Another important aspect of protecting your assetsAnything of value owned by a person or business (can also include money owed to a person or business). is making sure you have all of your advanced planning documents in order. There are various documents that may be used for planning for the future.
If you are over the age of eighteen you should have completed the documents outlined below. Because of the important, legal nature of these documents, when executing them please seek the assistance of an attorney so you are assured your documents are properly completed. Many of these documents will only take effect upon your incapacity or death, at which time you will no longer be able to correct errors which may make your documents invalid.
A Trust is a legal tool that enables the settlor (person who creates the Trust) to place certain or all of his or her property in the hands of another person who will hold this property for the beneficiaryAn individual, institution, trustee, or estate that receives, or may become eligible to receive, benefits under a will, insurance policy, retirement plan, annuity, trust, or other contract. or beneficiaries designated by the trust.
There are various types of trusts available and they are used as tools to achieve different goals. For instance you can have a trust to care for a disabled child or to shield assets from Medicaid. Trust documents are not public documents (unless litigation ensues), and they ensure a greater amount of secrecy than a Last Will and Testament.
Depending on the laws of your state, you might want to consider a Trust as it may be preferable to the creation of a Last Will and Testament. You should consult with an attorney who specializes in this area of the law to determine whether you need a Trust. This attorney should be able to clearly explain to you why a Trust is preferable to a Last Will and Testament as well as indicate whether this this document would be a cost effective solution for you. The drafting of a Trust agreement is more costly than the drafting of a Last Will and Testament, but you can save money by avoiding probate fees that are often required by the courts to “prove” your Last Will and Testament.
Last Wills and Testaments
A Last Will and Testament is a document that allows you to designate who should receive your property after your death. In most states, you will not be allowed to disinherit your spouse, however, you may disinherit other family members.
You must consult with a reputable attorney so that he or she may draft a Last Will and Testament for you. You should not use online forms or forms for sale at your local stationary store to express your wishes concerning the distribution of your property after your death. Each state requires that specific language be included in Last Wills and Testaments and also requires certain formalities for proper execution (signing) of these documents. Failure to respect these formalities will invalidate your Last Will and Testament and your property will be distributed according to the laws of intestacy of your state. Additional information on Last Wills and Testaments may be found at www.aarp.org which has an informative article entitled The Whys and Hows of Wills.
Upon your demise, the person that you have appointed in your Last Will and Testament to take charge of your affairs will have to bring your Will to Court so that the Court may decide whether it was properly executed. This is called a probate procedure. Your estate will also have to pay certain court fees that may be calculated based on the worth of your estate. In some states, the probate procedure is very easy, but in others it can be burdensome. After your demise, a Last Will and Testament that is offered for probate becomes a public document, hence, any person who is interested can find out who you left your property to.
Powers of Attorney
Powers of Attorney are documents that allow you to designate someone to step into your shoes for a variety of matters that may include banking transactions, estate transactions, business transactions and litigation matters. They can also convey expansive powers that allow the person that you have designated to conduct gift giving on your behalf or enquire into your records, reports or statements.
Powers of Attorney may take effect immediately upon your signing the document, in which case your agent can immediately exercise the powers that you have granted, or they may take effect upon your incapacity. You should consult with an attorney to discuss which types of powers you wish to grant and when they should take effect.
You should know that Powers of Attorney are very difficult to revoke. If you wish to effectively revoke a Power of Attorney you will need to notify all people and institutions who have received the power of attorney that it has been revoked. Therefore, the main issue with the Power of Attorney is trust: Do you trust the person that you are appointing 100%? If not, you might want to curtail your agent’s powers or appoint co-agents that will have to act together on your behalf. You may obtain more information on Powers of Attorney through www.caregiverslibrary.org.
Note: Powers of Attorney die with you, and are not a substitute for a Last Will and Testament. After your demise, your agent under the Power of Attorney will not be able to transact on your behalf or distribute your property to your heirs.
Medical Advance Directives
Medical Advance Directives are documents that allow you to lay out your medical wishes in advance, in the event that you are unable to communicate your medical wishes to your health care provider. There are two types of Medical Advance Directives: one allows you to appoint someone that you trust to make medical decisions on your behalf (Health Care Proxy or Health Care Power of Attorney) and the other allows you to state what type of medical treatment you would or would not want to receive should you be in a terminal or irreversible state (Living Will). These documents only take effect upon your incapacity. These documents do not override your direct instructions and will not be effective if you can communicate with your doctors.
A Health Care Proxy or Health Care Power of Attorney is a document that allows you to designate a person, and successors to that person, to make medical decisions on your behalf if and when you are unable to do so for yourself. This document is easy to complete and will ensure that your medical wishes are honored through the voice of a spokesperson that you have designated. Prior to signing this document you must have a conversation with your potential spokesperson, and discuss his or her willingness to step into your shoes and make medical decisions on your behalf should you become unable to make your own medical decisions. You must also have a conversation with your agents about the type of end of life treatment you desire if you are in a terminal or irreversible condition. Amongst other things, you should discuss your wishes regarding mechanical respiration, cardio pulmonary resuscitation, artificial nutrition and hydration, and antibiotics.
A Living Will is a document that allows you to state what type of end of life treatment you would or would not want in the event that you cannot articulate your wishes yourself. You should engage your physicians in a conversation about this form because living wills are often misunderstood and therefore they do not always accurately convey a person’s wishes.
Medical Advance Directive forms are available, for free, on your state’s website, from local hospitals, or on www.nhdd.org, and often come with a pamphlet detailing how to properly complete the forms. You should read and follow these instructions carefully so that your Medical Advance Directives are properly completed and valid in your time of need.