Who Needs Lawyers?

Recently, there has been some public discussion of whether lawyers are really necessary for senior citizens. Some think that anything a person needs to know about public benefits, estate planning, or financial planning is available through public agencies at no cost. Furthermore, some think, documents that senior citizens may need are available from many sources at no cost. This suggests that elder law attorneys like me are simply taking advantage of older people.

This view is seriously wrong, both in general and in numerous particulars. To show why, I want to focus on documents, in particular two that are available from the State -- a power of attorney and a will. I will show what some of the problems are with these documents.

POWERS OF ATTORNEY

The power of attorney is one of the more important legal documents. It provides for another person to make decisions for you in the event you become incapacitated and unable to make decisions for yourself. In Wisconsin, one winds up with two powers of attorney: a health care power of attorney that covers medical decisions and a financial power of attorney for management of property and finances. Most health care powers of attorney, these days, are completed at clinics, hospitals, or other medical facilities. The main question for most people concerns a financial power of attorney.

Wisconsin has a statutory form financial power of attorney. This means that there is a sample form spelled out in Wisconsin Statutes that can be used to execute a power of attorney. The form is widely available and can be obtained for free. In the course of my practice, I see a good many statutory powers of attorney. I see them in contexts where these statutory powers of attorney are causing problems.

These problems arise mainly because the statutory power of attorney prohibits gifting by the agent. In Wisconsin, in order for an agent to make gifts, the power of attorney document itself must specifically spell out that power. Not only does the statutory power of attorney not spell out this power, it specifically prohibits the agent from making gifts. This appears in some fine print on the document itself. So far, although I have reviewed dozens of statutory powers of attorney with clients who had signed them, I have yet to meet a client who was aware that this prohibition upon gifting was in the document or what its significance was.

What is the significance of a gifting power? Most often, problems arise when a person must go to a nursing home. In many circumstances, if gifts to family members are not made, all of the person's money will wind up going to the nursing home and none to the family members or other beneficiaries. If the person entering the nursing home is incapacitated and cannot, therefore, make the gifts himself or herself, the agent under a statutory power of attorney may not be able to make these gifts at all. Sometimes this problem can be corrected, but in many other cases it cannot.

The absence of a gifting power can also cause problems with probate avoidance and tax planning. Sometimes, it is possible to avoid probate by making gifts during one's lifetime. However, if a person becomes incapacitated, their affairs may wind up in an unnecessary probate.

WILLS

This is the age of cheap wills. Some attorneys who do not otherwise practice in the areas of estate and medical assistance planning produce wills for minimal charges. And, if you are so inclined, you do not even need to pay the minimum charge for a will. Just as it has a statutory form power of attorney, Wisconsin also has a statutory will form. So, you may think, who needs lawyers anyway? Or, to put it less kindly, are these lawyers are just taking advantage of people? Not really. Here is why.

For most persons, a will is an obsolete legal document. A will is a legal document that transfers property after death by means of probate court proceedings. The reality is that little happens in many probates except paperwork that would have been easy to avoid. If you read the probate code, you will see that most of it concerns rights of creditors and rights of surviving spouses and family members. Prior to the passage of Medicare and Medical Assistance statutes in 1964 and 1965, many persons died owing substantial medical bills. Probate court was the place where these bills and the rights of the family got straightened out. Nowadays, it is unusual for people to die owing substantial medical bills; for the most part, these are taken care of by insurance. Because of these social changes, probate has become a largely obsolete process.

I do write wills for some clients in some circumstances. My general rule of thumb is: if your affairs are such that they will need to be wound up in court proceedings anyway, probate and, therefore, a will makes sense. Examples of affairs that may wind up in court proceedings anyway are the following: dissolution of partnerships or closely held businesses, substantial debts that will need to be straightened out, significant tax problems, or the need to appoint guardians for minor children. Relatively few people for whom I do estate planning fall into the category of persons who need wills.

Not only are wills and probate becoming increasingly obsolete, I encounter many misunderstandings about wills and probate. For instance, a significant number of my clients think that they will avoid probate because they have a will. This is, unfortunately, flat wrong. Many people think that a will controls over, say, beneficiary designations in life insurance policies. Once again, this is wrong.

It is quite unlikely that a non-lawyer will have any appreciation of when a will is an appropriate estate planning vehicle. There are numerous alternatives to probate. These include beneficiary designations and revocable trusts. It is complicated deciding which of these possible estate planning vehicles is most appropriate and most cost effective. You should discuss these difficult matters and weigh the pluses and minuses with a knowledgeable attorney.

To the question: who needs lawyers?, the answer is: most people at one time or another. Only attorneys have the knowledge and experience to weigh alternatives and to ensure that you understand what you are doing. Unavoidably, life gets complicated from time to time. That is where knowledgeable professional advisers are needed. Persons who think that a 'one-size-fits-all' document drafted by the government will eliminate any need to see an attorney probably deserve what they may get: everything going to the nursing home or an unnecessary probate. Both these outcomes are readily avoidable.

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