Presenters: Marsha Goetting Joel Schumacher Extension Economics Specialists Extension Economics Specialists Department of Agricultural Economics & Economics Department of Agricultural Economics & Economics 2

Sponsors 3 This program is made possible by a grant from the FINRA Investor Education Foundation through a partnership with United Way Worldwide.

4 Solid Finances Web site solidfinances

Future Sessions5 DateTimeTitleLocation April 3 Marsha NoonWills, Living Wills, End-of-Life Registry, Advance Directives & POLST April 17 Marsha NoonEstate Planning Tools & Tips: Avoiding Probate with Beneficiary Deeds, PODs, TODs, and other Beneficiary Designations

66 Power of Attorney, Trusts and more about estate planning March 22, 2012

7 Question A: Have you granted someone power of attorney? 1.Yes 2.No

8 Question What percent of Americans age 55 – 64 have a Durable Power of Attorney?

9 Question B: % with Durable Power Attorney age % 2.38% 3.60% 4.55% 5.29%

10 Durable Power of Attorney Age 50 – 54 29% Age 55 – 6438% Age % Age % Age 75 – 79 60% Age %

11 Who needs POA? Anyone who has assets that would need to be managed if they should become incapacitated.

12 Incapacitated Motorcycle accident Car accident Alzheimer’s/Dementia Alcoholism Drug Dependency

13 What is a Power of Attorney? Written, notarized document in which one person gives another power to conduct certain acts on his/her behalf

14 Principal: Person granting the power

15 Attorney in Fact or Agent : Person to whom the power is granted

16 Montana Uniform Power of Attorney Act Effective October 1, 2011 Provisions for Creation Provides Safeguards

17 Forms Montana Statutory Power of Attorney Agent’s Certification as to the Validity of Power of Attorney and Agent’s Authority

18 Naming an agent? Only the principal can decide who should serve as agent  Must be trustworthy to fulfill the responsibilities of POA

19 Avoid Naming an Agent who Ill Difficulty managing money Inexperienced with financial matters

20 Responsibilities of Agent  Principal should inform agent what authority (power) has been given in the POA form

21 Important Information for Agent  Agent’s Duties & Circumstances  Potential liability for any losses caused by agent’s violations

22 List of transaction categories that can be included in the agent’s general authority Page 2 of MontGuide The Montana Uniform Act provides:

23 Real property Tangible personal property Stocks & bonds Commodities & options Banks & other financial institutions List of Transaction Categories

24 Operation of entity or business Insurance & annuities Estates, trusts & other beneficial interests Claims & litigation List of Transaction Categories, cont’d.

25 Personal & family maintenance Benefits from government programs Civil or Military Service Retirement Plans Taxes List of Transaction Categories, cont’d.

26 Additional Powers Create, amend, revoke, or terminate a revocable living trust Make a gift Create or change right of survivorship

27 Additional powers con’d. Waive the principal’s right to be a beneficiary of a joint and survivor annuity  Including survivor benefit from retirement plan Disclaim property

28 Question C: Can an agent write a will or have a will written for the principal? 1.Yes 2.No

29 Agent is not permitted to: Write a will--no Represent the principal in court

30 Authority to more than one person? Principal may designate two or more persons to act as:  Coagents  Use authority independently

31 Consequences of giving authority to coagents Disagree about action Potential results Attorney’s fees Court costs

32 Successor Agent Principal may designate a Successor Agent, if the original agent: Resigns Dies Becomes incapacitated Is not qualified to serve Declines to serve

33 Successor Agent Authority Has same authority that was given to the original POA agent

34 What makes a POA valid? Signed by:  Principal or  By another individual within the principal’s presence who is directed to sign the principal’s name

35 Notarized Form Genuine signature Acknowledged signature before notary public

36 When is a POA effective? When it is signed  Unless the principal provides instruction otherwise in special instructions section

37 Springing Power “Springs into” existence upon the conditions stated by principal

38 Question D: Can an agent continue to make financial decision after the principal has died? 1.Yes 2.No

39 Can agent make decisions after principal’s death? No! Authority ends at principal’s death Responsibility falls to personal representative

40 Does an agent get paid? Yes, unless the POA states otherwise  Reimbursement of expenses  Reasonable compensation

41 District Court Review Agent who is found liable for breaching duties is responsible for :  Restoring its value  Repayment of attorney’s fees & court costs

42 Durable Power of Attorney POA in Montana is considered durable unless the document specifically states otherwise

43 Signing a document that indicates that POA is revoked  “I hereby revoke my Power of Attorney dated January 12, 2012, naming John Jones as my agent” Revoke a POA

44 Prior POAs Should be destroyed because signing a new POA does not automatically revoke a previous one

45 Revocation Revocation statement could be added to: Special Instruction Section of POA

46 Financial Entities Unless notified of the POA revocation Principal may be legally bound by agent’s actions

47 What if a POA was signed before the Montana Uniform POA Act became effective on Oct. 1, 2011? Still effective if:  Met requirements of previous law

48 Question E: Is a POA written in another state valid in Montana? 1.Yes 2.No

49 Is a POA written in another state valid in Montana? Yes if, Complied with laws of the other state

50 Method for Agent to Prove Authority Form  Agent Certification as to the Validity of Power of Attorney & Agent’s Authority

51 What if Entity Refuses to Honor POA? After presented by agent, entity is required to accept the POA: No later than 7 business days

52 Question F: Does Social Security recognize POAs? 1.Yes 2.No

53 Social Security Does not recognize power of attorney for managing a beneficiary’s funds!

54 Representative Payee Social Security Veteran’s Pension Railroad Retirement Public Benefits

55 Representative Payee Contact appropriate agency for application form & instructions

56 Representative Payee Social Security –Report use of benefits Form SSA-623 Form SSA-6230 Form SSA-6233

57 Representative Payee Wording Bank Account Title –(Beneficiary’s name) by (Your Name), representative payee –(Your Name), representative payee for (Beneficiary’s Name)

58 Representative Payee Receive & Disburse funds Medical confirmation that person is unable to manage benefit payments required

59 Representative Payee Do not mix beneficiary’s funds with your own or other funds

60 Social Security Booklet “A Guide for Representative Payees” Call:  Online:

61 Caregiver Task Does a power of attorney exist? –Who has been given the power?

62 Question G: Do you believe a power of attorney would be useful in your situation? 1.Yes 2.No

63 Question H: Do you have a revocable living trust? 1.Yes 2.No

64 Question I: What percent of Americans age 50–64 have a revocable living trust? 1. 72% 2. 63% 3. 57% 4. 46% 5. 33% 6. 25% 7. 19%

65 Living Trusts Age 50 – 64 19% Age 65 – 7425% Age 75+29%

66 Why have a trust? Avoid probate Keep up with the Jones—every one has one Bad experience with a will

67 What is a Trust?? A trust is a legal entity that holds title to property for the benefit of one or more persons or entities

68 Types of Trusts Revocable Irrevocable Special Needs Testamentary A/B QTIP QDOT QPRT

69 Trust name Identify trust by – name & – date

70 Naming the trust James A. Sims & Lois R. Sims as trustees of the Sims Family Trust, Dated October 20, 2011

71 Trustor Person who establishes the trust

72 Trustee Named in trust agreement Manages assets for designated beneficiaries

73 Beneficiary Person to whom trustee distributes trust principal or income during life or at death

74 Trust Agreement Written document containing instructions to trustee

75 Funding the trust Life insurance proceeds Checking & savings accounts Stocks & bonds Home Land

76 Revocable Trust Can change your mind about provisions

77 Assets must be retitled in name of trust Worthless if do not transfer assets to it

78 Irrevocable Trust Can’t change anything

79 Testamentary Trust Established by a written will

80 Why Testamentary Trust? Incapacitated Spouse –Alzheimer’s –Dementia

81 Why testamentary trust? Age 18 Child has right to his/her inheritance without regard to financial competency

82 Why Testamentary Trust? Minor Children –Manage assets until they reach certain age

83 Why Testamentary Trust? Financially incapacitated/ incompetent heir –Can’t manage money –Addiction problem

84 Distribution of Trust Income or Principal Use percentages instead of dollar amount in case values of assets change

85 Percentages 75% to my son, John Jones 25% to MSU Extension

86 Authority given to trustee Distribute annual income & trust principal by: –Discretionary Standard –Mandatory Standard

87 Discretionary Standard Trustee judgment Health Education Maintenance Support

88 Trustee Decision Chris wants to take a trip during the summer to Europe –“It would be a very educational experience,” says Chris

89 Question J: You are the trustee…will you provide funds for a trip to Europe for Chris from the Trust? 1. Yes 2. No

90 Mandatory Standard Dictated by trust instrument –Distribute at predetermined date or occurrence

91 Upon reaching certain age –25 or 30 or ?? At intervals Ages 25, 30, 35? Occurrence

92 Inheritance????? Child who inherits assets of more than $2,000 –becomes ineligible for SSI & other benefits

93 Special Needs Trust For special needs children who receive or may later be entitled to receive public benefits

94 Montana  Parents Let’s Unite for Children Montana's Self Sufficiency Trust Guide

Question What is the $$ amount of equity in your home that a Montana Homestead Declaration (if recorded) protects against most creditor claims while you are alive?

96 Question K: Amount of home equity Montana Homestead Declaration protects? 1. $250, $100, $ 60, $ 40, $ 20,000

97 Question What is the $$ amount the homestead allowance protects against creditor claims after you die under the Montana Uniform Probate Code?

98 Question L: Amount of homestead allowance after death? 1. $250, $100, $ 60, $ 40, $ 20,000

Summary Homestead Declaration –$250,000 (living) Homestead Allowance –$ 20,000 (after death)

100 Question M: What % of Montanans paid an inheritance tax 2010? % 2. 75% 3. 50% 4. 25% 5. 10% 6. 0%

101 Heirs who paid Montana inheritance tax in % There is no longer an inheritance tax in Montana

102 Question N: What % of a Montanans deceased person’s estate paid federal estate tax? (2009) % 2. 75% 3. 50% 4. 25% 5. 10% 6. 1%

103 Federal Estate Tax 2009 less than 1%, –8,704 deaths  44 paid  0.005

104 Federal Estate Tax Exclusions YearApplicable Exclusion 2009$3,500, No estate tax 2011$5,000, $5,120,000

Evaluation Usefulness Sound Quality Knowledge gain Pace

106 Opinion Length Quality of Visuals Polls

Best wishes as you proceed with your estate planning! Marsha