By William B. Howell
If you have a “simple” Will as your only estate plan, you should realize that a Will only becomes effective after you are dead and after the Will has been submitted to the probate process in Chancery Court. What about protection for you and for your family if you should become incapacitated during life?
Many people have put in place a durable power of attorney giving someone they choose broad powers to act during life when they cannot. Sounds good, but there are potential drawbacks. The power of attorney may not be honored when the time comes to use it. Or the act that needs to be done is not specifically permitted in the power of attorney. Just saying that your power of attorney agent “can do anything I could do if I were present” may well not be either accepted or satisfactory. Many times the courts have held that in order to do some act using a power of attorney, the power of attorney must specifically grant that authority. Also, the laws in Mississippi do not mandate that a power of attorney has to be honored. Some financial institutions have a policy that “we don’t honor powers of attorney”, and you will most often not learn that until it is time to use the power of attorney because the principal has become disabled and you cannot get another document signed; so then what do you do?
The alternative under those circumstances is to go to Chancery Court for a conservatorship. This process is sometimes called “living probate” since it takes place in the same court and has many of the same requirements as the probate that follows death. There are expenses and delays in both these court matters. So, most people want to avoid them. But how? A properly drawn Living Trust prepared by an attorney licensed in Mississippi and familiar with our laws is a solution for most people. Unfortunately, many people only want a “simple” estate plan, so they do not manage to have a Living Trust. You know what those people get, don’t you? They have a “simple” plan (or no written plan at all, more likely) and their family gets to deal with the court and all the complications after death or disability.
Many people own their property as “joint tenants with rights of survivorship”. That means when the first joint tenant dies, the survivor automatically owns the asset without any court or lawyers. Sounds good, but what happens when the second one passes away? You have not eliminated probate, just delayed it. As you can see, this is only planning for death. What if the spouse does not pass away, but is incapacitated? No help there. And you may have given the survivor sufficient assets to create a death tax problem. This type ownership is often found between spouses. If you want to own property jointly with a spouse and still have the lifetime protection and no probate, and without creating an additional tax problem, then use a Living Trust.
Many people have put a child on their bank account, completely unaware that under Mississippi law there is a presumption that you intended to create a survivorship account, meaning that when you die that child gets your whole account, regardless of what your Will says. To get around this problem they sometimes then put all the children as co-owners on that account. The result is that now all creditors of all children have a right against the bank account. There are better ways to avoid probate that do not expose your assets in this way.
Get some good advice from a legal professional familiar with the complex area of estate planning and asset protection. Just like brain surgery, this is not a “do-it-yourself” undertaking. Good estate planning will likely be one of the best investments you will ever make.
And you will sleep better.
