CONSERVATORSHIPS, POWERS OF ATTORNEY & REVOCABLE TRUSTS Presented By: Cynthia R. Woods, Attorney at Law st Avenue North, #210 Billings, MT

Can you bring him out of his coma long enough to sign his paycheck?

FAMILY: LOVEY – Spouse, doesn’t like numbers, not good with finances BERNIE M. – Son, aggressive, investment person that takes a lot of risky positions, lives above his means PRUDENCE JOY – Daughter, passive, lives within a set budget, low risk tolerance FLOWER CHILD – Daughter, hippie, doesn’t care about finances, recently moved to Colorado Disclaimer: all characters portrayed are fictitious. Any resemblance to real persons, living or dead, is purely coincidental!

CONSERVATOR – A guardian, protector, preserver. Appointed by Court to manage the affairs of an incompetent person. One who is appointed by a Court to manage the estate of a protected person. From: Black’s Law Dictionary. Cause for Appointment: The person is unable to manage the person’s property and affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs or chronic intoxication, confinement, detention by a foreign power, or disappearance; and The person has property that will be wasted or dissipated unless proper management is provided or that funds are needed for the support, care, and welfare of the person or those entitled to be supported by the person and that protection is necessary or desirable to obtain or provide funds. From: Section (2), MCA

Priorities for Appointment as Conservator: A conservator, guardian of property, or other like fiduciary appointed or recognized by the appropriate court of any other jurisdiction in which the protected person resides; An individual or corporation nominated by the protected person if the person is 14 years of age or older and has, in the opinion of the court sufficient mental capacity to make an intelligent choice; The spouse of the protected person; An adult child of the protected person; A parent of the protected person or a person nominated by the will of a deceased parent; Any relative of the protected person with whom the protected person has resided for more than 6 months prior to the filing of the petition;

A person nominated by the person who is caring for the person or paying benefits to the person; A conservator corporation organized under Title 35, chapter 2 {nonprofit corporation act of Montana} The public administrator From: Section (1), MCA

The Conservatorship proceeding is a public, Court proceeding with the following steps: The proposed Conservator files a Petition with the Court which must include: A general statement of the person’s property with an estimate of the value of the property; including any compensation, insurance, pension, or allowance; and The reason why appointment of a conservator is necessary. From: Section (1), MCA The proposed Conservator must provide Notice of the time and place of hearing on the matter to the person to be protected and that person’s spouse, or if none, the person’s parents. That notice must be served personally at least 14 days before the date of the hearing. From: Section , MCA The protected person must either have counsel of that person’s choice or the Court will order the office of state public defender to assign counsel. The Court may appoint a physician and/or visitor to examine the protected person and report to the Court. From: Section (2), MCA

Temporary Conservator: The Court, while the petition for conservator is pending, and after preliminary hearing but without notice to others, and if the Court finds that the welfare of the person requires immediate action, may appoint a temporary conservator for the person for a specified period not to exceed 6 months. From: Section (1), MCA

Once Appointed: Conservator is to act as a fiduciary and shall observe the standards of care applicable to trustees. From: Section , MCA Within 90 days after appointment, a conservator shall prepare a complete inventory of the estate. From: Section , MCA A conservator has broad powers to act without court confirmation, but the conservator must file a full account in writing to the court every year. From: Sections & 438 MCA The Court may require a Conservator to post a bond or make another security arrangement. From: Section , MCA

Planning in place

DURABLE POWER OF ATTORNEY: 1.No Court involvement or determination of inability to manage money, unless it is springing in which event document specifies method to determine incapacity; 2.Principal determines who will be the agent and successor agents; 3.No public hearing or public record; 4.Can be immediately effective; 5.Effective during incapacity if “durable”; 6.Continuing fiduciary responsibility and management of property, but no court accounting; 7.Principal retains the right to make decisions.

In Montana, we have a Statutory Form Power of Attorney for Financial Matters This form is created under Section , MCA. The Power of Attorney can be as broad or as narrow as the Principal provides in the document The statute contains instructions to the Principal regarding what the power of attorney grants. It also contains instructions on the agent’s duties, termination of the agent’s authority and liability of the agent.

Revocable Trust: The trust survives the Trustor’s death and the successor Trustee can take over administration upon proof of death Combination of a Durable Power of Attorney and a Will Revocable means that it can be changed, modified or revoked The Trustor is usually the first Trustee and the trust provides who will be the successor Trustee(s) upon incapacity of the Trustor A revocable trust does not require additional tax filings if the client is both the Trustor and Trustee. The trust accounts are held under the Trustor’s social security number and the Trustor includes all income on the personal Form 1040 as the client did prior to establishing the trust The Trustor specifies in the trust how Trustor wants property distributed at death The Trustor can specify what will happen if a beneficiary predeceases The Trustor can make provisions for the property to remain in further trust for minor or incapacitated beneficiaries or for other reasons.

The trust survives the Trustor’s death and the successor Trustee can take over administration upon proof of death Provided all property is in the name of the trust, no probate is required on death of Trustor It is important to transfer property to the ownership of the trust: John Doe as Trustee of the John Doe Trust dated 1/1/2016 This is helpful, because it causes the client to inventory all assets owned and to make a schedule that can be used by the successor trustee in determining what property is owned by the client It is important to take all property into consideration when determining how to distribute property – including property that has beneficiaries named or that has payable on death designations

Forms of Ownership of Property and Designations at Death: Joint Tenancy, Rights of Survivorship Beneficiary Designations Payable on Death and Transfer on Death Designations Beneficiary Deeds Trusts, revocable or irrevocable ___________________________________________________ Tenants in Common and Sole Ownership

Advantages of a Revocable Trust: Provides a Trustee to handle finances in event of incapacity Avoids Probate at Death Provides facility of payment provisions for minor or incapacitated beneficiaries Provides ability to make payments to beneficiaries as prescribed by the Trustor Provides a common pool of funds for paying expenses during incapacity and at death

$100,000 Account1 with Bernie as beneficiary $100,000 Account2 with Prudence as beneficiary $100,000 Account3 with Flower Child as beneficiary House in sole ownership and no beneficiary

COMPARISON OF VEHICLES  Conservatorship:  Court determination of incapacity  Court determines agent based upon priority  Public hearing and public record  Time delays involved, because of notice and hearing  Court costs, atty fees of Petitioner & protected person, dr., visitor  Continuing reporting requirements to Court and parties  Conservator takes over all financial transactions  Durable POA, Trust:  No Court involvement  Client chooses agent  No public record  Immediately effective and continues through disability if durable  Expense of atty drafting  Continuing fiduciary responsibility, but no court accounting  Client retains right to make decisions if competent