How to Say I Love You Through Estate Planning
This month instead of giving chocolates and gifts this Valentine’s Day, consider these basic Estate Planning documents to make your loved one’s life easier.
1. A Health Care Proxy (HCP) allows a named health care agent to make health care decisions on behalf of the principal if he or she is no longer able to make those decisions. The agent will not have authority to make decisions on behalf of the principal until he or she is determined, typically by an attending physician, to be incompetent or unable to make health care decisions. It is usually recommended that the health care proxy provides the health care agent with the authority to access the medical records of the principal under the Health Insurance Portability and Accountability Act (HIPAA). We also recommend choosing an alternate Proxy incase the agent initially named is incapable or unwilling to exercise his/her duties.
2. A Durable Power of Attorney (DPOA) allows a named agent to manage financial and legal matters on behalf of the principal if he or she is no longer able to do so. The agent’s authority is typically either limited, usually meaning, the ability to manage assets, funds and insurance, or general, meaning the ability to act in any manner in which the principal would be able to act. A DPOA may list special powers or limitations to the authority granted to the agent, and will specify whether the agent’s authority commences upon execution of the document (“immediate”) or upon a determination that the principal is no longer competent or capable to manage his or her own affairs. It is important to choose a trustworthy agent to ensure the principal’s wishes are carried out during incapacity. DPOAs can be revoked or amended at any time.
3. A Basic Will serves many important functions, including the appointment of a personal representative to administer the estate, instructions on the payment of taxes, funeral services and administrative expenses, the distribution of remaining assets.
A Will distributes probate property., i.e. assets owned by the individual at the time of his or her death in his or her name alone. Note that jointly owned property passes to surviving joint owners by operation of law. Similarly, for retirement accounts like IRAs, the named beneficiary on the account inherits the asset upon the account holder’s death – outside of the Will and the probate process. Life insurance ordinarily passes directly to named beneficiaries although if the descendent survived such beneficiaries, proceeds are paid into the probate estate.
For older clients concerned with preserving assets that otherwise could be expended on long-term care costs, we suggest a Will with Testamentary Trust ( i.e. a trust defined within the Will itself). Despite the fact that Testamentary Trusts may prolong the court’s involvement in one’s estate, these Testamentary Trusts serve one critical function that merits attention. Medicaid allows Testamentary Trusts (and only Testamentary Trusts) to give the Trustee discretion on expending money for their beneficiaries. This can be vital as a way to preserve assets in the face of great long-term care costs.
4. Trusts serve many purposes (including reducing estate taxes, protecting benefits for disabled beneficiaries, maintaining control if a beneficiary is a “spendthrift” or is heavily indebted). Because of their variety and complexity, we take special pains to see that our clients and their ultimate trustees understand the subtleties of such instruments.
Susana Lannik, is a Certified Elder Law Attorney who can help you plan for estate planning needs, and may be able to protect some assets or stretch your existing assets to pay for care for a longer period of time. How should you get started? Contact our practice for more guidance on estate planning, so we may schedule a time to meet.
Our office policies are carefully thought through, and are set in place to better serve our clients. Lately, we have noticed that couples are “assigning” one or the other to speak with me on an initial (by the way free) consult. The problem with this is that I cannot possibly get a clear picture of their needs—collective and individual—this way. I cannot give complete recommendations without both parties being involved. So, unless a spouse is disabled, compromised or in a nursing home a pre-requisite to all of our free consults with husband and wife is that they both take the time to appear.
If you have worked with Susana and/or Jennifer and would like to give us a google review, please let us know and we will tell you how to do that.