Category: Powers of Attorney

Avoid Adding Adult Children as Joint Owners

Avoid Adding Adult Children as Joint Owners

It is generally wise to avoid adding adult children as joint owners of your accounts. The conversation may concern a checking or savings account or both. Unsolicited advice usually goes something like this: “If you want to have your children to be able to pay your bills if something happens to you, you need to add them to the account.” While the intentions are good, a recent Spokane Journal of Business article advises otherwise: “Adding adult children to accounts can be problematic.”

People are made to worry even more when they are told that if there is no second name on the account, it will be frozen upon death and no one can access it until a lengthy and costly probate process has occurred.

To do the right thing, many people respond by adding their most responsible adult child to the account. They don’t realize they are creating more problems than they are solving. A better solution exists, and it should be something taken care of when preparing or revising your estate plan.

Why wouldn’t you want to add an adult child to your accounts? Simply put, your last will and testament doesn’t apply to a bank account if it is a joint account. Most bank accounts are owned with a “joint tenancy with right of survivorship.” This means if the primary owner, the parent, should die, the adult child becomes the sole owner of assets in the account, regardless of what your will says.

Assuming that your intention is to split the assets in the account among several beneficiaries, this may or may not happen. The new account owner is under no legal obligation to share the assets, as they are solely and legally entitled to these funds.

Another problem: if the child decides to split the funds and transfer them to siblings, the IRS may see this as a gift subject to the requirement to fill out a gift tax return.

By having a joint owner, you may also expose these assets to creditor claims. What if the child named on the bank account causes a car accident and is sued? Those assets are considered owned by the child and could be attached by a creditor. If your child gets divorced, those assets may also be part of a divorce settlement.

Estate tax reporting gets more complicated. The IRS places an additional burden on accounts held as joint tenants with the right of survivorship. If the child unexpectedly dies first, the law places the burden on the estate to prove the child did not own the asset.

Is there a solution? Yes, a power of attorney.

A power of attorney is a legal document allowing an agent to act on behalf of the parent, providing authorization without ownership. The parent’s goal is almost always to provide authorization and access, but not ownership.

The POA can be made effective immediately upon signing to allow the child immediate access to the account for bill paying. It can apply not only to bank accounts but to all assets. Alternatively, it can also be limited to specific assets.

Avoid adding adult children as joint owners of your financial accounts. Your estate planning attorney can create a POA to authorize an agent to give them as much or as little control as you want. You’ll be able to determine precisely what you do and do not wish your agent to do. If you would like to learn more about managing financial and retirement accounts, please visit our previous posts. 

Reference: Spokane Journal of Business (Nov. 9, 2023) “Adding adult children to accounts can be problematic”

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The Difference Between Guardianship and Power of Attorney

The Difference Between Guardianship and Power of Attorney

Navigating the intricate landscape of elder law can be daunting, especially when faced with the decision between guardianship and power of attorney for elderly parents. This article sheds light on the difference between guardianship and power of attorney, providing clarity on which approach might be the best fit for your family’s unique situation.

What Exactly Is a Power of Attorney?

A power of attorney is a legal document that empowers an individual, often referred to as the “agent” or “attorney-in-fact,” to act on behalf of another, known as the “principal”. This authority can span a myriad of areas, from handling financial matters to making pivotal medical decisions.

  • Deciphering the Power of Attorney Document: The power of attorney document delineates the extent of the agent’s authority. For instance, a medical power of attorney focuses on health care decisions, while a financial power of attorney pertains to managing financial assets, like bank accounts.
  • The Significance of Durable Power of Attorney: This variant of power of attorney remains valid even if the principal becomes incapacitated due to conditions like dementia or Alzheimer’s disease. It’s imperative that this durable power of attorney must be prepared with precision, ensuring the agent’s ability to act remains unaffected by the principal’s mental state.

Guardianship: An Overview

Guardianship establishes a legal relationship where a guardian is court-appointed to make decisions for someone unable to do so themselves.

  • Guardianship Proceedings: Initiating guardianship requires one to file a petition in the probate court. If the court ascertains that the individual is no longer able to care for themselves or their assets, it may appoint a guardian.
  • Differentiating Guardian of a Person from Guardian of an Estate: While the former is tasked with personal and medical decisions, the latter oversees financial matters. The guardian’s responsibilities, whether it’s a duty to provide care or manage financial assets, hinge on the terms of the guardianship.

Power of Attorney or Guardianship: Which Path to Choose?

The choice between power of attorney and guardianship is contingent on the specific needs of the elderly individual.

  • Comparing Decision-Making Power: Both the agent (under power of attorney) and the guardian have a shared duty to provide for the best interest of the individual. However, a guardian typically possesses a more expansive level of decision-making power.
  • Flexibility and Autonomy: With a power of attorney, the principal gets to choose the person who will act on their behalf. In contrast, in a guardianship proceeding, the court has the final say, which might not always resonate with the individual’s preferences.

When Is Guardianship the Answer?

Guardianship becomes indispensable when an elderly parent is incapacitated and lacks a power of attorney.

  • The Process of Seeking Guardianship: If there’s a belief that an elderly parent is vulnerable, it becomes imperative to file a petition for guardianship. Consulting an elder law attorney can streamline the guardianship proceeding.
  • Guardianship vs Power of Attorney Post-Incapacitation: In the absence of a durable power of attorney, guardianship emerges as the sole recourse if an individual becomes incapacitated.

Can Power of Attorney and Guardianship Coexist?

Indeed, it’s possible to have both mechanisms in place, although their interplay can be intricate.

  • Roles and Boundaries: An adult child might be designated as the agent for financial matters under a power of attorney, while a professional guardian could be entrusted with medical decisions.
  • Harmonious Operation: Both the agent and guardian must act in the best interest of the individual, ensuring their comprehensive well-being.

Making the Right Choice for Your Family

Deciding between power of attorney and guardianship demands careful contemplation.

  • Engage with an Elder Law Attorney: Their expertise can offer tailored guidance, helping you traverse the complexities of elder law.
  • Factor in the Elderly Parent’s Desires: Their voice is paramount in the decision-making matrix, ensuring that their autonomy and dignity are preserved.

Key Takeaways:

  • Power of Attorney is a legal instrument allowing individuals to designate someone to act on their behalf.
  • Guardianship is a court-sanctioned role for those incapacitated and unable to make decisions autonomously.
  • The distinction between the two hinges on the individual’s circumstances and the extent of decision-making power required.
  • Both mechanisms can coexist, though their roles might differ.
  • Engaging with an elder law attorney is pivotal to making an informed decision tailored to your family’s needs.

Work closely with your estate planning attorney to ensure you understand the difference between power of attorney and guardianship. If you would like to learn more about guardianship, please visit our previous posts.  

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You Need Two Kinds of Power of Attorney Documents

You Need Two Kinds of Power of Attorney Documents

Wills and trusts are used to establish directions about what should happen to your property upon death and who you want to carry out those directions, explains an article from Coeur d’Alene/Post Falls Press, “Power of attorney documents come in two main varieties—do you have both?” However, the estate planning documents addressing what you want while you are still living but have become incapacitated are just as important. To some people, they are more important than wills and trusts. You need two kinds of Power of Attorney documents to have all of your bases covered.

A comprehensive estate plan should address both life and death, including incapacity. This is done through Power of Attorney documents. One is for health care, and the other is for financial and legal purposes.

A Power of Attorney document is used to name a decision maker, often called your “Agent” or “Attorney in Fact,” if you cannot make your own decisions while living. You can use the POA document to state the scope and limits the agent will have in making decisions for you. A custom-made POA allows you to get as specific as you wish—for instance, authorizing your agent to pay bills and maintain your home but not to sell it.

The financial POA document gives the chosen agent the legal authority to make financial decisions on your behalf. In contrast, a Health Care Power of Attorney document gives your agent the legal authority to make healthcare decisions on your behalf.

By having both types of POA in place, a person you choose can make decisions on your behalf.

Suppose you become incapacitated and don’t have either Power of Attorney documents. In that case, someone (typically a spouse, adult child, or another family member) will need to apply through the court system to become a court-appointed “guardian” and “conservator” to obtain the authority the Power of Attorney documents would have given to them.

This can become a time-consuming, expensive and stressful process. The court might decide the person applying for these roles is not a good candidate, and instead of a family member, name a complete stranger to either of these roles.

The guardianship/conservator court process is far less private than simply having an experienced estate planning attorney prepare these documents. While the records of the legal proceedings and the actual courtroom hearings are often sealed in a guardianship/conservatorship court process, there is still a lot of personal information about your life, health and finances shared with multiple attorneys, the judge, a social worker and any other “interested parties” the court decides should be involved with the process.

For peace of mind, have an experienced estate planning attorney explain why you need two kinds of power of attorney documents. Preparing these documents when creating or updating your estate plan is a far better way to plan for incapacity. If you would like to learn more about powers of attorney, please visit our previous posts. 

Reference: Coeur d’Alene/Post Falls Press (Oct. 11, 2023) “Power of attorney documents come in two main varieties—do you have both?”

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Essential Estate Planning Documents every Caregiver Needs

Essential Estate Planning Documents every Caregiver Needs

Being a caregiver for a loved one can be one of the most emotionally challenging things you can do. There are so many aspects of your loved ones life that you are suddenly responsible for managing. So many important discussions about estate planning and writing a will are emotionally challenging as they ask those involved to come face-to-face with their mortality. But these are important discussions, says a recent article, “Elder Law Guys: All the documents to have in place when you’re an adult caregiver,” from Pittsburgh Post-Gazette. The sooner these conversations take place, the better. There are some essential estate planning documents every caregiver needs to have available.

Here are the documents needed:

General Durable Power of Attorney. The financial POA is the most essential estate planning document. An agent is named to stand in for the parent or other person and make all financial and legal decisions. Name not just one but two successor agents to serve if the primary agent cannot or will not serve when needed. If no POA or agent can serve, the family will need to petition the court to have a judge name a guardian to manage the person’s financial affairs. There’s no guarantee that the court will name a family member. POA law varies by state, so speak with an estate planning attorney to ensure the POA permits the specific actions you want the agent to be able to take.

Durable Healthcare Power of Attorney and a Living Will. In some estate planning practices, these two documents are combined, while in others, they are separate. For the Healthcare POA, an agent is named to make health care decisions for the person. It’s advised to name two successor agents in case the primary person cannot or does not wish to serve in this capacity.

A Living Will contains the person’s wishes regarding receiving life-sustaining treatment in the event they can’t make their own decisions and the treating physician has determined the patient is either suffering from an irreversible coma, is in a persistent vegetative state, or an end-stage medical condition not survivable even with treatment.

Last Will and Testament and Trusts. The last will and trusts both dictate how property will pass, but the will directs how property is passed upon death. A trust contains provisions to manage assets during a person’s lifetime. Assets owned by a trust don’t go through probate, so they transfer directly to beneficiaries, and their value and the identity of beneficiaries remain private.

Suppose there are family members who are disabled. In that case, the estate plan should include a Supplemental Needs Trust to hold any inheritance from a disabled beneficiary who receives needs-based government benefits. Otherwise, the disabled recipient will become ineligible for government benefits. Depending on the circumstances, parents may want assets to be held in trust for other beneficiaries until they can manage their inheritances wisely.

Asset Protection Trust. An irrevocable Asset Protection Trust holds assets to shelter them from the cost of long-term care and can reduce or eliminate estate taxes for beneficiaries. An estate planning attorney will know which type of Asset Protection Trust will be most effective for your situation.

Beneficiary Designation Forms. All accounts or assets with beneficiary designations should be reviewed to be sure the named beneficiary is correct.

These essential estate planning documents should be stored in a known location so the may be available for a caregiver to access, if they need. Documents must be reviewed every three to five years to ensure they align with the parent’s wishes. Estate and tax laws change, relationships change, and people move and pass on, so it’s important to keep these documents updated. If you would like to learn more about the role of a caregiver, please visit our previous posts. 

Reference: Pittsburgh Post-Gazette (July 8, 2023) “Elder Law Guys: All the documents to have in place when you’re an adult caregiver”

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Legal Documents Every Senior Needs

Legal Documents Every Senior Needs

There are legal documents every senior needs. Legal documents pertaining to health care, end-of-life treatments and allowing others to access medical records are vital to protecting adults at any age. However, they are especially important for seniors, says a recent article from The News-Enterprise, “All seniors need legal documents for medical issues.”

These documents include a living will, health care power of attorney and HIPAA authorization. In addition, they give you the ability to name the individuals you want access to secure medical information and who will be able to make decisions about your health care during incapacity.

The health care power of attorney is the broadest and most important medical estate planning document. Depending upon where you live, it may be known as medical power of attorney, healthcare proxy, or healthcare surrogate.

Here’s where an estate planning attorney is needed: like many estate planning documents, the health care power of attorney can be broad, encompassing both a living will, and a HIPAA authorization within one single document, or it can be extremely limited. By having a document created for you, rather than using a boilerplate form, you can ensure your exact wishes are followed.

The health care power of attorney generally makes specific determinations. The document needs to name one person or agent and a backup agent to act on your behalf. Many people think they can change their agent if the agent becomes incapacitated or unavailable. Still, all too often, they need to remember to have their document updated, and then, when they need to have an agent act on their behalf, no one can do so.

Without an appointed agent, court intervention becomes necessary, which is time-consuming and costly.

The health care power of attorney should specify when the agent may act on behalf of the person and address both access to information and decision-making. The ability to immediately make decisions is critical when the individual is at an advanced age or has urgent medical needs. In addition, other provisions are included to ensure the agent has the full ability to act.

A living will, sometimes called an advance medical directive, may be a separate document or contained within the health care power of attorney. It includes instructions for end-of-life decisions. These may be as detailed as outlining when artificial nutrition and hydration may be used or as simple as naming an agent with the right to remove the person from life support. If you have strong feelings about using life-prolonging devices, your wishes can be legally enforceable through a living will.

Lastly, a HIPAA authorization permits another person to have access to review medical records.

These are the basic legal documents that every senior needs built into their estate planning. These health care documents should be created with the help of an experienced estate planning attorney to ensure the person carrying out your wishes is the person whose judgment you trust and to clarify your wishes. Preparing for these tough decisions in advance is hard. However, this is a gift to those you love, who will otherwise be left hoping they did what you would have wanted. If you would like to learn more about health care planning, please visit our previous posts.

Reference: The News-Enterprise (May 27, 2023) “All seniors need legal documents for medical issues”

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Estate Plans Require Preparation for Success

Estate Plans Require Preparation for Success

Making wishes clear to family members is never enough to satisfy legal standards, according to a recent article, “Preparation is essential part of estate plan” from The News-Enterprise. Quite the opposite occurs when family members refuse to follow verbal requests, especially when personal grievances come to the surface during times of grief. Estate plans require preparation for success.

A second misconception concerns the spouse or children being able to step in and take action for a loved one whose health is declining solely based on the family relationship.

Many parents have children who would make poor agents, so many don’t name their children to act on their behalf. Even if you want your spouse or child to act on your behalf, you have to name them in the proper legal documents.

A third frequent misconception is that documents can be created when needed. Not so! Documents like Power of Attorney, Health Care Power of Attorney, Living Will and others must be created well in advance. An incapacitated person cannot sign legal documents, so if no planning has been done, the family will have to petition the court to name a guardian—an expensive, time-consuming and complicated process.

Every adult should have three basic documents while they are in good health: a Health Care Power of Attorney, a Durable Power of Attorney and a Last Will and Testament.

The Health Care Power of Attorney gives another person the right to make healthcare decisions for you if you are unable to do so. It also gives another person the right to access protected health care information, including medical and health insurance records. It may also be used to authorize organ and/or tissue donation and set limitations for donation. Finally, the document may direct end-of-life decisions regarding artificial life support.

The Durable Power of Attorney allows another person to handle legal and financial matters. It can be effective upon signing or upon incapacity. Without correctly executed Powers of Attorney, the family will need to apply for guardianship.

The Last Will and Testament determines who should receive any specific property and how your property is to be divided and distributed. Wills are only effective upon death, so any property in the will continues to be yours until death. Wills are also used to name the executor who will be responsible for administering the estate. It can also be used to set up additional protections for disabled beneficiaries, minor children and others who are not good with finances.

Speak with an experienced estate planning attorney to be certain to have these essential documents to prepare for the times when life doesn’t go as expected. Preparation is required for the success of your estate plan and those you love. If you would like to learn more about drafting an estate plan, please visit our previous posts. 

Reference: The News-Enterprise (May 13, 2023) “Preparation is essential part of estate plan”

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Who is Authorized to Amend a Trust?

Who is Authorized to Amend a Trust?

Procrastination is the most common mistake in estate planning when people don’t create a will and trusts and when documents are not updated. For one family, a revocable trust created when both parents are living presents some complex problems now, when the surviving wife wants to make changes but is suffering from serious health issues. So who is authorized to amend a trust?

As described in the article “Estate Planning: Who can amend the trust” from NWI Times, this scenario requires a careful review of the trust document, which should contain instructions about how it can be amended and who has the authority to do so. An estate planning attorney must review the trust to ensure it can be amended.

If the trust allows the surviving settlor to amend the trust, the authority to amend it may only be given to the surviving settlor. The mother may be permitted to amend the trust. However, it can’t be anyone acting on her behalf.

If the language in the trust makes the power to amend personal, a guardian or an attorney-in-fact likely won’t be able to amend the trust. Likewise, if the mother is incapacitated and cannot do this herself, the trust may not be amendable while she is ill or disabled.

However, if the trust allows the surviving settlor to amend the trust and the power is not personal, a legal representative, such as a guardian or an attorney-in-fact, may be able to amend the documents for her, if they have the authority to do so under the terms of the trust.

Anyone contemplating this amendment must be aware of any “self-dealing” issues. The legal representative will be restricted to making changes only for the benefit of the beneficiaries and should be mindful before attempting to amend the trust.

Suppose the authority to amend doesn’t exist or other restrictions make it impossible, depending on the state’s laws. In that case, it may be possible to docket the trust with the court and obtain a court order authorizing the trustee to depart from the terms of the trust or even amend the document.

Accomplishing this is far easier if all involved agree with the changes to be made. Unfortunately, if any interested parties object, it may lead to litigation.

Depending upon the desired change, entering into a family settlement agreement may be possible after the mother dies. If everyone is willing to sign off, an agreement can be written authorizing the trustee to deviate from the terms of the trust. This will also require the guidance of an estate planning attorney to ensure that the agreement follows the state’s laws.

If family members disagree with the change, the trustee can refuse to accept the settlement agreement to protect themselves from potential liability. It is wise to sit down with your estate planning attorney and ensure you and your loved ones are familiar with who is authorized to amend a trust. If you would like to learn more about trusts, please visit our previous posts. 

Reference: NWI Times (May 7, 2023) “Estate Planning: Who can amend the trust”

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Unmarried Couples must have Estate Planning Documents

Unmarried Couples must have Estate Planning Documents

Many couples make the choice not to wed, even after being together for decades, for personal or financial reasons. For example, some clients don’t marry so as not to impact their children’s inheritance, while others would rather not bother with the legalities, says a recent article, “Estate Planning for Unmarried Couples” from My Prime Time News. In some cases, marriage would cause the couple to lose pension or Social Security benefits, if they remarried. However, unmarried couples must take extra care to have estate planning documents in place to make their wishes clear and to protect each other in case of incapacity, serious illness and, ultimately, death.

From any statutory priority, a significant other does not have the legal rights granted to a spouse to serve as a personal representative or executor for their loved one’s estate. In addition, there is no statutory right to inherit property, including any family allowance or exempt property allowance.

The significant other also has no rights regarding acting as guardian or conservator for their partner and no ability to make medical decisions, if they become incapacitated or disabled.

All of these issues, however, can be resolved with the help of an estate planning attorney. Both partners should execute a will, health care power of attorney, general power of attorney and a living will to protect each other.

The last will and testament designates a personal representative or executor who will be in charge of the decedent’s estate and inherit the person’s assets. With no will, a partner will inherit no assets, unless they are owned jointly or the partner is a named beneficiary.

Having a health care power of attorney and a financial power of attorney gives a partner the power to make decisions if their loved one becomes incapacitated. In addition, these power of attorney documents are necessary for adult children to have priority in making these decisions, and guardianship proceedings will be required if there are no children or family members.

Disputes between the adult children of unmarried couples are common if a comprehensive estate plan still needs to be completed. For example, imagine a partner of many decades becoming too ill to communicate their end-of-life wishes. Even after a lifetime together, the adult children will have the legal upper hand, regardless of what the couple has discussed as their wishes for this situation.

It may be challenging for unmarried couples to discuss their living arrangements and family dynamics. However, the experienced estate planning attorney has met with and helped families of all kinds and will have the knowledge to prepare an estate plan to address all family dynamics.

Unmarried couples must have estate planning documents in place. Once this work is done, the couple can rest easy, knowing they have protected each other in the best and worst circumstances. If you would like to learn more about planning for unmarried couples, please visit our previous posts.

Reference: My Prime Time News (May 1, 2023) “Estate Planning for Unmarried Couples”

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Durable Power of Attorney can Prevent Guardianship Issues

Guardianship or conservatorship documents are not easy to obtain and can take months to finalize, warns the article “Possible Guardianship Or Conservatorship in Your Future? Plan Ahead With A Durable Power of Attorney” from Idaho Senior Independent. However, there is a far easier way to plan for the future. A durable power of attorney can prevent guardianship issues.

Guardianship is a tool to solve the issue of a person who has become incapacitated and cannot make personal care, legal or financial decisions. With a durable power of attorney for health care decisions and a general durable power of attorney for financial matters, you can achieve the same level of control, with far less time, trouble and cost.

The ultimate goal is to gain the legal authority to make decisions for the incapacitated individual which will be honored by third parties, including financial institutions and health care providers and facilities.

Most estate planning attorneys advise married couples to give each other durable power of attorney (POA) for health care and finances. As long as the couple doesn’t die at the same time or become incapacitated at the same time, the well spouse can manage the couple’s health and assets. It may also be a good idea to give his legal authority to another person, usually one of their children.

Having an estate planning attorney create a comprehensive estate plan, which includes powers of attorney, health care powers of attorney, a last will and testament and other necessary legal documents, may seem like a lot to do. However, the alternative, pursuing guardianship or conservatorship, is just as lengthy, if not more so, and only solves one problem. A complete estate plan solves many, from care during incapacity to the distribution of assets after death.

Guardianship is needed if there is no durable health care POA for a loved one and they are unable to care for themselves or make medical decisions. This is especially true if they need some kind of housing assistance, such as assisted living or memory care. A conservatorship allows the named person to manage the loved one’s assets, including Social Security, investments and any property or vehicles they own. The POA also permits you to use their assets to pay for their care.

None of this can happen while going through the guardianship/conservatorship process, meaning you or someone else will have to pay the bills and time-sensitive decisions cannot be executed.

Achieving guardianship/conservatorship involves filing a petition with the court in the county where your loved one lives. In most cases, an estate planning attorney will advise the family member to obtain an appointment for their loved one with a physician who can evaluate the person’s ability to manage their life. A physician will need to provide a letter verifying the need for guardianship/conservatorship. The letter becomes part of the petition filed with the court.

The attorney will require a hearing based on the information provided.

Many courts require a different attorney to be retained to represent your loved one to avoid any conflict of interest. A different physician will, in many cases, also be required to evaluate the health of your relative.  Courts also often require an assessment by a legal “visitor,” typically a licensed social worker who independently evaluates your relative and makes recommendations.

The visitor reports their findings to the court and to the attorneys. The guardianship/conservatorship applicant pays for the visit and subsequent reports, plus any attorney fees.

All of this takes time, although an attorney can request that the court grant temporary guardianship and conservatorship.

Having a legal, durable power of attorney for health and finances can prevent guardianship issues long before they will be needed. It is a far simpler way for you to care for loved ones, if and when they need it. If you would like to learn more about guardianship and elder law, please visit our previous posts. 

Reference: Idaho Senior Independent (May 1, 2023) “Possible Guardianship Or Conservatorship in Your Future? Plan Ahead With A Durable Power of Attorney”

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Use Estate Planning to Prepare for Cognitive Decline

Use Estate Planning to Prepare for Cognitive Decline

Since 2000, the national median age in the U.S. has increased by 3.4 years, with the largest single year gain of 0.3 years in 2021, when the median age reached 38.8 years. This may seem young compared to the life expectancies of older Americans. However, the median age in 1960 was significantly lower, at 29.5 years, according to the article “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans” from Think Advisor. As we get older, it is wise to use your estate planning to prepare for cognitive decline.

An aging population brings many challenges to estate planning attorneys, who are mindful of the challenges of aging, both mental, physical and financial. Experienced estate planning attorneys are in the best position to help clients prepare for these challenges by taking concrete steps to protect themselves.

Individuals with cognitive decline become more vulnerable to potentially negative influences at the same time their network of trusted friends and family members begins to shrink. As people become older, they are often more isolated, making them increasingly susceptible to scams. The current scam-rich environment is yet another reason to use estate planning.

When a person is diagnosed with Alzheimer’s or any other form of dementia, an estate plan must be put into place as soon as possible, as long as the person is still able express their wishes. A diagnosis can lead to profound distress. However, there is no time to delay.

While typically, the person may state they wish their spouse to be entrusted with everything, this has to be properly documented and is only part of the solution. This is especially the case if the couple is close in age. A secondary and even tertiary agent needs to be made part of the plan for incapacity.

The documents needed to protect the individual and the family are a will, financial power of attorney, durable power of attorney and health care documentation. In addition, for families with more sophisticated finances and legacy goals, trusts and other estate and tax planning strategies are needed.

A common challenge occurs when parents cannot entrust their children to be named as their primary or secondary agents. For example, suppose no immediate family members can be trusted to manage their affairs. In that case, it may be necessary to appoint a family friend or the child of a family friend known to be responsible and trustworthy.

The creation of power of attorney documents by an estate planning attorney is critical. This is because if no one is named, the court will need to step in and name a professional guardian. This person won’t know the person or their family dynamics and may not put their ward’s best interests first, even though they are legally bound to do so. There have been many reports of financial and emotional abuse by court-appointed guardians, so this is something to avoid if possible. An experienced attorney will make sure you are using your estate planning to prepare for cognitive decline. If you would like to learn more about elder care planning, please visit our previous posts. 

Reference: Think Advisor (April 21, 2023) “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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