUMMARY

For most people, these five documents: Will, Trust, POA, Living Will, Health Care POA – make up their “Estate Planning” package. In addition, I would strongly urge bicyclists to use the Estate Planning process as a time to organize your papers and get them in one place, to consider a safe deposit box for important papers, to review and update their life, health and disability insurance and consider any estate tax issues in their situation. Further, this is a great time to discuss your Estate Planning decisions, particularly your end of life decisions, with others. Morbid, perhaps, but for the casual or serious rider, this could be one of your most important conversations!

GOOD LUCK AND GOOD RIDING!

Steve Magas - The Bike Lawyer!

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[1] Boring Legal Shiii …er…. Stuff!

[2] Steve. Magas is an avid Ohio cyclist and trial lawyer whose practice focuses on protecting the rights of riders. Steve has handled more than 100 “bike cases” ranging from traffic tickets and crashes involving minor injuries to crashes leading to brain injury or death. Steve writes regularly on legal issues relating to cycling. Steve offers a FREE CONSULTATION on your legal questions – reach him at 513-484-BIKE or online at BikeLawyer@aol.com.