Why Won’t the Bank Honor My Power of Attorney?

Why Won’t the Bank Honor My Power of Attorney?

When you have been appointed as an agent under a Durable General (Financial) Power of Attorney, you presume that financial institutions will honor the document appointing you and provide you with access to funds and financial information on behalf of the person who appointed you as agent. It can be a frustrating experience to be told that you cannot access accounts or get the information you are seeking. To resolve the problem, it is important to ask for a clear explanation for why the document is not acceptable. There are some common reasons for a bank, financial institution or other agency to refuse to acknowledge the power of attorney.

1.) The Power of Attorney Is Not Durable
Read the document carefully. For a power of attorney to be effective after incapacity, it must contain specific language indicating that the power of attorney is “durable,” meaning it continues to be effective after the principal becomes incapacitated. Otherwise, it is only effective while the principal is still of sound mind. Since most individuals want the power of attorney to be effective in the event they are no longer able to handle their financial affairs, they should be sure that the power of attorney contains the appropriate durable language when it is drafted. If there is no such language, the agent has no authority and a bank will not honor the power of attorney. If the principal is already incapacitated, they will not be able to execute a new power of attorney and a guardianship may be necessary to access accounts and financial information.

2.) The Power of Attorney Has Not Been Activated
Most Durable General (Financial) Powers of Attorney contain language about how they become effective, again it is important to read the document very carefully before you need to use it, so you can determine what must occur for it to become activated. Some powers of attorney contain language indicating they are “springing,” meaning they only become effective upon the incapacitation of the principal. Some indicate that the document becomes effective after the principal signs a written statement indicating it is effective and they want the agent to act for them. Other powers of attorney are effective immediately the day they are executed, meaning the principal does not have to be incapacitated for the agent to use the document to act on their behalf.

3.) You Have Not Provided Required Documentation
If the power of attorney requires incapacitation before it is effective, you must provide documentation to the bank or financial institution showing that incapacitation has occurred. You may need medical records or a statement from a physician; or if the document requires it, the signature of two physicians who have examined the principal and determined that he or she is unable to manage their affairs due to mental incapacity. If the document requires a written statement from the principal, you must present that document, along with the power of attorney. If you are a secondary agent, named to act in the event the primary agent is unwilling to act or is unable to act due to death or incapacitation, you must provide documentation as to why the first named agent is not acting (e.g. a written resignation, death certificate or certificate showing the first agent has become incapacitated).

4.) The POA Is “Stale”
The notion of “staleness” implies that if a power of attorney was executed a number of years ago, then there is a chance the principal may have revoked the power or has executed a new one. In Wisconsin, a person may not refuse a power of attorney based on the date it was executed; however, a person may ask for a certification of the power of attorney which provides that the principal is still alive, has not revoked or amended the power of attorney and that the contingency requiring it to be effective has occurred.

5.) Handling Power of Attorney Issues with Banks
Keep in mind that banks and other financial institutions are often trying to prevent fraudulent transactions, giving access to an unauthorized person or granting access to an authorized person under the wrong circumstances. They want to protect their customers and can be held liable for granting unauthorized access. While this can be frustrating for the agent, try to remember that you would want the utmost caution taken if someone were trying to access your personal information or accounts.

Remember, if you have communicated clearly and have provided all documentation without successfully accessing the needed information, your attorney may be helpful in providing the bank or financial institution with the legal authority necessary to access the information.

 

Naming a Trust as the Beneficiary of a Tax-Qualified Retirement Account

Naming a Trust as the Beneficiary of a Tax-Qualified Retirement Account

Many have heard the quote often attributed to Benjamin Franklin, “In this world nothing can be said to be certain, except death and taxes.”  The sentiment behind this quote remains as relevant today as it did then, particularly in the context of modern retirement planning and tax-qualified retirement accounts.  According to the Social Security Administration, tax-qualified retirement accounts are the predominant retirement plan among workers in the early 21st century.  Common examples of tax-qualified retirement accounts include Individual Retirement Accounts (IRAs), 401(k) Plans, 403(b) Plans, etc.  The prevalence and value of these accounts have risen dramatically in the past 20 years.

Given this increased wealth accumulation, tax-qualified retirement accounts are beginning to play a larger role in estate planning.  For many, a trust often serves as the cornerstone of their estate plan.  Trusts offer many advantages including the ability to avoid probate while still (i) managing assets for the benefit of young beneficiaries, (ii) protecting inherited assets from a beneficiary’s creditors or ex-spouse, or (iii) preserving a beneficiary’s eligibility for important public benefits.  Given these advantages, it is often desirable to name a trust as the beneficiary of a tax-qualified retirement account.  However, it is important to understand that these accounts remain subject to a complex set of income tax regulations that can often pose a trap for the unwary, particularly in the context of trust planning.

The major attraction of a tax-qualified retirement account is the ability to accumulate funds inside the account on a tax-deferred basis (or tax-free, in the case of a “Roth” account).  However, IRS regulations dictate when this tax-sheltered accumulation must end.  At a certain point, the account owner and/or beneficiary must begin to withdraw required minimum distributions (“RMDs”) from the account and pay income tax on the funds that are withdrawn. Generally, the best income tax planning strategy with respect to RMDs is to withdraw them over the longest period of time possible.  This offers the advantage of delaying the income tax associated with the withdrawals and allows the funds to grow within the account on a tax-deferred basis as long as possible.  This income tax deferral can have a significant investment and long-term savings impact on the account in question.

When an account owner dies and has named an individual directly as the beneficiary of his or her tax-qualified retirement account, the beneficiary can often easily establish an inherited account that allows him or her to withdraw RMDs over the course of his or her remaining life expectancy.  This is usually the longest distribution period permitted under IRS regulation.  A spousal beneficiary will also have the option of rolling the account over directly into his or her name.

However, when a trust is named as beneficiary, the trust document itself plays a crucial role in determining how quickly RMDs must be withdrawn from the account.  If a trust meets specific requirements and is considered a “see-through trust,” the life expectancy of the oldest trust beneficiary may be used as the measuring life for determining how quickly RMDs must be withdrawn from the account.  Otherwise, if such requirements are not met, the funds must be completely withdrawn from the account over either the remaining life expectancy of the account holder or within a five year period, depending upon the age of the account owner at the time of his or her death.  This often accelerates the timeline for withdrawing the funds from the account, as well as the associated income tax.

For a trust to be considered a “see-through trust,” it must meet the following requirements:

  1. Valid.  The trust must be valid under state law.
  2. Irrevocable.  The trust must either become irrevocable upon the death of the owner or be irrevocable on the date that it is signed.
  3. Identifiable.  The beneficiaries of the trust must be identifiable from the trust instrument.  This is required so that the oldest trust beneficiary can be identified to determine how quickly RMDs must be withdrawn from the account.
  4. Documentation.  Certain documentation must be provided to the plan administrator.  This may often be satisfied by supplying a copy of the trust document.
  5. Individuals.  All beneficiaries of the trust must be individuals.  Estates, charities, non-qualified trusts and other entities do not qualify as individual beneficiaries.

While some of the above requirements are fairly straight forward, it remains easy to run afoul with others in the average trust document.  For example, the simple act of including a charity as a contingent beneficiary may prevent a trust from being considered a see-through trust.  Accordingly, if you plan on naming a trust as the beneficiary of a tax-qualified retirement account, you should speak with your attorney to make sure your trust qualifies as a see-through trust.  In some estate plans, it might even make sense to create a standalone see-through trust depending on the size of the tax-qualified retirement accounts and the account owner’s estate planning goals and family situation.

 

Accounting for Digital Assets in your Estate Plan

Accounting for Digital Assets in your Estate Plan

Like many things rendered obsolete by the progress of technology, older estate plans may not adequately address the realities of the digital age. In the last 15 years, the Internet has become commonplace and many transactions are now recorded electronically or completed entirely online. Most people now manage their finances, business and personal lives through the Internet, and a growing number of organizations are going “paperless.” With this progress came a new form of asset which old laws did not properly address: digital property.

Even those who view themselves as digitally removed probably have some important connection to a digital asset. For example, someone without e-mail, social media accounts and who does not make online purchases, may still store important family photographs or videos on an online or other electronic platform. While of minimal monetary value, such digital assets can be important emotionally. Inversely, some individuals’ lives have become so entwined with their digital presence, making sense of their finances or business dealings would be impossible without full access. Ensuring the ability for loved ones or caretakers to reach such data has become a legitimate part of modern estate planning.

The rise of digital technology developed more quickly than the law, so historically, survivors and caretakers had no clear right to access the digital assets or accounts of a deceased or disabled loved one. Technology company user agreements controlled and were usually designed to provide security and privacy for the company’s living users and often only recognized the rights of the original user. This made accessing vital information a headache at best, and impossible at worst, when the original user was no longer alive or able to manage their own affairs. Adding to this confusion was the fact that few users ever actually read or understood these policies.

In response to the lack of appropriate laws for digital property, the Uniform Law Commission created model guidelines which were presented to the states to pass into law. Wisconsin based its Digital Property Act on these uniform rules but made several changes before passing it into law in 2016.

The Wisconsin Digital Property Act only applies to users who reside in Wisconsin or resided in Wisconsin at the time of their death. Under the Act, digital property means “an electronic record in which a person has a right or interest” but not the underlying non-electronic property. This can be understood as information about you, created by you, or purchased by you that exists digitally. This includes your e-mail, social media, photo and video sharing, gaming, and online information storage accounts. Internet shopping sites like Amazon or eBay may include credit balances in your favor; and accounts like PayPal can hold funds for use in online purchases. Digital media accounts, like iTunes, often store valuable rights to songs, subscriptions, e-books, or other media. Some individuals may even have websites, articles, domain names, online stores or blogs they own or manage which generate revenue. Personal accounts tied to businesses can contain client information, mailing lists and valuable newsletter subscriptions.

The Act automatically provides limited access to digital information to individuals named in estate plans and power of attorney documents upon their written request, but the Act takes an “opt-in” approach for a user to grant rights to the actual content of digital communications. This means the law allows users to decide how their online information will be granted but does not do so automatically. Users can opt-in by either completing an “online tool” or specifically giving the rights to individuals named in an estate planning document, such as a will, trust or power of attorney.

“Online tools” are options built into some websites for opting in, but not all websites contain this feature. As an example, Facebook’s online tool is called a “Legacy Contact” and can be accessed under the security menu on an account. Google’s online tool is called an “Inactive Account Manager” and can be set to notify a designated contact and allow them to download certain types of data.

Wisconsin uses a “tiered approach,” meaning a designation in an online tool takes priority over a conflicting designation in an estate planning document. Because of this priority issue, you may wish to discuss with your estate planning attorney how to coordinate use of these features to reach your desired outcome.

If you opt-in under either method, the law requires the website provider to allow the designated person access and management of the digital property. This allows them to archive important information or photos, maintain & close accounts and transfer any credits or income generating assets. If you do not opt-in, the user agreements govern and usually do not allow such access or management.

In addition to creating the legal authority for someone to manage your digital assets by opting-in, it is important they have the information necessary to fulfill their role. A simple step in organizing your digital estate is making a list of your digital assets and how to access them. This includes login usernames and passwords. However, make sure to also consider access to accounts with additional protections, like two-factor verification or encryption programs. The list should be stored in a secure, but accessible, location, and someone you trust should know where it is kept. Once made, the list should be updated periodically. Also, this list should not be included in your last will and testament, as this will be filed with the court after your death and becomes available to the public.

An estate planning attorney can assist you with understanding and organizing both your digital and non-digital estate. If you already have an estate plan, consider having it reviewed to make sure it covers digital property. Most estate planning completed by a Wisconsin attorney in the last several years will include these digital estate provisions, but older documents are likely silent on the issue or may address it in a way inconsistent with the 2016 law. The digital revolution has changed many things, but for estate planning, the old rule still holds true: a little planning up-front can save a lot of stress and expense for your loved ones down the road.

 

A Business Check-up Checklist

A Business Check-up Checklist

If you are a business owner, then you, no doubt, have or will go through the process of finalizing your financial statements and gathering your other accounting records and tax documents for your CPA. I encourage you to take time to also locate your company record book and critical legal documents. Having your legal house in order is an important part of business risk management and planning. A basic business check-up should include the following:

1.) Corporate/Company Record Book Review.
Make sure you can locate your company record book and that it is up-to-date, including the ownership records. There are statutory requirements as to certain minimum records that must be kept by certain types of companies. For a detailed list of the records that must be kept, refer to the following article: Statutory Requirements for Record Books.

2.) Organizational Document Review.
A company’s organizational documents contain the rules that should be followed in carrying out business operations. For corporations, the controlling document is the Articles of Incorporation. For limited liability companies, the controlling document is the Articles of Organization. Usually both of these documents contain relatively few provisions. However, whatever provisions they do contain will control if other documents contain conflicting provisions. Watch out for particular limitations or restrictions on ownership. Sometimes restrictions that once made sense are no longer applicable. If those restrictions are in your Articles, they will still be binding!

After reviewing the Articles, you should review the Bylaws (for corporations) and Operating Agreement (for LLCs). These documents should contain more specific details regarding the management and general operations of the business. Review the documents for specific restrictions placed on the authority of managers, officers and directors. Are you acting in compliance with these restrictions? This can be especially critical if you are not the sole owner of the business; however, even if you are the sole owner, it is still important to understand what “position” has what authority.

In addition to reviewing the basic organizational documents, now is the time to review your meeting minutes or resolutions. Some businesses will hold formal meetings to conduct business at the shareholder, member, director and manager levels. Other businesses opt to use “informal action resolutions” or other forms of written consent to document important decisions. In either case, it is important that your records are accurate and kept up-to-date. Remember, if you want others to respect your company as a distinct legal entity, then you must respect it too.

3.) Buy-Sell Agreements.
If you are in business with someone other than your spouse, take a few minutes to review the following article written by my colleague, Steven Thompson: Buy-Sell Agreements: Working for the Best and Planning for the Worst. This article discusses the value of a buy-sell agreement to your business.

4.) Key Contract Review.
Review your key contracts, including leases, customer contracts and vendor agreements. Calendaring important dates from each contract can help you avoid costly mistakes. Many contracts will automatically renew each year or at the end of the term unless some advance notice is given. This may be a good or bad thing, depending on your perspective on any given contract. What it should not be is a surprise!

I find that most owners have a pretty good handle on the “business terms” of their contracts but the standard legal terminology and provisions are often a mystery. Such standardized legal language is known as “legal boilerplate.” Those “boilerplate” terms, however, are often the most important. For example, look at the “assignment” provisions to understand if your contract could be assigned to another person. If you are planning to sell, then assignability of a key customer contract could be crucial. Other often overlooked terms include limitations on liability, indemnification and insurance requirements. While these provisions may mean little if all goes well, they could be the most important provisions if there is a problem. Ask yourself if those provisions are both fair and adequately protect your business.

5.) Insurance Review.
Forming an LLC, corporation, or other business entity can be a critical part of your business risk management and control. However, forming a business entity alone is not sufficient. Proper liability and property insurance coverage is critical. Hopefully you meet at least annually with your insurance agent or broker to review coverage. If it has been a while, then you should take time now to review what you have in place. Consider the following:

  • General commercial liability and products liability.
  • Fire and extended insurance coverage for your business assets.
  • Worker’s compensation insurance as required by law.
  • Insurance for business vehicles (liability, collision and comprehensive).
  • Non-owned and hired vehicle insurance coverage.
  • Theft, vandalism and malicious mischief.
  • Bonding for employees handling funds of business and required bonding for fiduciaries of qualified retirement plans.
  • Any insurance required of you under a lease arrangement.
  • Make sure that owners and your subsidiary companies are included as additional insured parties or are covered on their own policies and include necessary parties (like landlords or mortgagees) as additional insured parties or as loss payees, if required in your leases, contracts or mortgages.

Make reviewing these basic business records part of your normal routine! Reviewing these types of business records routinely puts your business in a safer and more productive state. If, during your review, you have questions or need assistance, contact the skilled attorneys at the Anderson O’Brien Law Firm.

 

Statutory Requirements for Record Books

Statutory Requirements for Record Books

There are statutory requirements as to certain records that must minimally be kept in a Corporate/Company Record Book. These records vary based on the type of company. The following is a list of different types of records to be kept for LLCs and Corporations:

For LLCs the following records must be kept:

  1. A list, kept in alphabetical order, of each past and present member and, if applicable, manager. The list shall include the full name and last-known mailing address of each member or manager, the date on which the person became a member or manager and the date, if applicable, on which the person ceased to be a member or manager.
  2. A copy of the Articles of Organization and all amendments to the Articles.
  3. Copies of the limited liability company’s federal, state and local income or franchise tax returns and financial statements, if any, for the four most recent years or, if such returns and statements are not prepared for any reason, copies of the information and statements provided to, or which should have been provided to, the members to enable them to prepare their federal, state and local income tax returns for the four most recent years.
  4. Copies of all Operating Agreements, all amendments to Operating Agreements and any Operating Agreements no longer in effect.
  5. Unless already set forth in an Operating Agreement, written records containing all of the following information: 1) The value of each member’s contribution made to the limited liability company as determined under Wis. Stat. Section 183.0501(2); 2) Records of the times at which, or the events upon which any additional contributions are agreed to be made by each member; 3) Any events upon which the limited liability company is to be dissolved and its business wound up; 4) Other writings as required by an Operating Agreement.

For CORPORATIONS the following records must be kept:

  1. Minutes of meetings of its shareholders and board of directors.
  2. Records of actions taken by the shareholders or board of directors without a meeting.
  3. Records of actions taken by a committee of the board of directors in place of the board of directors and on behalf of the corporation.
  4. Appropriate accounting records.
  5. A record of its shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, by class or series of shares and showing the number and class or series of shares held by each shareholder.

Making sure you locate your company’s record book and ensuring that it is up-to-date is an important part of keeping your legal “house in order.” The maintenance of your company’s record book is a part of proper risk management and a step in checking up on your business. For information about other documents recommended you review for a business check-up check out the article: A Business Check-up Checklist.

 

Steps to Preserve Your Claim in a Premises Liability Case

Steps to Preserve Your Claim in a Premises Liability Case

Anderson O’Brien handles many claims involving individuals who injure themselves after falling or tripping due to ice or some other unsafe condition or obstacle. These types of cases are called premises liability cases. They occur frequently, especially during Wisconsin’s difficult winters involving ice and snow. March is a particularly hazardous month with all of the freezing and thawing that takes place, resulting in the accumulation of ice. Many of these incidents result in very serious injuries requiring surgery, necessitating the insertion of plates and screws into someone’s ankle, leg or hip. These cases can be difficult to prove, as it is necessary to establish that the property owner was negligent and/or, in some cases, that they violated Wisconsin’s Safe Place Statute.

However, while serious injuries may result from a slip and fall, it can be difficult to preserve the very evidence you need to prove your case. Several steps must be taken to effectively preserve your evidence and to pursue your claims. The following consists of some of the steps that are important for you to take if you intend to pursue a premises liability claim.

1. Provide Notice of the Incident Immediately.
Proper documentation in premises liability cases is crucial. Providing notice immediately to the owner or manager of the property is something that absolutely must be done in order to pursue your claim. The purpose of immediate notice is that it puts the owner or manager of the property on notice so that it provides credibility to your claim that the trip and fall actually occurred at the time and location you said it did. The restaurant, store, gas station, or manager of the facility where you fell also should generate a written incident report which can later be used to prove your claim. Additionally, providing immediate notice to the owner or manager on site will cause that person to investigate and to observe for themselves if there are, in fact, icy conditions or other dangerous conditions which exist, and they can be a witness that you can use to establish your claim. It also provides the manager with notice that they should take measures to render the premises safer, such as placing salt on the ice upon which you fell, and that can also be used as evidence against the property owner.

2. Take as Many Photographs as You Can.
Documenting the scene of the incident through photographs is invaluable and can literally make or break your case. The condition of what you tripped or fell on can change almost instantly. (For example, water or liquids can be cleaned up by the property owner; ice and snow conditions on a sidewalk or inside a building can melt. Other unsafe conditions can be fixed and repaired within a short period after the incident.) Therefore, if you do not take photographs to establish the condition at the time you fell, it may be very difficult to give an accurate verbal description to the insurance company or to a jury of what it is you fell on, what time you fell, and where you fell. Certainly, you may not be able to think about taking photographs at the time that you sustained a serious injury. However, you need to do whatever you can to take pictures. If you need to, ask someone else to take pictures with your phone immediately or have a friend or relative go back to the location as soon as they can after you fall. Photographs are the single most critical piece of evidence in many slip and fall claims.

3. If Possible, Obtain Information About Other Witnesses.
In many slip and fall cases, if you do not have direct video surveillance saved by the business where the incident took place, the claim may essentially boil down to “he said, she said” evidence. The insurance company may argue that you did not even fall on the date or time that you said you did. If you obtain the contact information of all witnesses who observed the incident or saw you lying on the ground after you were injured, this will give greater credibility to your claim. You will also then have contact information for these witnesses who can testify as to the conditions where you fell at that exact moment.

4. Seek Medical Treatment if Necessary.
If you are injured in a slip and fall incident and you need medical care, you should do so immediately and go to the emergency room rather than waiting for an appointment with your doctor several days later. The significance of this is twofold. First, the doctors can examine you and take x-rays to get you the proper care you need immediately to get you on the road to recovery. You should follow all of your doctor’s advice and show up to all of your appointments. Secondly, the fact that you slipped and fell will be reported in your medical records and if you go to the emergency room, this will help establish the date, time, and location of when this incident actually occurred. Be specific with your doctors about the details surrounding this injury. When you pursue a claim against the insurance company and have to testify, sometimes several years later after the fall, the documentation in your medical records will prove invaluable in establishing your claims.

5. Contact an Attorney.
It is important to contact an attorney right away if you intend to pursue a potential premises liability claim. There are important time limits and notice provisions under the law that must be satisfied in order to pursue a claim against property owners or insurance companies. The legal requirements of notice will differ based upon where you fell (i.e., for a government entity, you must give notice of the injury within 120 days). Evidence must be preserved, investigations and contact with witnesses must be made. Anderson O’Brien has the experience and expertise to handle these types of cases. We take the burden off of you to develop your case from the very beginning. We offer free initial consultations to evaluate potential premises liability claims.

Following the above steps in a premises liability claim, or any personal injury claim, will greatly assist your attorney in representing you to obtain the best results possible.

 

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