Adults who become incapable of caring for themselves, their property or their dependents may have a guardian appointed for them. However, guardianship can be avoided through the use of living wills and powers of attorney. In such circumstances, personal preferences can be respected without the need for court-appointed guardians.
Living wills/healthcare proxies ("living wills") and powers of attorney can provide that they become effective when a person is temporarily or permanently unable to handle his or her financial or personal affairs due to illness or injury.
MAKING A LIVING WILL
Advance instructions about health care preferences are commonly given in documents called living wills. The laws of every state allow individuals to use living wills to direct health care providers on the use or withholding of life-sustaining medical treatment.
Should an individual be incapable of stating his or her wishes at the time such major life decisions must be made, the living will specifies these wishes.
Some people think that living wills can only be used to limit the use of life-prolonging treatment. However, these documents can also be used to direct health care providers to administer all available medical treatment, even experimental procedures.
A living will can help your loved ones avoid family discord or even a lawsuit over medical care. The law ordinarily requires health care providers to follow the directives of a valid living will, even if they conflict with medical advice or the wishes of family members. Without a living will, disagreements among medical care providers or family members can result in costly legal battles over proper treatment.
Your lawyer can help you prepare a living will that includes the specific instructions you want. For example, you may want to state your preferences regarding the particular treatments such as dialysis, chemotherapy, radiation, surgery and the use of respirators, feeding tubes or other methods of life support.
A living will can be changed at any time. If your preferences change with regard to more, or less, treatment, you can use a new living will to express your wishes.
Your living will is only followed if you become permanently unconscious or otherwise unable to make medical decisions. If you understand your medical condition and the effect of proposed medical treatment, it will be unnecessary for your health care providers to consult your living will; they will ask you instead.
USING A POWER OF ATTORNEY
A power of attorney is a document that authorizes one person, the agent, to act on behalf of another person, the principal. Powers of attorney are commonly used to allow an individual to appoint someone else to handle the sale of a car or house. Powers of attorney can also be used to appoint someone else to handle the following kind of routine chores and decisions:
The powers granted to your agent can be broad or limited. You can give your agent complete authority to manage all your affairs and make all decisions for you. Or, you can limit your agent’s power. You can specify a termination date and put restrictions on your agent’s authority to act. You retain the power to revoke your power of attorney at any time while you are competent. You can also discharge one agent and appoint another.
A limited power of attorney is useful if you expect to be away from your home or business for an extended period of time. For example, if business takes you on an overseas assignment, you may wish to give your spouse a power of attorney. Or if you are taking a long vacation with your spouse, you can give a power of attorney to an adult child, a trusted friend, an advisor, or your bank.
A durable power of attorney can be used to authorize an agent to handle financial and other matters. For example, your power of attorney can authorize your agent to invest your money and pay for the support of the persons that you designate. The power of attorney can authorize your agent to pay your bills, collect interest, dividends and rent, and to take care of personal matters that arise during your absence.
A durable power of attorney can be invaluable if you are unable to make decisions as a result of incompetence or unconsciousness. If you are facing a serious operation or suffering from an incapacitating illness, a durable power of attorney can be prepared to take effect as soon as you sign it. Or your durable power of attorney can provide that it should become effective only when a doctor certifies that you have become incapacitated.
In certain states, a power of attorney may be used to designate another to make health decisions. In other places, this may be done with a health care proxy or living will.
Your lawyer can prepare a power of attorney that meets the requirements of your state. Your lawyer can also help you select a trusted family member, friend or advisor under your power of attorney. Your lawyer may recommend that you select two agents - one to administer your medical care and another to manage your financial affairs.
APPOINTING A GUARDIAN
Should you become incapacitated without having made a durable power of attorney, you may need a guardian. Guardianship is a legal procedure by which a court declares an adult incompetent and appoints someone to manage financial matters, living arrangements and medical care decisions. The procedure is sometimes referred to as conservatorship, custodianship or civil commitment.
Older adults do not need a guardian simply by reason of age or minor mental physical impairments, provided they are still able to manage their personal and financial affairs. The courts will not appoint a guardian for you merely because your family believes that you are making foolish or risky decisions. Courts will appoint a guardian if you have a physical or mental condition which impairs your decision-making capacity or your ability to avoid harm to yourself or to others.
Guardianship is ordinarily not necessary for an incapacitated person who has appointed an agent under a durable power of attorney. However, if an agent has not been appointed, your friends or family may start legal proceedings to have a guardian appointed. If you disagree, you can fight the proceedings for guardianship. This may be appropriate if you can’t decide who to select as your agent or what to specify in a living will. Guardianship may also be preferred if you fear that your family members will try to force their interests, rather than yours, upon your agent or doctor. However, guardianships are more expensive than powers of attorney because of court fees, bond premiums, and the fees of the experts who will testify during the legal proceedings.
PROTECTION AGAINST UNSCRUPULOUS AGENTS AND GUARDIANS
Guardians and agents are required to act in your best interests, keep accurate records, and treat your property separately from their own. You retain the right to revoke a power of attorney while you are still able to handle your own affairs. The courts can remove an agent or guardian who does not act in your best interests even after you are incapacitated.
SAFEKEEPING FOR YOUR LIVING WILL AND POWER OF ATTORNEY
Your living will and power of attorney should be kept in a safe place where they can be located when needed. You may wish to have your lawyer retain a copy in case the original is damaged or lost. You should also tell a trusted friend or family member where the signed documents are stored.
SEEING A LAWYER
A visit with a lawyer provides an opportunity to ask for help in planing for incapacity. Your lawyer can advise you about using living wills and appointing agents and guardians -- either for yourself or for aging family members or friends. Your lawyer can also answer your questions about the matters listed on the Planning Checklist at the end of this guide. Your lawyer will meet with you in private, allowing you to express your preferences.
You should plan ahead so that your needs and desires can be followed in the event of an incapacitating illness or injury. Your lawyer can explain the benefits of advance planning to avoid guardianship should you become incapable of taking care of your personal affairs. If you wish to appoint an agent, your lawyer can prepare a power of attorney naming someone you trust to handle your affairs if you cannot. Your lawyer can also prepare a living will or a health care proxy that complies with your wishes as well as the detailed requirements of your state.
For additional information contact us today at 1(800)290-1012 or at firstname.lastname@example.org visit our website, www.amarallaw.com.
In recent years, living trusts have grown increasingly popular as substitutes for wills in estate planning. They are sometimes called revocable trusts or inter-vivos trusts. Living trusts can have several advantages over wills, including avoiding probate, avoiding guardianship, maintaining liquidity, and keeping privacy.
You can create a living trust with a simple trust document and change it at any time. You can transfer all of your assets to the trust but continue to use and manage them during your lifetime. After you die, your trustee will transfer ownership of the assets to the beneficiaries named in the trust.
An important benefit of living trusts is the speed with which your property can be transferred to your heirs after your death. In addition, a living trust is private. Only you, your trustee, and your beneficiaries will know the value of the trust property, how it is to be distributed and the names of your beneficiaries.
At Amaral & Associates, P.C., we can help you decide whether a living trust is appropriate in your circumstances and prepare a trust document that meets your goals.
USING A LIVING TRUST
Most people understand the importance of a will, but many are not familiar with trusts. Both a will and a trust can be used to transfer your property when you die, but the similarity ends there. A will has no effect until you die, while a living trust becomes operative during your lifetime to manage your assets. While a will is a part of the public record a trust is not, thus providing greater privacy. Trusts are usually easier to amend than wills and less likely to be contested by your heirs.
You can use a living trust to make decisions about your old age care. The trust can specify your preference for care by your family or in a nursing home. If you become disabled or incompetent, your trust will control who will care for you and how your money will be managed. Without a living trust, a court might need to appoint a guardian if you become incapacitated. As with probate, guardianship proceedings can be costly and time consuming. A living trust provides a way to avoid legal proceedings to appoint a guardian.
A living trust may also help you in a variety of other circumstances. For example, you can use a management feature of living trusts to appoint a professional trustee for the elderly, for inexperienced persons who have recently inherited wealth, and for minors. Living trusts are also useful for those lacking time to manage their property, such as entertainers, entrepreneurs, and busy professionals.
If you own real estate in more than one state a living trust can help avoid probate in each state. Probate in multiple states increases the cost and time to distribute your property to your heirs.
CREATING A LIVING TRUST
Your lawyer can prepare a living trust agreement that appoints a trustee to manage your property for your beneficiaries. To maintain control, you can be your own trustee. Commonly, the person creating the living trust is the first beneficiary while other provisions transfer the property to their heirs upon death. The trust agreement will provide details on your rights to change the trust, the duties of the trustee, how to distribute your property, how to provide for your family, and when and how to select a successor trustee.
You can cancel or change any of the provisions of your trust document, including the beneficiaries, the property they are to receive, and the trustee. You should review your trust every year to assure that it still meets your needs. Your lawyer can advise you about the legal and tax effects of your proposed changes and prepare a document that will accomplish those changes.
CHOOSING A TRUSTEE
As noted above, you can serve as your own trustee or you can appoint a professional trustee such as a bank or trust company. Most people appoint an individual such as their spouse, a relative, a friend, their lawyer or other advisor to serve as successor trustee. When deciding whom to select as trustees, you should consider whether they are worthy of your trust and are willing to accept the job.
A professional trustee may be the best choice if your property will be difficult to manage or distribute. The disadvantages of professional trustees are that they are impersonal and charge annual fees ranging up to two percent of the value of the trust assets. Furthermore, many professional trustees are unwilling to serve if the value of the trust assets is less than $100,000.
The trust document will describe the duties of the trustee to manage the trust property, keep records, prepare tax returns, and make distributions to the beneficiaries. The trust document can also designate a successor trustee or provide instructions on how to select the successor.
TRANSFERRING PROPERTY TO YOUR TRUST
After creating your trust, you must complete the formality of transferring your property to the trust. For example, instruct your broker to transfer your stocks and bonds into the name of the trust. Tell your insurance agent to assign your life insurance policies to the trust. Deeds transferring your real estate should be prepared and recorded in every county where you own real estate.
Although your living trust can help you to avoid probate for some of your property, you may still need a will. It may inconvenient to transfer certain property, such as your car or your personal checking account to a trust. Such a transfer could make it difficult to insure your car; it might be harder to obtain credit if your checking account is not kept in your name.
A will may still be needed even if you transfer all of your property to a trust. A will is needed to appoint a guardian for your minor children. A will is also needed for assets that you acquire after the creation of the trust or may have neglected to transfer to your trust, such as furniture, clothing and jewelry. The will can have a “pour-over” provision to transfer your property to the trust when you die. Such a “pour-over” provision will cause your property to be distributed according to the terms of your trust.
You can use a living trust to choose the state for administering your estate. The state for your trust can be different from the state where you reside. This can enable you to select a state that has laws that are most favorable to you for income tax and inheritance tax purposes.
For tax purposes, the trust property is treated as if you remained the owner. You will report income from the trust on your federal income tax return until your death. However, the creation and funding of a living trust does not have any federal gift tax consequences. A trust can be used to avoid estate taxes. Your lawyer can help you to design a trust that provides the most favorable tax treatment for you and your heirs.
Living trusts have many advantages in estate planning. Unlike wills, living trusts do not require lengthy and costly probate proceedings. Your property and heirs will not be listed in public records in a courthouse. And your property can be transferred to your heirs almost immediately after your death. The advantage of the living trust must be weighed against the expense and effort of creating and administering the trust.
Ask your lawyer whether a living trust is the right estate planning tool for you. Your lawyer can carefully draft a trust document to meet your needs and objectives and help you to reduce taxes for yourself and your heirs. Your lawyer can also help you prepare other estate planning documents, such as a will, a durable power of attorney, and a health care proxy.
LIVING TRUST CHECKLIST
(1) BENEFITS OF LIVING TRUST
For additional information contact us today at 1(800)290-1012 or at email@example.com visit our new website, www.amarallaw.com.
Many people do not want to even begin thinking about “what happens when…,” but it is very important for you and your loved ones that you take the time to make a will so that there are no unanswered questions after you are gone.
Making a will may seem like a daunting task and you may not even know where to begin, but here are some steps to help you begin the process.
1. Take an inventory of your assets and liabilities. Take into consideration important tangible assets such as real estate, vehicles, and valuable jewelry and artwork, as well as intangible assets such as investments and life insurance policies. Having such a list will enable you to have a better idea of what your estate looks like and how you may want it distributed once you have passed.
2. Choose a personal representative. An executor, now known as a personal representative, is the individual who will implement the instructions that you set forth in your will. It is thus of the utmost importance that this individual is very reliable and will be available when their assistance becomes necessary. Often, individuals select their spouse as the personal representative of their will and provide an alternate individual in case their spouse predeceases them or is unable to act as a personal representative for any reason. Additionally, many people opt to have their attorney act as their personal representative, so as to ensure that an experienced mind handles the proceedings. Once you have chosen your personal representative, it is very important to let them know that you are naming them as such and to keep them updated if and when your will changes.
3. Make a list of beneficiaries. These individuals are those who will benefit from the distribution of your assets. More often than not they include family, friends, and charities. If you choose to leave all of your assets to one individual, you will need to come up with alternative beneficiaries, in the event that that individual predeceases you. This is a matter that can be discussed with your attorney.
4. Name guardians if you have minor children. Choosing your children’s guardians is a very important step and for individuals with children, probably the most important and hardest choice in the will writing process. To help you make the choice, keep in mind the following:
· Financial capability of the guardian to provide for your children
· Location of the guardian
· Age of the guardian
· How the religious beliefs of the guardian align with you and your spouse
· Time the guardian will have to give to your children
It is important when reviewing your will that you also reevaluate who you have chosen as guardians. As time goes on, your guardians may have a growing family, making it less likely that they will be able to care for your children, or they may have moved far away, which may not be good for your children’s transition in the event of your passing. By continuously reevaluating, you can ensure that the future needs of your children are always taken care of.
5. Meet with your attorney. With all of this information gathered, a meeting with your attorney will now be less daunting and allow you to have the time to ask whatever questions you may have.
For additional information regarding the preparation of your will or other highly recommended estate planning docs, such as your health care proxy, power of attorney and living trust, contact us today at 1(800)290-1012 or at firstname.lastname@example.org visit our new website, www.amarallaw.com, where you can fill out an online intake form for the above.
APPOINTING AN EXECUTOR
You should appoint an executor in your will. An executor locates heirs, lists property, pays debts, and distributes property to your heirs. A relative or friend can serve as your executor, but you should consider using a professional executor (such as a bank or trust company) if you have a large or complicated estate. An executor should be someone who is familiar with managing property, financial matters, and record-keeping. Before naming an executor, confirm that the person is willing to serve. Your lawyers can help you select the best executor. As noted above, your will can state that the executor is not required to furnish a bond, thus saving your estate this expense.
APPOINTING A GUARDIAN
If you have children under 18, you should appoint a guardian in your will. Otherwise, if you and your spouse die at the same time without such an appointment, a court will select a guardian to care for your children and manage their inheritance until they become adults. You can create a trust to control the property transferred to your children. A trust is useful if you are concerned that the children may lack the maturity to handle their inheritance after age 18. Your lawyer can help you to select a guardian and create a trust in your will that protects your children and your wishes.
KEEPING YOUR WILL IN A SAFE PLACE
Your will should be kept in a safe place so that it can be promptly located when you die. You may wish to have your lawyer keep the original to protect it from damage or loss. Although you are not required to give your executor a copy of the will, you should tell both your executor and a trusted family member where your will is stored.
In addition to ordinary wills that state your wishes for your property when you die, the laws of some states permit “living wills” that instruct your doctors to withhold life support equipment while you are alive. A living will is important if you become comatose with no hope of regaining consciousness. Your “living wills” should be written in a document separate from your ordinary will and you should re-sign and re-date it every few years to comply with your state law and to reaffirm your preferences. Give a copy of your “living will” to your doctors and to a close family member. Your lawyer can help you write a “living will” and advise you about re-signing it every few years to keep it valid.
MAKING YOUR FUNERAL ARRANGEMENTS
You can include instructions for your funeral arrangements in your will. However, you may wish to put these instructions in a separate letter. Give a copy of the instructions to your executor or a family member or friend to avoid delays when you die. You can also include instructions about gifts of your body organs to hospitals for research or transplants. Such instructions for gifts of body organs can be noted on your driver’s license or a separate donor card that you can carry in your wallet.
REDUCING THE TAXES ON YOUR ESTATE
Federal estate taxes and state inheritance taxes may be deducted from your property before it is transferred to your heirs. A federal estate tax applies if the value of your property exceeds an exempt amount that varies depending on the year of your death. Following is a table of the exempt amount:
Year of Death Exempt Amount
2002-2003 $1.0 million
2004-2005 $1.5 million
2006-2008 $2.0 million
2009 $3.5 million
2010 No estate Tax
2011 and after, $1 million, unless Congress extends the repeal of estate taxes.
A special $1.3 million exclusion applies to estates that hold investments in family businesses and farms. Your lawyer can help you prepare an estate plan that will reduce federal and state taxes. For example, your lawyer may suggest that you make gifts before you die to reduce taxes, hold property in joint tenancy with your spouse, transfer ownership of life insurance policies to your spouse or heirs, or use a trust arrangement. Your lawyer can also help you shift the tax responsibility among heirs if you would like some of them to receive their shares without being taxed on it.
REDUCING PROBATE COSTS
Probate costs include court fees, bond premiums and the fees of professionals who assist your executor with the administration of your estate. Your lawyer can help you reduce probate costs with estate planning tools like joint ownership, living trusts, lifetime gifts, and business recapitalizations. For example, your lawyer can prepare a living trust in which you appoint a trustee to distribute your property when you die. Some estate planning tools can help you reduce probate costs, but they may not lower your estate taxes.
PREPARING YOUR WILL WITH A LAWYER
Your lawyer can help you draft your will and explain the tax consequences. Your lawyer can also help you comply with the detailed requirements for a valid will, see that your property is distributed as you wish, and reduce estate taxes and probate costs. The legal fees are usually well spent and often less than the added costs and taxes that would result from dying without a will.
You should have a will if you own any property-a home, a car, bank accounts, stocks and bonds, retirement benefits, jewelry, clothing, household goods, and so on. A will lets you distribute your property as you want with a minimum of costs and taxes. It is an opportunity to select an executor for your estate, a guardian for your children, establish trusts and dispense with costly bonds. If you don’t have a will, ask your lawyer about drafting one without delay.
CHECK LIST FOR WILLS
(1) ESTATE PLANNING TOOLS
B. Joint tenancy
C. Living trusts
D. Lifetime gifts
E. Business recapitalization
(2) SELECTING YOUR HEIRS
D. Other relatives
F. Charitable organizations
(3) IDENTIFYING YOUR DEBTS AND LIABILITIES
A. Credit cards
C. Home mortgages
(4) LISTING YOUR PROPERTY AND THE HEIRS TO RECEIVE IT
A. Automobiles and boats
B. Bank accounts
C. Computers and electronic equipment
D. Home and household goods
G. Rental property
H. Stocks and bonds
(5) APPOINTING AN EXECUTOR FOR YOUR ESTATE
(6) NAMING A GUARDIAN FOR YOUR CHILDREN
(7) CREATING TRUSTS FOR ALL OR A PART OF YOUR PROPERTY
(8) ALLOCATING TAXES AMONG YOUR HEIRS
(9) PROVIDING FOR FORCED HEIRS
(10) DISINHERITING UNWANTED HEIRS
(11) COORDINATING WITH THE WILL OF YOUR SPOUSE
(12) DIRECTIVE TO DOCTORS TO WITHHOLD LIFE SUPPORT (“LIVING WILL”)
For additional information contact us today at 1(800)290-1012 or at email@example.com visit our new website, www.amarallaw.com.
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