Posted by: The Life and Legacy Planning Group
According to a March 2017 survey by caring.com, six out of ten Americans have no will or any other kind of estate plan. Many said they’d get around to it – eventually. When they’re old (whatever that means). The survey did find that the elderly are much more likely to have some sort of plan in place. It’s all too clear that most of us think “estate planning” is a euphemism for “deathtime” planning. Indeed, in the caring.com survey, one-third said that they didn’t need an estate plan because they didn’t have any assets to give someone when they’d died.
Comprehensive estate planning isn’t just deathtime planning. It’s lifetime planning, too. It’s about ensuring that your medical and financial decisions can be made by someone that you trust. Lifetime planning can help you address potential tax liabilities, find benefit programs you may eligible for, and protect your family from costly guardianship court. It can ensure that a trusted party looks after and protects your affairs, if and when you’re not able to.
LIFETIME PLANNING TOOLS
As estate planners, we have an arsenal of lifetime planning tools to benefit clients, and we can custom-tailor such plans to an individual’s needs. Here are a few of the most common (and necessary) lifetime planning tools you should discuss with us.
Revocable living trusts
When people hear the word “trust,” they may think of “trust fund babies” or think that trusts are something only for the super-rich.
However, a trust is simply a legal tool that can help almost anyone with property – not just the wealthy. With a trust, assets you own are re-titled and transferred into the trust. When this happens, technically, you no longer own your real estate, stocks, bonds and similar properties. Instead, the trust owns them all. But you still control everything in the trust: you can buy and sell these assets as if they were still in your name. In fact, Revocable Living Trusts don’t even change your income taxes while you’re alive. You continue to file your tax returns as you always have, making them very easy to administer while you’re alive. And as the creator, or settlor of the trust, you can continue to make changes to the trust as long you’re competent to do so.
If you become incapacitated and are no longer able to manage your financial affairs, your trustee is empowered to take over management of your assets for you, thus avoiding a public and expensive guardianship proceeding. With a properly drafted Living Trust, your financial affairs continue to be managed by the people that you trust, without court involvement.
Once you die, the trust becomes irrevocable, meaning its terms can’t generally be changed. At this point, your chosen successor trustee distributes assets to beneficiaries (the people, such as your spouse, children, a church, or other charity) that you’ve designated to inherit from you. In many respects, the role of the trustee is similar to that of the executor of a Will. But, a trustee of a fully funded Living Trust doesn’t have to go through the public and expensive probate process. Trusts are private, unlike Wills, which can also provide valuable privacy to your family.
Durable Power of Attorney for Property
Durable Powers of Attorney (POAs) come in two forms. With a standard Durable Power of Attorney, a person is legally designated to act on your behalf, in the ways specified in the document. You can make the Durable Power of Attorney broad in scope or quite limited and, if you choose, it can become active as soon as you sign it. Under this document, the agent may sign checks for you, enter contracts on your behalf, even buy or sell your assets. What the agent can do depends on what you authorize in the document.
You may not want the POA to become effective immediately. In the case of a “springing” Power of Attorney, the person only has authority if you become incapacitated. At that point, the POA “springs” into action.
There is no “best” power of attorney. We’ll work with you to determine which is the best fit for your needs and goals.
Power of Attorney for Health Care
In an instant, an accident can change a healthy, vigorous person into someone who can’t make her healthcare decisions. Others face a long decline in mental capacity because of a disease like Alzheimer’s. In either case, you want to empower those you trust to make medical decisions for you. With a Power of Attorney for Health Care, you authorize someone to make medical decisions for you, if and when you no longer have the capacity to do so. You can also communicate your desired treatment and end-of-life care.
A HOLISTIC APPRACH
Lifetime planning is a comprehensive approach to estate planning. And while it addresses needs of the living, comprehensive planning may also improve the after-death part of your plan as well, because it can reduce family conflict and preserve assets against court control or interference in the event of incapacity.
CONTACT AN EXPERIENCE ESTATE PLANNING ATTORNEY
For insight into how to establish a trust and implement other lifetime planning options, call us today to schedule a consultation.