A lot of people think that estate planning begins and ends with the financial part of the equation, but this is really not the case. It is also important to address eventualities that you may face toward the end of your life, such as incapacity or incompetency. They are not especially pleasant to consider, but a difficult situation can be much worse if you enter into it when you are completely unprepared.
The population is aging rapidly because of the fact that the baby boomer generation is attaining senior citizen status. Of course, if you plan ahead effectively for retirement, your “golden years” can be full of travel, leisure activities, and quality time with your family.
This is something to look forward to, but once you reach the age of full Social Security eligibility, your life expectancy will be 85 if you are a man, and 87 if you are a woman. The United States Census Bureau has found that the segment of the population that is between 85 and 94 years of age is growing faster than any other.
When you put these numbers into perspective, you can see that there is a very good chance that you will experience life as an octogenarian.
Alzheimer’s disease is a condition that we have all heard about, but when you look into it a bit, its widespread nature is quite surprising. According to the Alzheimer’s Association, one in 10 people that are 65 and older have contracted this disease. It strikes someone every 65 seconds, and by 2050, it is projected that 13.8 million American seniors will be suffering from Alzheimer’s.
This disease causes dementia and incapacity for seniors and come in many different forms. Clearly, the potential for latter life incapacity is something that everyone should take quite seriously.
There are a number of different steps that you can take to prepare yourself for possible incapacity, starting with the creation of a living trust. Many people think that a last will is the right choice as an asset transfer vehicle if you are not extremely wealthy. In fact, a living trust is a better choice for a number of different reasons.
We will cover all of them in a different blog post, but one of the advantages that you can gain if you use a living trust is the ability to prepare for incapacitation. While you are alive, you can act as the trustee of your living trust. In the trust declaration, you can name a disability trustee that would be empowered to administer the trust if you are still living, but incapacitated.
Your incapacity plan could include a durable power of attorney for property, which would give the agent the ability to manage your financial affairs. A durable power of attorney is another document that can be used to address incompetency later in life. This document gives an agent or attorney-in-fact the ability to make legally binding decisions on your behalf. You could execute one of these documents if you don’t have a living trust, and it would be useful even if you do, because you could have property in your personal possession that was never conveyed into the trust. A durable power of attorney for health care decisions should be part of incapacity planning.
In order for the health care agent to be able to make sound decisions, he or she must have access to your medical records. They are kept private unless you sign a HIPAA release form, so this is another piece to the puzzle.
How would you feel about being kept alive indefinitely through the utilization of artificial life-sustaining measures if there was no hope of recovery? You can answer this question through the inclusion of a living will.
If you would like to learn more about all aspects of estate planning, attend one of our upcoming Webinars. There is no admission charge, and you can check out our Webinars schedule page to get all the details.
An important estate planning question that must be asked is, "Who makes decisions about your medical care if something happens to you?" This results from illness, injury, incapacity (such as dementia or Alzheimer's), or some other reason. If something happens, having the right legal documents in place might be a lifesaver. Simply writing down your wishes ahead of time may not be enough because you cannot anticipate every situation. You must select someone you trust to manage your care, instead of relying on a doctor, estranged relative, or even a judge, none of whom are likely to be aware of your preferences. In order to accomplish this, you need a Nevada health care power of attorney and an estate planning attorney can help.
In order to prepare comprehensive Nevada health care directives, you need three different health care documents: the Durable Power of Attorney for Health Care, a Living Will, and a HIPAA Authorization Form. The Durable Power of Attorney for Health Care allows you to select someone you trust to manage your health care when you are unable to do so. That person is your “agent.” The second document, the Living Will, allows you to specify in writing the type of medical treatment you agree to receive in certain situations. This includes end-of-life wishes for health care treatment (often referred to as your "pull-the-plug" directive). Finally, your HIPAA Authorization Form makes sure those people you want to be involved in this process will not be limited in discussing your private medical care with your physicians, nurses, or other health care providers.
The person you select to make your health care decisions is called your agent. It is common for people to name a spouse, partner, child, relative, or close friend as an agent. However, in Nevada your agent may not be:
These restrictions do not apply to your spouse, legal guardian, or next of kin, however. So if your spouse happens to be employed at a health care facility, the restriction would not apply. If you have questions about restrictions on a health care power of attorney, talk to one of our estate planning attorneys.
In order to create a legally valid power of attorney or living will, you must be considered “legally competent.” In this context, competency refers to mental capacity, age, and maturity. In order to enter a legally binding agreement, you must be at least 18 years of age. This requirement is based on the presumption that individuals who are still immature are too inexperienced to understand or properly execute a contract or legal document. Furthermore, if you have been diagnosed with Alzheimer's disease, dementia, or have any cognitive impairments, you may not create these legal documents without the written certification by your physician that you are of sound mind at the time of signing them.
In Nevada, you can authorize your health care agent to take over your medical care immediately upon execution of the document. Accordingly, there will be no need for a physician to determine whether you are incapacitated or not. Instead, you agent will have the ability to step in and make decisions on your behalf at anytime. As long as you are competent, you will still be able to dictate your own medical care. Regardless of when the document goes into effect, your health care agent is always required to act in your best interests and follow your health care wishes as you have expressed them.
If you have questions regarding powers of attorney or any other estate planning matters, please contact the experienced attorneys at Anderson, Dorn & Rader, Ltd. for a consultation. You can contact us either online or by calling us at (775) 823-9455. We are here to help!
We understand that making the decision to obtain a court-ordered guardianship for can be difficult. If a loved one is no longer capable of caring for themselves and properly managing their affairs, and they did not establish a living trust for themselves, then a guardianship may be the only alternative. When families reach this point, and they are facing the decision to get the court involved, most families wonder how much a guardianship will cost in Nevada? While the overall cost can be estimated, it depends on numerous factors that must be taken into consideration.
A guardian is entitled to “reasonable” compensation for his or her services. These fees must be related to the guardian’s duties and must be reviewed and approved by the Court overseeing the guardianship. There are numerous factors that are considered by the Court in determining what the reasonable fee should be. Some of those factors include:
A public guardian is a county position and entitled to fees as any other guardian would be. However, if the ward's estate is insufficient to pay fees then the public guardian generally will not collect a a fee.
Private professional guardians will nearly always charge a fee, as it is their profession to serve in this capacity. So, unless the ward has sufficient assets to pay the fees, a private professional guardian will not be an option. The fees of a private guardianship in Nevada are often higher at the beginning of a guardianship because of the work involved to initially establish a guardianship.
There are benefits associated with consulting an attorney before and during the guardianship process. An estate planning attorney can bring invaluable expertise in incapacity planning and in navigating through the court process. It would not be uncommon for fees to establish a permanent guardianship to start at $3,000. However, this is only an estimate and should be discussed with your attorney because rates and time involved can vary. In most cases, attorney fees are paid from the assets of the ward and must be approved by the court.
There may be urgent situations where a guardian must be appointed immediately. In these situations, the law provides emergency procedures for the appointment of a temporary guardian. The fees for a temporary guardianship also vary, especially if a temporary guardianship is likely to result in a permanent guardianship.
If you have questions regarding incapacity planning or guardianships, please contact Anderson, Dorn & Rader, Ltd. either online or by calling us at (775) 823-9455.
You may have heard of HIPAA, or been asked to sign a form the last time you visited your doctor. Nearly every health care provider now requires its patients to sign acknowledgement forms indicating they are aware of the HIPAA regulations. How many of us know what HIPAA is for and what these health care regulations require? It is helpful, while you are creating or modifying your estate planning, to understand how HIPAA authorizations play a role in your estate and incapacity planning.
What is HIPAA?
HIPAA is the acronym that stands for Health Insurance Portability and Accountability Act, which was passed in 1996. In 2003, the U.S. Department of Health and Human Services passed regulations that apply to HIPAA. These laws impose serious penalties upon health care providers who, among other things, release any Protected Health Information without authorization. This includes releasing unauthorized medical information that is normally contained in a patient’s medical records. Because of these very strict laws, health care providers have become very hesitant to release medical records or any other medical information to anyone other than the patient.
What medical information is protected by HIPAA?
According to the statute and applicable regulations, “protected health information” includes any information created or received by a covered entity, which relates to the mental or physical health condition of an individual, or that could be used to identify that individual. The legal definition of “health information” is:
Health information means any information, whether oral or recorded in any form or medium, that –
(A) is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and
(B) relates to the past, present, or future physical or mental health or condition of any individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.
“Covered entities” include health care providers, as well as pharmacies, insurance companies and nursing homes.
The need for HIPAA authorizations in incapacity planning
In light of the HIPAA regulations, health care providers will not release medical information without the required authorization. As such, every comprehensive estate and/or incapacity plan needs to include a properly executed HIPAA authorization. Otherwise, your spouse or children, will be unable to obtain any information regarding your condition, in the event you become incapacitated. The HIPAA authorization allows any person you name in the release to receive protected medical information from your health care providers. It is critical that the person you identify as your agent for a Health Care Power of Attorney be authorized to receive your medical information. If you do not include a HIPAA authorization that will cover your agent(s) for a Health Care Power of Attorney, a Durable Property Power of Attorney, as well as your trustee(s) in your revocable living trust.
Another consideration is the need for your attorney to have access your medical records, for instance, if a determination as to your incapacity is required at some point. The reality is, there may be many individuals, designated in your various estate planning documents, who will need access to your medical information in order to fulfill their fiduciary duties. The HIPAA authorization will give them that access. The alternative would be going to court.
If you have questions regarding HIPAA authorizations, or any other incapacity planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Under Nevada law, you have the right to make decisions regarding the use of life-sustaining treatment, as long as you are competent to do so.
Learn more about advanced directives in Nevada in this presentation.
An agent is someone who is designated to manage the affairs of someone else. In a power of attorney, their authority usually extends to the management of finances or health care decisions. The person who creates the power of attorney and designates the agent is known as the “principal.”
Once an agent accepts the authority given to him or her under the power of attorney, a legally binding relationship is created between the agent and the principal. With that relationship and authority comes certain legal duties that must be adhered to. The role of an agent is entirely voluntary, but once an agent agrees to take on that role, the agent has agreed to the responsibilities that come with it.
What is an agent’s responsibility to the principal?
Being an agent under the authority of a power of attorney is a serious function and cannot be taken lightly. An agent is expected to act in good faith and with competence, care and diligence. An agent must avoid any conflicts that would prevent him or her from acting in the principal’s best interests.
An agent’s actions are governed by the authority granted in the power of attorney document, and based on the preferences of the principal. It is improper to override the desires of the principal in favor of the agent’s own preferences.
An agent is required to keep his or her own money and property separate and distinct from the property of the principal. Whenever an agent conducts financial transactions on behalf of the principal, the agent must use only the principal’s funds for the principal’s benefit. The agent is also expected to keep good records of all transactions, including receipts. An agent is required by law to provide an accounting to the principal whenever requested.
Differences between a general and limited power of attorney
Depending on the type of power of attorney, an agent’s authority may be limited. A general power of attorney provides very broad authority. For example, an agent may be given general authority to handle all financial matters or all health care decisions. A general power of attorney is commonly used to give an agent full authority to handle important decisions regarding the finances, real property, personal property and accounts of the principal. It can be valid immediately upon the execution of the document or the principal may specify that it is valid only in the event that the principal becomes incapacitated.
Whereas, a limited power of attorney normally provides more precise instructions for the agent or contains limitations on the scope of authority. If it is limited to a single transaction such as the sale of a piece of real property, once those duties have been completed or the goals accomplished, the powers are automatically revoked. A limited power of attorney may be put in place for a particular bank account and no other asset, so as long as the account is in place and the power of attorney has not been revoked, the agent may have access to that account.
Can an agent resign or be replaced?
Sometimes the power of attorney will describe how the agent can resign. If not, the agent may resign by simply giving notice to the principal. If the principal is incapacitated, the agent must give notice to the guardian or conservator (if one has been appointed). If there is a co-agent or successor agent, then notice would be given to that person, as well. A principal may remove an agent by giving notice to the agent in the same manner.
In the event none of those situations apply, an agent can resign by giving notice to the principal’s caregiver, to another person with sufficient interest in the welfare of the principal, or to a governmental agency with the authority to protect the principal. It is necessary for the principal, when an agent has resigned or has been removed, to notify any person or institution that has dealt with the agent. If a power of attorney has been recorded, it is necessary to record the revocation of the power, as well.
Powers of attorney can be highly technical documents and should be prepared by a qualified law firm to be certain of its legality. Many times a limited power of attorney is available from the institution requiring it such as as banks or title companies.
Both a guardianship and a power of attorney are methods of placing the control of someone’s affairs into the hands of someone else. There are differences between the two and certain advantages and disadvantages that you should discuss with your Nevada Estate Planning attorney before making a choice as to which is most appropriate for you.
A guardianship is a legal proceeding during which the court appoints someone to become the guardian for someone else who has become incapacitated in some way. The guardian serves as the decision maker for the ward. The guardian can be placed in control over the ward’s property, finances or care of the ward himself.
The guardian’s job is always to protect the ward and his assets. The guardian is required to obtain a court order before making certain decisions which is preceded by filing a petition with the court. Some of those important decisions include withholding life-saving medical care or terminating parental rights. The guardian is also required to make an annual report to the court regarding the status of the ward and his or her personal and financial affairs.
A power of attorney is an estate planning document which authorizes an “agent” to act on behalf of the “principal.” A financial or property power of attorney can be used to pay bills, manage bank accounts, or complete other types of financial transactions. A health care power of attorney can be used to make medical decisions. The power of attorney is intended to specify the specific tasks the agent is authorized to perform. The authority you convey can either start immediately ("immediate") or only after a certain event occurs ("springing"). A power of attorney does not require you to give up the right to manage your own affairs, but simply allows someone else to act on your behalf if that becomes necessary.
One difference is that a power of attorney is a private method, whereas a guardianship is a public proceeding carried out and monitored by the court. A power of attorney is less expensive than a guardianship, primarily because of the court involvement required with a guardianship. Another difference is that, with a guardianship, you may not have any control over who is chosen to act on your behalf. However, with a power of attorney, you are entirely free to identify the person who will serve as your agent.
With regard to the scope of authority, a power of attorney is generally more limited in scope. Furthermore, some institutions may be hesitant, or even refuse to honor the terms of power of attorney. That is primarily because of the risk of fraudulent use by agents. On the other hand, a guardian is given broad legal authority, backed by the courts, which is recognized by financial institutions, as well as health care providers.
A power of attorney(POA) is a legal document that gives someone you have chosen the authority to act on your behalf. In Reno, Nevada, the person who creates the power of attorney is called the “principal.” The person you choose to act on your behalf is called the “agent,” or the "attorney-in-fact." Two types of powers of attorney in Reno are most commonly used. One to handle medical needs and the other to manage financial needs. For example, you could create a power of attorney to give someone the authority to pay bills or manage your bank accounts. The authority can become effective immediately, or only when a specific event occurs, such as incapacity.
In order to be sure that this legal document is valid and to ensure that your agent possesses the power he or she needs to perform tasks on your behalf, certain requirements must be met. In Nevada, the requirements are governed by state statute. Generally, the law in Nevada requires as follows:
A power of attorney must be signed by the principal or, in the principal’s conscious presence, by another individual directed by the principal to sign the principal’s name on the power of attorney. A signature on a power of attorney is presumed to be genuine if the principal acknowledges the signature before a notary public or other individual authorized by law to take acknowledgments.
There are some specific requirements based on different circumstances.
For example, if the principal is residing in a hospital, nursing or a similar healthcare facility, at the time he or she executes the power of attorney, a certification of competency is required from a physician, psychologist or psychiatrist. That certification must be attached to the power of attorney.
Also, if the principal either resides in, or is about to reside in such a facility, no one associated with that facility (i.e., owner, operator, employee) can be named as an agent. The only exception is if one of those people is a spouse, legal guardian or next of kin of the principal.
In Nevada, a power of attorney for health care must be signed by the principal and either acknowledged before a notary public or witnessed by two adult witnesses who personally know the principal. The witnesses cannot be a healthcare provider, an employee of the healthcare provider, or an operator or employee of the healthcare facility. The agent named in the power of attorney cannot be a witness either. At least one of the witnesses must be unrelated to the principal by blood, marriage or adoption and not entitled to any part of the principal’s estate upon his or her death.
Although there are various do-it-yourself power of attorney forms available on the internet, one-size doesn’t fit all when it comes to estate planning instruments. It is best to consult with an attorney to make sure that your specific needs will be met by the document. If you need assistance with drafting a power of attorney in Reno, contact the Anderson, Dorn & Rader office and we will be happy to help.
There are different types of powers of attorney. They each have their own purpose and transfer varying levels of authority to the agent. A “durable” power of attorney stays in effect even after you have become incapacitated. Any other type of power of attorney will terminate automatically if you lose your mental capacity. Common examples of durable powers of attorney are ones that relate to financial or medical affairs.
According to the statutory law in Nevada, an “agent” (sometimes referred to as an "attorney-in-fact") is the “person granted authority to act for a principal under a power of attorney.” Depending on the type of power of attorney you are executing, there are some limitations on who can act as your agent.
For example, if the principal either resides or is about to reside in a hospital, assisted living facility or facility for skilled nursing, there are several categories of individuals that can NOT be designated as an agent. Those include the principal’s health care provider, an employee of the health care provider, the operator or employee of the health care facility. The only exception is if any of those individuals are the spouse, legal guardian or next of kin of the principal.
There are other specific situations that must be considered, especially when the principal is residing in a healthcare facility of some kind. You should consult a Reno Nevada estate planning attorney for assistance in choosing your agent for a power of attorney.
Since your agent will be given the legal authority to act on your behalf, it is crucial that you choose someone trustworthy and whom you believe will act only in your best interests. Consider whether you trust that person with your important financial or legal affairs.
Is that person responsible when it comes to their own finances? Consider how they manage their own affairs. You may choose a lawyer or accountant, but remember they will normally charge a fee, whereas family members usually perform the service for free. No matter who you choose, discuss that decision with them and make sure they agree to serve as your agent before you officially appoint them.
Remember, if a conflict of interest ever arises or you become worried about the agent’s trustworthiness, you can always terminate the agent’s authority by revoking the power of attorney and creating a new one.
You are allowed to appoint co-agents who will serve together as equals, as well as successive agents, in case the first agent is unable to continue the task. Keep in mind, however, if you appoint co-agents, confusion or conflict may arise if there are disagreements about the best approach for your financial assets. This situation would no doubt cause delays and disrupt the handling of your finances. With a health care power of attorney, it is never advisable and in some states it is prohibited to name co-agents. The reasons are obvious. For example, your health care provider may be able to reach only one of the agents in the event of an emergency, you may be suffering internal bleeding or another medical event that requires immediate attention, or the agents might not agree about what is best. Forcing the health care provider to find two people may exacerbate an already urgent situation. It is wise to discuss the potential advantages and disadvantages of this choice with a Nevada Estate Planning Attorney as part of your overall estate planning.
There are different types of wills that are used in the field of estate planning. One of them is the last will or last will and testament, which is used to transfer assets following your death. You can also nominate a guardian for dependents in your last will. Another type of will that should be a part of every comprehensive estate plan is a living will. Some people confuse living wills with living trusts, so we would like to provide some clarity here.
Individuals generally equate a will with the transfer of property. This can lead to the misconception that a living will facilitates property transfers while you are still alive.
This is not the case. A living trust is a vehicle of asset transfer. However, a living will has nothing to do with financial matters.
With a living will you state your wishes with regard to the implementation of life-sustaining measures like the utilization of feeding tubes, respirators, and ventilators.
It seems that modern medicine can keep people alive almost indefinitely using these measures, even if there is no hope of recovery. Some individuals would want this to continue, and others would prefer to allow nature to run its course. How you feel about it is a personal preference, and you can state that preference by executing a living will.
If you don't have a living will and you do fall into an incapacitated state your closest relatives would be forced to make decisions in your behalf. This is a very difficult position to be placed in. You essentially have a matter of life or death in your hands, and you may not know how the person in question would have acted if he or she could communicate.
Disagreements among family members often arise, because this is an issue about which people can be very passionate. This is a difficult time for all concerned, and family members should be pulling together. You can prevent this type of situation if you take the time to execute a living will.
A living will is an advance directive for health care. Since we are covering an important advance directive in this post we would like to mention another one that is highly recommended, the health care power of attorney.
Medical decisions may present themselves that are not specifically covered in the living will. They may be quite sensitive. You can appoint someone of your choosing to make these decisions for you if it becomes necessary by executing a durable power of attorney for health care.
When you do this the agent you name will have the legal authority to act on your behalf when it comes to health care decisions.
The process of estate planning involves some very measured and informed decision-making. If you make certain assumptions as a layperson you may be making errors of commission and omission.
Because of the fact that there are websites on the Internet selling do-it-yourself generic, fill-in-the-blanks last wills, more and more people are getting the idea that they can go it alone. Unfortunately, this is increasing the numbers of people who are not properly prepared.
With a will, you need to consider the fact that your estate must be probated before the heirs receive their inheritances. The probate laws in the state of Nevada require rigid formalities that may cause delay and expense if they are not followed precisely.
When you work with a qualified estate planning attorney who is licensed in Nevada you can be certain that your will is properly constructed.
If you use a boilerplate document that you picked up on the Internet or at the book store you have no way of knowing if the will is truly up to par.
And then there is the simple fact that a last will may not be your best choice.
Last Will Alternatives
The probate process that we mentioned above is time-consuming, and, when all the costs, fees and expenses are considered, quite expensive.
There are effective ways to arrange for asset transfers to your heirs directly, outside of probate. One of them would be through the creation of a revocable living trust.
With these trusts you can retain control of the assets while you are alive and well. If you were to become incapacitated, your successor trustee would be empowered to handle your financial affairs, usually avoiding the need for a guardianship.
Upon your passing the trustee administers the estate outside the probate court and then distributes assets to the beneficiaries in accordance with your wishes.
There is no one-size-fits-all estate plan because different families have different concerns. For instance, if you have estate tax exposure you must take steps to position your assets in a tax efficient manner to avoid a 40% hit.
If asset protection is a concern you would implement certain strategies that would not be important if you were not concerned about shielding assets from creditors and litigants.
Special needs planning is a factor for some people. You have to be careful about the way you set aside money for a person with a disability who is relying on government benefits like Medicaid and Supplemental Security Income.
People who are owners of small businesses are going to have estate planning concerns that differ from those who work for someone other than themselves.
These are just a few examples of the unique circumstances that require varied approaches.
It is also important to include an incapacity component within your estate plan. The courts could, at considerable expense to your estate, appoint a guardian to manage your affairs if you don't take the appropriate action. This guardian may not be someone that you would have chosen.
You can select potential future decision-makers using an appropriate revocable living trust combined with a durable power of attorney.
All these solutions are best handled with a qualified estate planning law firm.
People that have assets that exceed the exclusion amount ($5.25 million in 2013) most certainly need to discuss tax efficiency strategies with a licensed estate planning attorney who places an emphasis on wealth preservation.
However, there are those who the only reason someone would meet with an estate planning lawyer is to avoid taxes. They may reason that because their estate is less than the exclusion amount, there is no need for estate planning. In fact, there are myriad concerns that can be addressed with a properly constructed estate plan that have nothing to do with tax exposure.
One of these concerns could be long-term access to financial resources. You may be concerned about leaving lump sum inheritances to certain people on your inheritance list. After all, you won't be around to help if someone in the family was to burn through his or her inheritance too quickly.
A way to respond to this would be to convey assets into a spendthrift trust. You appoint a trustee, and this could be a family member, the trust department of a bank, or a trust company. This trustee will administer the funds according to your stated wishes and distribute assets to the beneficiary in a measured fashion. The beneficiary will not be able to control the principal, which also means their creditors would not have access, either.
This is only one possible scenario. There are many others, including planning for blended families and providing for a family member with special needs without jeopardizing disability benefits.
Arranging for the transfer of your financial assets to your loved ones is a profound act. It is something that is best undertaken with the benefit of professional guidance.
The estate planning process involves a number of different facets, including matters that the typical layperson may not consider. When you know the facts you understand why certain courses of action are recommended by estate planning and elder law attorneys.
On the other hand, when you harbor misplaced notions you may fail to act or take incorrect courses of action. With this in mind we would like to highlight two misplaced notions that can lead to negative consequences.
Incapacity Is Unlikely
You may feel as though it is unlikely that you will ever become unable to make your own decisions. If you feel this way you should ask yourself if you expect to live until you are at least 65.
If you say yes to the above, and you are correct and you do reach the age of 65, it is likely that you will live to the age of 80 at minimum.
Alzheimer's disease is very common among the elderly. 13% of those who are 65 years of age and older have Alzheimer's, and if you confine the sample to those 85 and up you are looking at a figure of 45%.
Given the likelihood of Alzheimer's disease or other forms of dementia, having durable powers of attorney naming agents to act on your behalf the event of your incapacity is important. Having a living trust is an even better plan.
I Don't Need a Trust
There are those who don't even consider the possibility of creating a living trust because they feel as though trusts are for very wealthy people. Of course, wealthy individuals and families should have a living trust at a minimum, but even those with modest means can benefit.
Living trusts are used to facilitate asset transfers outside of probate. Probate is the process of estate administration, and because it is done through the courts, it is time-consuming and often costly. If you create a living trust your heirs will receive their inheritances in a timely manner because these transfers are not subject to the probate process.
Estate planning attorneys have noticed an interesting trend emerging in the United States.
There was a 14% increase in the numbers of people who are at least 60 years of age who are living with someone as a domestic partner according to a 2008-2010 United States Census Bureau survey as compared to 2005-2007 numbers.
In most cases the underlying reason that so many seniors are choosing to live together is that marriage can have negative financial implications.
Retirement pensions are one of the concerns. Many pension plans allow for the surviving spouse of the individual receiving the pension to continue to receive survivor's benefits after the death of his or her spouse.
Given the limited income that is provided by Social Security this survivor's pension can be the difference between relative poverty and a comfortable lifestyle.
In many instances the rules governing the survivor's pension state that it will no longer be paid if the recipient was to get remarried. Because this income can be so important to many individuals they simply don't get legally married.
There are other financial reasons why seniors choose to remain unmarried, not the least of which are the preferred tax benefits of a single person. If you make the choice to remain single, but live with your new partner, you must be certain that you have executed all of the appropriate estate planning documents.
The law will not recognize your significant other if you were to become disabled, need medical decisions to be made for you, or pass away without recording your wishes in a legally binding manner. However, with a visit to a good estate planning lawyer you can make sure that you and your partner are provided for come what may.
With a proper estate plan you can not only provide for your domestic partner, but you can also include an incapacity provision empowering your partner to act as your representative and handle your affairs if you were to become unable to make sound decisions at some point in time. You can also allow them access to you if you are hospitalized and name them to make medical decisions for you in your advance directives, should you choose to do so.
Incapacity planning is important when you are serious about preparing yourself for all the eventualities of aging. It can seem as though it is unlikely that you will ever become unable to make sound decisions on your own, but the statistics tell a different tale.
According to the Alzheimer's Association one out of every eight individuals who has achieved senior citizen status will suffer from the disease. The possibility continues to rise as you get older with upwards of 40% of people who are 85 years of age being Alzheimer's sufferers.
People who suffer from Alzheimer's disease often find it impossible to make sound decisions due to Alzheimer's induced dementia. Of course, there are other causes of incapacity so this is something to take seriously.
Incapacity planning typically involves executing documents called durable powers of attorney. You must select an agent which is referred to as your attorney-in-fact to make decisions on your behalf should you become unable to do so.
You may find that the person that you would like to see making your financial decisions differs from the individual who would be the health care decision-maker. Because this is the case you will find that there are two types of powers of attorney - the financial or property power of attorney and the health care power of attorney, which is also called an advance directive.
Hopefully, we will all lively happily and in good health until the end of our lives. The reality, however, is that some of us will lose our ability to think clearly as we age. Who would take care of your finances if that should happen to you? More specifically, do you want to decide who will control your money if this should happen to you?
When an individual shows signs that he or she is no longer capable of managing his or her financial affairs, a petition for an involuntary conservatorship or guardianship petition is often filed with the Court by a concerned relative. If granted, this means that the petitioner will control your assets. Of course you have the right to oppose the petition; however, a frightening statistic shows that as many as 94 percent of all involuntary petitions for conservatorship are granted despite any objections by the subject of the petition. At that point, you would have little choice in the matter but you do now.
There is not much that you can do to prevent your incapacity, but you can decide who will control your estate if you became incapacitated. Estate planning options such as a durable powers of attorney, a living trust, and a will can all afford you the opportunity to decide now what will happen to you if you become incapacitated. Most importantly, they provide you with the ability to name someone you trust to take control of your assets in the event of your incapacity, taking away the possibility that a court will make that determination down the road.
Have you considered who would manage your financial afffairs if you became incapacitated? Married couples are sometimes under the impression that their spouse will automatically be given access to all the assets. This may not be the case. Assets that are titled jointly may be easily accessed but that is not always the case. Take for instance real property that is jointly titled. If the well spouse desired to refinance, obtain a secured loan or sell real property that is jointly owned a legal representative would have to be appointed to sign in behalf of the incapacitated spouse. A power of attorney may not adequately authorize an agent to handle these transactions. Then there is the issue of a retirement account or pension benefits solely in the name of an incapacitated spouse. In these cases, the well spouse, child or parent woul likely need to seek a court’s permission to access your assets taking a significant amount of time and money.
Often, when someone becomes incapacitated, assets that are needed by loved ones to maintain the household or pay bills are inaccessible when most needed. Even worse, a dispute can arise as to who should manage the assets which can prolong the process of obtaining a court order.
There are, however, a variety of estate planning tools that can be used to avoid the need for court intervention. Executing a comprehensive durable power of attorney or creating a revocable trust may also be viable options. With just a small amount of pre-planning on your part you can avoid a lengthy and costly court process in the event of your incapacity.
Trying to cover all of your bases for when the latter portion of your life rolls around means you have to consider factors beyond simply arranging for the transfer of assets after you pass away. Reaching an advanced age is certainly a milestone, but other detrimental possibilities loom with age, and it is important to be prepared for them.
A lot of people don't realize just how long lifespans are these days. Americans are living longer than ever, with people 85 years and older making the fastest-growing segment of the population. Clearly, when you reach your mid-80s and beyond the possibility that you won't be able to make all of your own medical decisions becomes a real one indeed.
For this reason it is important to select a trusted representative to act on your behalf through the execution of a durable power of attorney for health care along with a living will. With a living will you state your wishes with regard to the use of medical procedures to keep you alive should you become unable to communicate your preferences in real time. The issue of having your life preserved via the use of artificial means when there's no hope of recovery is typically at the core of these documents.
When you look at the facts it is rather startling to see how few Americans have executed these documents. An interactive Harris survey from 2009 found that only 29% of the adults that they polled had a living will in place. Though we emphasize how important these documents are for seniors, they are are also important for younger adults. If you're looking for proof simply recall the highly publicized case of Terri Schiavo, and the protracted legal battle between her husband, who was also her legal guardian, and her parents.
If you are unprepared you could be leaving your family in a very uncomfortable position should life-and-death decisions fall into their laps. You may want to take action and arrange for a consultation with an experienced estate planning attorney sooner rather than later to execute these important documents.