I recently began handling a very contentious family matter regarding the substantial assets of an elderly man in West Texas. It appears a 90 year-old man who was worth several million dollars was cleaned-out by his “friends.” Today, the friends have hundreds of acres of hill country, some of it on the Colorado River, and lake front property. The elderly gentleman is in a nursing home waiting to be put out on the street for not paying his bills.

In the course of representing this man, I have learned a great deal about how people getting up there in their age should protect their assets and themselves. This month’s article is devoted to those issues.

Q. I am thinking about having a will written but I am wondering if I should. What do I need to think about?

A. First, just about everybody except children with no assets should do what lawyers call estate planning. Sometimes estate planning means writing a will and sometimes it means preparing for life’s end in other ways. For example, a power of attorney or a trust may make sense.

Q. I have an old will but it was written when I was still married, do I have to have a new one written?

A. Generally, a former spouse is automatically removed as a beneficiary under the other spouse’s will in the event of a divorce unless the will or other documents require otherwise. So, the quick is answer is, no you do not need to write a will because you got a divorce to keep your ex-spouse from getting anything. However, because the law only takes away the gift under the will to your ex-spouse, you probably need to write a new one so that everything ends up where you want it.

Q. So once I get a will written, I am done?

A. No. A will is only the first step. For some people a it will be very simple, for others it will be complex. It all depends upon what kind of assets a person owns. It will take a lawyer to determine what all you need but assuming a will is enough could be a very costly mistake.

Q. What else should I do?

A. Perhaps the most important estate planning you can do is change your accounts to payable on death. Every account you have such as checking, savings, money market, IRA, 401k, life insurance, etc. can be paid to another person upon the owner’s death. Since most people have most of their assets in one of these forms, payable on death designations can resolve many estate planning issues. Just be careful who you designate. If you designate a spouse, you need to be sure and change the designation if you get a divorce because the law won’t automatically remove them like it does with a will. Also, having your assets transferred through payable on death accounts keeps them away from the estate tax which is still around at least for a little while and it keeps them out of the court that administers your will. This means more of your money goes to who you want it to go to.

Q. I have several hundred acres of property and assets in many forms. How should I handle those?

A. When you start getting into real property other than your home, you should consult a lawyer. A good estate planning lawyer can be found more reasonable than you might think. Email me below and I can give you some names. In any event, the few hundred dollars you would spend on a lawyer would probably save you thousands in estate administration fees, taxes, and penalties.

Q. If I have a will written, will it protect me in the event I become incapacitated or too old to take care of myself?

A. No, a will only takes effect after your death. There are many ways to take care of a person financially who has been incapacitated for some reason. One way is to give a durable power of attorney to another person. Another way is to create a trust and have the trustee draw down a monthly benefit for the incapacitated person.

Q. I am thinking about giving my sister power of attorney over me in the event of my incapacitation. What do you think?

A. I would say you should take great caution in taking this step. Most people believe, or want to believe, that their family will take care of them in this type of situation. My experience has been that someone with a lot of assets rarely gets taken care of; they usually get taken advantage of. The case I wrote about earlier involves family and friends taking advantage of a wealthy man. Though most people won’t take the advice, it is always a good idea to create a trust for your benefit in the event of incapacity.

Q. Why is a trust preferred?

A. First, you do not just want a trust but one that appoints a bank or trust company as trustee. There are many reasons for this. Perhaps the most important reason is that it keeps the money in the hands of disinterested people who work for a bank or trust company. This is their business and they will lose it if they take advantage of their customers. Another reason this is so important is because a trust company that runs off with your money can be sued and probably has some assets you can liquidate to get your money back. Family and friends under a power of attorney or as a trustee usually waste away your money or hide it with friends so you can’t ever get it back.

Q. I guess I better get to work getting these things done for my estate. Can I just use the software you see at the office supply stores?

A. You can. Sometimes you can get acceptable documents this way. The problem with this approach is that you cannot get advice with this software. You don’t have someone asking you questions and tailoring an approach to your situation. Also, these programs are usually not state specific so you may not get something that will work in Texas. Before you decide you can not afford a lawyer, you should get a price from a few. They will do this for nothing and at least you will know how much it costs. You may be pleasantly surprised.