Estate planning and Elder Law protections help people manage their finances before and after they die.
Estate planning is an essential part of retirement. While it ensures that the proper beneficiaries are selected, it also guarantees that and as little financial and administrative burden as possible is left behind.
Attorney-in-Fact
With the exception of court-appointed guardians or conservators, an attorney-in-fact is the safest way a senior can protect him or herself from vulnerabilities associated with aging. Especially in the case of finances, having an attorney-in-fact can ensure that a senior’s interests are maintained, even in the case of incapacitation.
An attorney-in-fact can either have limited or general power of attorney. Whereas each right is specified under limited power of attorney, an attorney-in-fact with general power of attorney can make all decisions in place of his or her client, to include legal, financial, and personal matters. This power can also be either current, whereby full rights determined by a client are effective on the day they are allocated, or springing, by which rights are acquired over a given period.
Often, it is advisable to have both a guardian or conservator and an attorney-in-fact with at least limited power of attorney so that a senior can ensure that his or her legal, financial, and private matters as well as personal care are handled as proficiently as possible. Furthermore, legal representation can help avoid issues that arise with competency requirements, which vary by state and tend to be ambiguous.
Wills
While wills are legally binding documents that state beneficiaries to an estate and legal representatives, it does not cover properties that are not probate. Properties that are not designated as probate include jointly owned property, life insurance proceeds, and property with an indicated beneficiary. Aside inheritance, other purposes of writing a will include:
- Expediting the probate process
- Reducing estate taxes
- Appointing a guardian for surviving dependents
Medical Directives
A medical directive is a dossier that contains a health care proxy, medical instructions, the designation of an attorney-in-fact, a will, and other documents as required by state laws and personal decisions. Medical directives are an easy way to consolidate all relevant information to planning an estate.
Trusts
A trust is a legal arrangement whereby a “trustee” retains the legal title to property for a “beneficiary.” Rules for the trustee are dependent on the trust instrument, while beneficiaries continue to control the trust throughout their lives. Once the beneficiary dies, the trust is then inherited by one or more “remaindermen.” Trusts are often used to circumvent probate, receive tax benefits, qualify for Medicaid, and to protect the property contained in the trust.
Taxation
Effective January 1, 2010, estates are free of federal taxation, but may still be taxed by state governments.
