Putnam County Estate Planning & Medicaid

How Powers of Attorney Are Used in Planning for the Future

The same level of advance planning needed for a new baby or for a child going to college is necessary for retirement and estate planning.

Decisions about housing, income, health care and your heirs' lives after you pass away are not always easily made. These decisions involve emotional, financial and legal considerations. Timing these decisions and creating the necessary documents requires good planning, as many of these decisions must complement each other.

According to The Harvard Press in "Older & Wiser: Powers of Attorney," the complexity of these issues leads most people to seek professional assistance regarding retirement living and estate planning. While many of us are tempted to avoid uncomfortable decisions, careful planning can save you thousands of dollars and can help you avoid unnecessary guardianship or institutionalization.

Powers of attorney are documents executed by an individual, the "principal," to give another individual, the "attorney-in-fact," power to decide issues on the principal's behalf. The principal has the ability to define the scope of decision-making authority in the power of attorney document.

Based on how they're drafted, powers of attorney can become effective in different ways. A durable power of attorney must be executed while the principal is still competent. It will be immediately effective and stay in effect, even if the person becomes incapacitated. A springing power of attorney is different. It becomes effective when the person is no longer competent.

A durable power can be used without the consent of the individual but must be used to the person's benefit. The springing power lets the person creating the document keep control over his or her affairs as long as it is practical. Both of these types of documents may be revoked by the principal in writing.

Drafting and executing power of attorney documents is an individualized process that varies depending on the circumstances. So it's never a good idea to use a boilerplate form from the Internet that doesn't reflect the individual's needs and circumstances.

There is no doubt that taking care of these matters in a timely manner can provide you with peace of mind and the assurance that your affairs will be handled. Speak with a qualified estate planning attorney to ensure that you have a properly drawn and executed power of attorney—and other estate planning—documents in place.

Reference: Harvard Press (April 28, 2016) "Older & Wiser: Powers of attorney"

Think Way Outside the Box When Faced With a Mystery

When a beloved member of the family passes away without a will, heirs are left with a mystery that requires creative thinking to solve.

Put on your detective hat if a loved one passed away with no will or estate plan. According to MarketWatch in "My wealthy grandmother left no will — how do we find her stocks and bonds?," you are going to need to think like an investigator, looking for clues in the most unexpected places.

The executor may have to do a lot of gumshoeing.

You can contact grandma's estate planning lawyer, if she had one, as well as anyone who had access to her home—like housekeepers, friends, and other relatives. You can also see if she had a safe deposit box at her bank and watch the mail for updates on any accounts.

According to recent research, women in particular are often faced with this problem when their spouse dies. Women are also less likely to know the terms of their spouse's life insurance policy (57% versus 69% of men) and less likely to locate family financial documents in an emergency (32% versus 21% of men).

To avoid putting your loved ones in this position, make sure that your financial documents are in a place where they can be located easily when you die. Unfortunately, there's no law that says we have to make out a master list of where our assets are located. The deceased had to have independently made a list. Also, it's not unusual for assets to go undiscovered: grandma may have had a bank account in northern Minnesota or a timeshare in Hawaii. If there's no documentation, you'd never know.

State law usually appoints the closest living relative to be the administrator, or a relative can file papers to begin probate proceedings. This is a court appointed process that will include conducting an inventory of all assets and paying debts and taxes. A far better way to go? Speak with an experienced estate planning attorney to prepare the necessary documents. Also, put your important papers in order and have a conversation with your loved ones so that they will be better prepared.

Reference: MarketWatch (April 30, 2016) "My wealthy grandmother left no will — how do we find her stocks and bonds?"

Six Key Estate Planning Documents To Protect Your Loved Ones

We don't learn about the private lives of celebrities who have done their estate planning. Privacy and a faster resolution to settling estates are just two good reasons to create an estate plan.

You really don't have to be a millionaire or famous to create an estate plan, as noted in an article appearing on the Forbes' website, "Prince and Estate Planning: What We Can Learn from the Late Musician's Financial Picture." All you have to do is make sure that you have six basic estate planning documents in place to protect your loved ones from additional stress and worry when you pass away.

Here are the six key documents you should have to protect your assets and your family in the event of your passing:

1. Beneficiary Forms. This indicates who gets the assets in your 401(k)s, IRAs, life insurance policies, pensions, and other financial accounts upon your death. These designations take priority over the directives in your will, so keep them up to date.
2. POD and TOD Designation. A payable on death (POD) form typically says who should receive the money in your checking or savings accounts when you pass away. A transfer on death (TOD) form is similar but typically for brokerage accounts. A TOD deed says who takes over the deed to your home after you die.
3. Durable Power of Attorney. This important document designates a person to make health care or financial decisions for you if you become incapacitated or unable to make them for yourself.
4. Living Will. This is also called an Advance Health Care Directive. It details the way in which you want your doctors to treat you should you become unable to communicate those wishes.
5. Will. This outlines how you want your probate assets divided, as well as who should become guardian of any minor children.
6. A Living Trust. This document, like a will, says how you want your property and funds distributed and who will take care of your minor children. It also appoints a trustee to carry out specific wishes for your assets. Unlike a will, assets held in a trust don't have to go through probate. A trust can be used to help manage your assets and property while you're still alive.

Every situation is different and depends on your circumstances. By working with an estate planning attorney, you can rest assured that your heirs will be protected and your wishes will be carried out.

Reference: Forbes (April 29, 2016) "Prince and Estate Planning: What We Can Learn From the Late Musician's Financial Picture"