Common Legal Concerns

Basic information about wills, estate planning, powers of attorney, advance medical directives, and other legal matters.

Discuss The Importance Of Wills And Estate Planning.

The goal of estate planning is to distribute a person’s assets and minimize taxes at death. For most of us, that means making and periodically updating a will.

If a person dies without a will, each state’s law differs on who will inherit the property or assets. In some states if a person dies without a will, the surviving spouse receives one-third to one-half of the estate with the balance going to any children. If there are no children, some of the estate could go to parents and siblings, even if this means a hardship for the surviving spouse. In other states, if a person dies without a will, the law may require that the surviving spouse receive the assets, despite the desires of the deceased in regard to the needs of children. A will, however, allows an individual to control the disposition of assets upon death.

Within a will, an executor will be specified. The executor makes sure that the provisions of the will are carried out. Given life expectancies, it is recommended that your loved one choose a younger person for the role of executor. The will should be reviewed regularly to take into account changes in residence (state laws on wills vary), family and asset changes, as well as possible changes in the desires of the individual. Coownership of property between spouses does not mean that a will is unnecessary. Couples can die simultaneously and a will streamlines the administration of estate. Drafting a will normally should be done with the help of a lawyer. This may be costly, but the cost will vary according to the complexity of the estate.

Also, various types of trusts or gifts can be arranged to help preserve assets for heirs. Trust funds are legal arrangements for the transfer of assets on behalf of a beneficiary. A trustee must be appointed to manage the trust according to the wishes of the grantor. Since tax consideration and probate can be complex and important, it is recommended that legal advice be taken before the establishment of trusts. It should also be noted that a number of states require that large gift transactions (such as putting all assets into a trust fund) occur at least three years prior to application for Medicaid since some individuals are alleged to use this strategy as a way of preserving an estate that could otherwise be reduced by the high cost of long-term health care.

Consider A Durable Power Of Attorney.

While your loved one may be quite capable of handling his or her personal affairs, illness, memory loss, or sensory loss can make this difficult. In this case, it may be useful for your loved one to give a power of attorney to you or another responsible individual. A power of attorney is a written document authorizing another to act as one’s agent or attorney. This power may be either general (for multiple purposes) or specific (to do one particular task).

A durable power of attorney will allow the designated person to continue to act for your loved one even if your loved one becomes incompetent. The durable power of attorney is considered a better tool for caregivers than a basic power of attorney because it remains in effect even if the person granting the power becomes incompetent. “Of all the documents anybody signs, a durable power of attorney could be the most important, especially for someone 55 or older,” says Thomas D. Begley, Jr., an elder law attorney in Moorestown, N.J. “It means that if you become incompetent you will have a person of your choosing ready to make decisions on your behalf, and it costs $100 instead of the $3,000 it takes to have a guardian appointed by a court.”

A durable power of attorney may not neatly address all cases, however, so check with your lawyer about what is suitable for your family’s particular situation. Also be aware that state laws vary, and you should contact an attorney who is familiar with the laws of the state in question.

In order to grant any type of power of attorney, your loved one must be competent at the time the power of attorney document is signed. If he or she has already lost the capacity to make decisions, conservatorship or guardianship may be necessary. In this case, a court may appoint a relative, friend or attorney as conservator or guardian. This court appointment gives the conservator access to your loved one’s assets, and the conservator is responsible to the court for any disposition of assets made and for the overall management of your loved one’s affairs.

Suggest A Living Will Or Other Advance Medical Directives.

If permitted by state law, most people should have a living will that specifies the type of medical care they want or don’t want if they become hopelessly ill and unable to communicate their wishes. A living will typically states that if the signer becomes terminally ill and is incompetent to participate in decisions concerning his or her medical treatment, life sustaining procedures should not be used to prolong life. The living will ordinarily allows physicians or other health care providers to withhold or withdraw life sustaining medical care based on the patient’s wishes, without prior court approval.

Experts also recommend a “health care power of attorney” or “health care proxy,” which designates a family member to make decisions about medical treatment. The health care agent can use his or her knowledge of the patient’s personal desires as well as information about the patient’s condition to make a decision regarding medical care. If authorized in the health care power of attorney, the agent can also make decisions on whether or not life sustaining procedures should be used to prolong the patient’s life.

© Copyright FamilyCare America, Inc. All Rights Reserved.

Adapted from “Financial Caregiving: A Survival Guide.” FDIC Consumer News. Summer 1997. Updated August 8, 1999. Federal Deposit Insurance Corporation.


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