Getting older changes the way that we look at estate planning. In addition to being concerned about your children, you need to make sure that you are protected in the event of disability. Depending on your circumstances, you may want to consider leaving something to grandchildren and/or favorite charities. Read on to see what planning is recommended for individuals in their “golden years”.
Under this document, you name a trusted individual to act as your agent for medical purposes. Your agent will have the authority to determine your medical treatment if you are unable to do so. The Power of Attorney will give your agent guidance in regard to your preferences concerning organ donation and life support. When you are unable to make medical decisions, your healthcare providers will look to the appointed agent to make those decisions.
This Power of Attorney names an agent for financial purposes. Your agent will be able to pay your bills, manage your finances, investments, real estate and other property on your behalf. Your agent’s authority can, but is not always, limited to times when you are unable to take care of your own affairs. The powers can be as broad or limited as you are comfortable with.
If you become disabled, having a current Power of Attorney for Property in place may make it unnecessary for the court to appoint a guardian of your estate. If a guardian is appointed, the Power of Attorney expresses your preference that your agent be named as your guardian.
Who should be my agent under my Powers of Attorney for Property?
Married couples tend to name each other as the agent under their Power of Attorney. As we get older, our spouses are not always as sharp as they once were. If you are married you need to honestly consider whether it is in your best interest to name your spouse as your agent. If you have children, one of your children may be a better choice.
Do I need to name a successor agent?
Whenever possible, you should name at least one individual as a successor agent in case the first agent is unwilling and/or unable to act. If you are considered incompetent when your first agent becomes unavailable, you will not be able to name a new agent.
Plan for the unthinkable! If something happens to you, what will happen to your property? Leaving the distribution of your assets and personal property unplanned can have unintended results. Both a Will and a Trust allow you to choose who will benefit from your assets and to name the person or entity that will handle your estate.
This document is often referred to as a “living trust”. A revocable (living) trust exists at the time it is executed. A trust can have one grantor (the person making the trust) or multiple grantors. If a trust is the major document in your estate plan you will have a little more work to do upfront than if a will is the major document. That is because trusts need to be “funded” to be fully functional. To fund a trust is to transfer assets into it during your lifetime.
The advantages to doing the work up front are that:
Assets that are held in the trust do not need to go through probate. If the bulk of your assets are in your trust (or pass by beneficiary designation) it may not be necessary to open a probate estate on your death.
If you become disabled and your assets are in the trust, the trustee will be able to use those assets to pay for your care and it will not be necessary for the court to appoint a guardian of your estate. The same thing can be accomplished with a Power of Attorney for Property but there are fewer complications if the assets are in trust because the trustee is legally the owner of those assets.
There may be other planning benefits to using a trust depending on your particular situation.
Typically you will be the initial trustee of your trust. As such, you will be able to freely transfer assets in and out of the trust and to sell assets that are in the trust as long as you are able to manage their own affairs.
Because the trust is revocable, the terms of the trust can be amended or completely revoked at any time.
A revocable trust typically benefits first the grantor and then his or her spouse, if any followed by children and/or other descendants, charities and pets.
What will happen if your beloved pet survives you? It is permissible to establish a trust for the care of your pet. Planning for the care of your pet will ensure that this important companion will live out its life with the proper care.
Naming beneficiaries and contingent beneficiaries of your life insurance, retirement plans, stocks, investments, real estate or any other accounts or property is important. Leaving these designations unspecified, or naming a minor directly, may have unintended consequences. You should carefully consider all of your beneficiary designations and review them from time to time. be carefully considered and chosen by the account holder.
When a grandparent wishes to make a gift for the benefit of a grandchild how the gift is made is important. It is usually not a good idea to make a large gift directly to a grandchild. Fortunately when making a gift to a child there a number of options available. One option is to make the gift to a trust for the benefit of the child. That trust would be written to qualify for the gift tax annual exclusion. Another option is to make a contribution to a Section 529 college savings program.
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