King & Wood, P.A.

Protect Cryptocurrency in Your Estate Plan

“Cryptocurrency has become a new wrinkle in the development of an estate plan.”

The very nature of cryptocurrency as a secure digital asset is the result of the complete absence of any identifiable information associated with an individual crypto account. These types of assets are also not easily identifiable to executors or heirs, says a recent article, “Today’s Business: Cryptocurrency and estate planning” from CT Insider.

The only way an heir or designated fiduciary (like an executor) may gain access to crypto accounts after the owner’s death is to have the password or “private key.” Without it, there is no way to gain access.As a result, the cryptocurrency is worthless. Therefore, safeguarding the passwords, especially the crypto “seed” phrases, is critical.

The “key” to a person’s cryptocurrency must never exist only in the owner’s mind. The owner must never be the only person who knows where the passwords are printed, whether on a piece of paper, in an encrypted file on a thumb drive or laptop, or an online password manager.

At the same time, this critical information must be secure. How do you accomplish both?

Start by telling your estate planning attorney that you own cryptocurrency. Just as they wouldn’t be able to help protect a traditional asset if they didn’t know it existed, they will need to know you own cryptocurrency, so they can incorporate it into your estate plan.

To safeguard seed phrases and other passwords for estate planning purposes, consider these options:

A straightforward way of storing passwords and seed phrases is to write them down (legibly) on a piece of paper and store the paper in a secure location, such as a personal safe or safe deposit box.

Using a password manager can work. This is software used to store all passwords in an encrypted format. It allows the storage of secret seed phrases, passwords and other sensitive information, accessible through a single password. Be careful to select only a high-rated password manager from a recognized company. You should also never store seed phrases or passwords with the cryptocurrency wallet address to minimize the chances of hackers accessing your digital wallet.

Because of the importance of securing information from physical and digital threats, you may want to invest in a fire and water-proof safe and give a trusted friend or relative a means of accessing the stored information. In addition, as the security landscape continues to change, it’s essential to regularly change passwords and seed phrases to ensure digital assets remain secure and loved ones can access them if you become incapacitated or pass away.

Properly securing seed phrases and other passwords is a part of today’s estate planning. You and your estate planning attorney need to plan for digital assets to ensure that they are properly managed and passed on to loved ones without compromising sensitive information in a last will and testament.

Reference: CT Insider (March 18, 2023) “Today’s Business: Cryptocurrency and estate planning”

Older Singles Can Plan to Protect Themselves

“Aging solo is about those individuals who are widowed or not married, live alone and have no family or none they can count on. They are going through the last years of their lives on their own. It can be just fine until one’s health declines and the usual activities and access to friends get out of reach.”

The U.S. Census Bureau reports nearly a third of all seniors live alone—about 14 million—some of whom don’t have children or anyone to care for them if they need help. However, according to a recent article from Forbes, “Essentials for the Solo Ager,” everything is fine until there’s a problem. This is especially true when the solo ager’s friends are all about the same age and in the same situation.

One financial adviser asked an estate planning attorney to contact a client who was 88, living alone, still driving and maintaining her own home. She had an inadequate estate plan done for free by a volunteer at her senior center and needed a Power of Attorney and Health Care Power of Attorney. In addition, her only living relative lived outside of the United States, and the person she relied upon was a 90-year-old, legally blind neighbor. All of this had worked fine for years, but at 88, she was highly vulnerable.

Here are some options for solo agers to consider while planning constructively for the future:

Consider naming a fiduciary to handle finances in your estate plan, which an experienced estate planning attorney should prepare.

Healthcare decisions are often a minefield for someone who is cognitively or physically impaired and unable to make decisions. Some professionals can be named as your healthcare agent, preferably someone who knows the healthcare system and can advocate for you if you are incapacitated. In addition, a healthcare power of attorney would be needed.

Make your wishes and preferences clear in your estate planning documents, so someone who does not know you well can follow your specific directions and fulfill your wishes.

Give up the idea of being 100% well until you pass. Most seniors unfortunately experience one or more health challenges and need more assistance than they ever imagined. Be realistic and identify younger adults who will be able to help you and give them the legal tools to do so. If they never need to help you, fantastic, but if they do, you’ll be glad to have their help.

Single people are independent and self-reliant and take pride in these characteristics. This is great.  However, there comes a time when none of us can be independent. No one likes to think about losing their independence or becoming disabled. However, planning will keep you safer rather than hoping for the best.

Meet with an experienced estate planning attorney who will help you plan for your future and protect you from the unexpected.

Reference: Forbes (March 26, 2023) “Essentials for the Solo Ager”

Planning for Long-Term Care with Irrevocable Trusts

“With the possibility of needing long-term care in the future, many people are interested in proactive planning.”

One of the best strategies to plan for long-term care involves using an irrevocable trust. However, the word “irrevocable” makes people a little wary. It shouldn’t. The use of the Intentionally Defective Grantor Trust, a type of irrevocable trust, provides both protection and flexibility, explains the article “Despite the name, irrevocable trusts provide flexibility” from The News-Enterprise.

Trusts are created by an estate planning attorney for each individual and their circumstances. Therefore, the provisions in one kind of trust may not be appropriate for another person, even when the situation appears to be the same on the surface. The flexibility provisions explored here are commonly used in Intentionally Defective Grantor Trusts, referred to as IDGTs.

Can the grantor change beneficiaries in an IDGT? The grantor, the person setting up the trust, can reserve a testamentary power of appointment, a special right allowing grantors to change after-death beneficiaries.

This power can also hold the trust assets in the grantors’ taxable estate, allowing for the stepped-up tax basis on appreciated property.

Depending on how the trust is created, the grantor may only have the right to change beneficiaries for a portion or all of the property. If the grantor wants to change beneficiaries, they must make that change in their will.

Can money or property from the trust be removed if needed later? IDGT trusts should always include both lifetime beneficiaries and after-death beneficiaries. After death, beneficiaries receive a share of assets upon the grantor’s death when the estate is distributed. Lifetime beneficiaries have the right to receive property during the grantor’s lifetime.

While grantors may retain the right to receive income from the trust, lifetime beneficiaries can receive the principal. This is particularly important if the trust includes a liquid account that needs to be gifted to the beneficiary to assist a parent.

The most important aspect? The lifetime beneficiary may receive the property and not the grantor. The beneficiary can then use the gifted property to help a parent.

An often-asked question of estate planning attorneys concerns what would happen if tax laws changed in the future. It’s a reasonable question.

If an irrevocable trust needs a technical change, the trust must go before a court to determine if the change can be made. However, most estate planning attorneys include a trust protector clause within the trust to maintain privacy and expediency.

A trust protector is a third party who is neither related nor subordinate to the grantor, serves as a fiduciary, and can sign off on necessary changes. Trust protectors serve as “fixers” and are used to ensure that the trust can operate as the grantors intended. They are not frequently used, but they offer flexibility for legislative changes.

Irrevocable trusts are an excellent way to protect assets when drafted with both protection and flexibility in mind.

Reference: The News-Enterprise (March 18, 2023) “Despite the name, irrevocable trusts provide flexibility”

What Is the Relationship between Executor and Beneficiaries?

“In terms of executor vs. beneficiary rights, there are several differences with regard to what type of authority each one has.”

When a person dies, others are called upon to manage their estate. The executor, named in their will, oversees the distribution of assets. If they didn’t have a will, the court names an executor, sometimes referred to as an administrator. Beneficiaries are those designated to inherit the decedent’s assets, as explained in a recent article, “Executor vs. Beneficiary Rights: Estate Planning Guide” from Nasdaq.

The terms beneficiaries and heirs are used interchangeably. Beneficiaries are typically persons named in a legal document, such as a will or a trust. Life insurance policies, retirement accounts and bank accounts also have named beneficiaries to inherit the assets or proceeds. In the case of life insurance, it is on the death of the original owner. In most cases, the person making beneficiary designations has the right to change them.

State inheritance laws legally identify the heir as having the right to receive assets from a deceased person’s estate, usually their spouse, children, or other relatives.

The executor is appointed by the will or the court to oversee probate. This is where assets are inventoried, outstanding debts are paid and any remaining assets are distributed to heirs.

When having a will prepared by an experienced estate planning attorney, it’s possible to name a beneficiary as an executor. However, there are some pros and cons to doing this.

An executor who will benefit from the will could simplify things, if the estate is relatively straightforward. However, if the estate is large, or if other beneficiaries might challenge the will, it could get messy.

Executor tasks may include:

• Consulting with estate planning attorneys, accountants, financial advisors, and others whose services are needed in the probate process
• Collect and inventory assets of the decedent
• Give notice to creditors of the person’s death, so they may bring claims against the estate for any outstanding debts
• Receive reimbursement for expenses paid to manage the estate, including professional fees
• Collect a fee for their time and services provided as the executor, which could be a percentage of the estate or a flat fee, depending on what is permitted by state law and local custom.

Beneficiaries have certain rights:

• Receive assets from the estate they’re entitled to according to the terms of the will or state law in a timely manner
• Request and receive information about the administration of the estate, including financial details
• Request the removal of the executor.

Beneficiaries also have the right to sue the executor of an estate, if they believe a breach of fiduciary duty has occurred. The executor is a fiduciary, meaning they must act in the best interest of the beneficiaries or other persons represented in financial matters.

Executors can be sued only if there are grounds for doing so. For example, a beneficiary might have grounds to sue the executor if the executor:

• Fails to provide financial statements upon request.
• Delays distribution of assets for no reason.
• Favors one beneficiary over others when distributing assets.
• Mismanages or misuses estate assets for their benefit.
• Uses estate assets to make risky investments.
• Has an obvious conflict of interest because they are also beneficiaries of the estate.

Understanding the difference between executor vs. beneficiary rights is essential if you’ve been assigned either role. If you’re preparing a will with an experienced estate planning attorney, they will clarify these roles and help you determine the best candidate for executor.

Reference: Nasdaq (March 10, 2023) “Executor vs. Beneficiary Rights: Estate Planning Guide”

What Documents are in an Estate Plan?

“There are frequently asked questions that people have about revocable living trusts, wills, supported decision making agreements (new), powers of attorney and advance health care directives.”

Understanding how estate planning documents work is central to creating an estate plan for each individual’s unique situation. An estate planning attorney needs to know the details of your life, not because they’re nosy. It is because this is how they can create a plan tailored to protect you during your lifetime, plan for long-term care and distribute assets upon your death. A recent article, “Understanding estate planning documents” from Lake Country Record-Bee, explains in broad strokes what each estate plan needs to include.

The will nominates an executor to administer the decedent’s estate, including the distribution of specific gifts and other assets. Depending on your state of residence, the will must be witnessed by one or two people who have no interest in the outcome of your will. At death, the distribution of assets only applies to those in the estate and not to those who receive property transferred under a trust, through a designation of death beneficiary form or a joint tenancy title.

A trust controls and manages assets placed in the trust during life and after death. Assets held in a living trust are used to avoid conservatorships, should become incapacitated during life. Assets in trusts do not go through probate.

Assets transferred into a living trust must belong to the person to establishes the trust, known as the settlor. A married couple may establish a joint trust to receive community property, if they live in a community property state. Each spouse may choose to transfer his or her own separate property assets into a joint trust, or keep their separate property assets in separate trusts.

Trust assets are titled for ownership and control to the trustee. The trustee is a fiduciary, meaning they are the legal representative of the trust and administer the provisions of the trust as directed in the trust documents.

You should always have a successor trustee for a trust, who takes office when the last initial trustee resigns, becomes incapacitated, or dies. How and when the transfer to the successor trustee takes place is included in the trust documents. Some trusts include a specific method to fill a trustee vacancy, if no nominated successor trustee accepts the role.

Living trusts can be changed by the settlor. The incapacity or death of the settler makes a living trust an irrevocable trust. A joint trust, however, sometimes allows either settlor acting alone to amend the living trust. Your estate planning attorney will help you determine whether a joint trust makes sense for your family.

Powers of attorney (POA) allows a person (the principal) to authorize another person (the agent) to act as a representative over some or all of the principal’s own legal and financial affairs. The POA does not have any power over a trust; the trustee is in charge of the trust. A POA can be effective on signing or effective upon incapacity of the principal. POA forms do not always reflect specific individual wishes, so it’s best to have one created by an estate planning attorney.

The Advance Health Care Directive (AHCD) delegates authority to an agent to make decisions and act on the principal’s needs in health care. The AHCD must be created and be in place before incapacity occurs. An incapacitated person cannot sign legal documents.

Reference: Lake County Record-Bee (Feb. 18, 2023) “Understanding estate planning documents”

How Does a Trust Work?

“There’s no single path for everyone to follow. However, you might consider establishing a trust, which offers some key benefits.”

You’ve worked hard to accumulate financial assets. You’ll need them to support your retirement. However, what if you also want to pass them on to loved ones? Trusts are used to pass assets to the next generation and have many benefits, says a recent article titled “Passing assets through a trust—What to know” from the Daily Bulldog.

“Funded” trusts don’t go through probate, which can be time-consuming, costly, and public. Your last will and testament becomes a public document when it is filed in the courthouse. Anyone can see it, from people wanting to sell your home to thieves looking for victims. Trust documents are not public, so no one outside of the grantor and the trustee knows what is in the trust and when distributions will be made. A trust also gives you the ability to be very specific about who will inherit assets in the trust, and when.

An estate planning attorney will help establish trusts, ensuring they are compliant with state law. There are three key questions to address during the trust creation process.

Who will serve as a trustee? There are several key roles in trusts. The person who creates the trust is the grantor of the trust. They name the trustee—the person or company charged with managing the trust’s assets and carrying out the instructions in the trust. You might choose a loved one. However, if they don’t have the knowledge or experience to manage the responsibilities, you could also name a corporate fiduciary, such as a bank or trust company. These entities charge for their services and usually require a minimum.

When will distributions be made? As the grantor, you get to decide when assets will be distributed and the amount of the distribution. You might want to keep the assets in the trust until the beneficiary reaches legal age. You could also structure the trust to make distributions at specific ages, i.e., at 30, 35 and 40. The trust could even hold the assets for the lifetime of the beneficiary and only distribute earned income. A large part of this decision has to do with how responsible you feel the beneficiaries will be with their inheritance.

What is the purpose of the trust? The grantor also gets to decide how trust assets should be used. The trust could designate broad categories, such as health, education, maintenance and support. The trust can be structured so the beneficiary needs to ask the trustee for a certain amount of assets. Other options are to structure the trust to provide mandatory income, once or twice a year, or tie distributions to incentives, such as finishing a college degree or purchasing a first home.

An estate planning attorney will explain the different types of trusts and which one is best for your unique situation. There are many different types of trusts. You’ll want to be sure to choose the right one to protect yourself and your loved ones.

Reference: Daily Bulldog (Dec. 24, 202) “Passing assets through a trust—What to know”

What Is Included in an Estate Inventory?

“One of the essential steps in the probate process is filing an inventory of all the assets that are part of the estate.”

The executor’s job includes gathering all of the assets, determining the value and ownership of real estate, securities, bank accounts and any other assets and filing a formal inventory with the probate court. Every state has its own rules, forms and deadline for the process, says a recent article from yahoo! Finance titled “What Do I Need to Do to Prepare an Estate Inventory for Probate,” which recommends contacting a local estate planning attorney to get it right.

The inventory is used to determine the overall value of the estate. It’s also used to determine whether the estate is solvent, when compared to any claims of creditors for taxes, mortgages, or other debts. The inventory will also be used to calculate any estate or inheritance taxes owed by the estate to the state or federal government.

What is an estate asset? Anything anyone owned at the time of their death is the short answer. This includes:

• Real estate: houses, condos, apartments, investment properties
• Financial accounts: checking, savings, money market accounts
• Investments: brokerage accounts, certificates of deposits, stocks, bonds
• Retirement accounts: 401(k)s, HSAs, traditional IRAs, Roth IRAs, pensions
• Wages: Unpaid wages, unpaid commissions, un-exercised stock options
• Insurance policies: life insurance or annuities
• Vehicles: cars, trucks, motorcycles, boats
• Business interests: any business holdings or partnerships
• Debts/judgments: any personal loans to people or money received through court judgments

Preparing an inventory for probate may take some time. If the decedent hasn’t created an inventory and shared it with the executor, which would be the ideal situation, the executor may spend a great deal of time searching through desk drawers and filing cabinets and going through the mail for paper financial statements, if they exist.

If the estate includes real property owned in several states, this process becomes even more complex, as each state will require a separate probate process.

The court will not accept a simple list of items. For example, an inventory entry for real property will need to include the address, legal description of the property, copy of the deed and a fair market appraisal of the property by a professional appraiser.

Once all the assets are identified, the executor may need to use a state-specific inventory form for probate inventories. When completed, the executor files it with the probate court. An experienced estate planning attorney will be familiar with the process and be able to speed the process along without the learning curve needed by an inexperienced layperson.

Deadlines for filing the inventory also vary by state. Some probate judges may allow extensions, while other may not.

The executor has a fiduciary responsibility to the beneficiaries of the estate to file the inventory without delay. The executor is also responsible for paying off any debts or taxes and overseeing the distribution of any remaining assets to beneficiaries. It’s a large task, and one that will benefit from the help of an experienced estate planning attorney.

Reference: yahoo! finance (Dec. 3, 2022) “What Do I Need to Do to Prepare an Estate Inventory for Probate”

What’s More Important: Estate Plan or Trust?

“Trusts and estates are the two main legal structures for transferring assets to your heirs and beneficiaries. Each works in critically different ways.”

A will makes a one-time transfer of assets after death, while trusts allow assets to be transferred during life and after death. Each one has an important role to play in managing assets and protecting loved ones, reports an article “Estate vs. Trust: Do You Really Understand the Difference” from yahoo!.

An “estate” in this sense is everything you own at the time of your death. It doesn’t include anything you own together with someone else as a joint tenant with rights of survivorship. It also doesn’t include any assets with beneficiary designations. These are assets transferred or otherwise assigned to pass to another person when you die. Your heirs are anyone who receives money, personal possessions, or any other assets from your estate.

Let’s say a woman named Penny dies. The home she owns with her husband is not part of her estate, since it now belongs solely to her spouse. Anything she gave away while living is not part of her estate. Her estate owns anything she independently owned at the time of her death.

An estate is a temporary legal entity existing only to make a one-time distribution of the assets of a decedent. Once the assets have been distributed, the estate is closed. This doesn’t mean estates are short-lived. Some estates take years to settle, depending upon their complexity and how well-prepared the estate plan was.

Estates are distributed in two main ways: by the will, also known as the last will and testament, or by the legal chain of inheritance. A will contains a set of instructions for who gets the assets of the estate. If the deceased has a valid will, the estate is distributed under these terms.

If there is no will, the person has died intestate and assets are distributed according to state law. Most of the time, this means assets go to the next of kin. In most states, spouses have the top spot in the line of inheritance, followed by biological children, then parents, then extended family. The spouse often gets one half of the estate and the children divide the balance.

A trust is a legal entity holding and distributing assets according to the directions in the trust. The person who creates the trust, known as the “grantor,” establishes the conditions and may give whatever they want, at whatever time they specify. A trust is independent of the people who create and fund it. Assets placed in the trust belong to the trust until they are distributed.

Let’s say a person named Edward wants to create a trust for certain family members’ college expenses. He could set up a trust with his estate planning attorney, then fund it with $6 million. The trust could be overseen by his attorney acting as the trustee. The trust names children, nieces and nephews as beneficiaries. They ask the trustee for money to pay college tuition, and the trustee handles the distribution.

The trustee has the job of making sure the monies are used in the manner prescribed by the trust. Therefore, in this case, the attorney may decide to only make distributions directly to colleges to pay for tuition. The trustee is a fiduciary and their first responsibility is to carry out the instructions in the trust.

Trusts can be set up while you are living and they can survive the creator’s death, unlike a will. When a person who has set up a trust dies, the trust continues until it runs out of assets or until its terms dictate it be dissolved.

Trusts and estate plans both exist to distribute assets. However, they do so in very different ways. Your estate planning attorney will guide you as to how these two entities work together for your unique situation.

Reference: yahoo! (Nov. 9, 2022) “Estate vs. Trust: Do You Really Understand the Difference”

What are Alternatives to Guardianship?

“We all want to protect vulnerable people from harm. However, taking away all their rights usually isn’t the place to start. Instead, there are several less severe options that could be the right way to go.”

Guardianships are drastic and very invasive. They strip individuals of their legal autonomy and establish the guardian as the sole decision maker. To become a guardian requires strong evidence of legal incapacity, and approval by a judge, explains an article titled “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First” from Kiplinger. They should not be undertaken unless there is a serious need to do so. Once they’re in place, guardianships are difficult to undo.

If an elderly person with dementia failed to make provisions durable powers of attorney for health care and for financial matters before becoming ill, a guardianship may be the only ways to protect the person and their estate. There are also instances where an aging parent is unable to care for themselves properly but refuses any help from family members.

Another scenario is an aging grandparent who plans to leave funds for minor beneficiaries. Their parents will need to seek guardianships, so they can manage the money until their children reach the age of majority.

Laws vary from state to state, so if you might need to address this situation, you’ll need to speak with an estate planning attorney in the elderly parent or family member’s state of residence. For the most part, each state requires less restrictive alternatives to be attempted before guardianship proceedings are begun.

Alternatives to guardianship include limited guardianship, focused on specific aspect of the person’s life. This can be established to manage the person’s finances only, or to manage only their medical and health care decisions. Limited guardianships need to be approved by a court and require evidence of incapacity.

Powers of attorney can be established for medical or financial decisions. This is far less burdensome to achieve and equally less restrictive. A Healthcare Power of Attorney will allow a family member to be involved with medical care, while the Durable General Power of Attorney is used to manage a person’s personal financial affairs.

Some families take the step of making a family member a joint owner on a bank, home, or an investment account. This sounds like a neat and simple solution, but assets are vulnerable if the co-owner has any creditor issues or risk exposure. A joint owner also doesn’t have the same fiduciary responsibility as a POA.

An assisted decision-making agreement creates a surrogate decision-maker who can see the incapacitated person’s financial transactions. The bank is notified of the arrangement and alerts the surrogate when it sees a potentially suspicious or unusual transaction. This doesn’t completely replace the primary account holder’s authority. However, it does create a limited means of preventing exploitation or fraud. The bank is put on notice and required to alert a second person before completing potentially fraudulent transactions.

Trusts can also be used to protect an incapacitated person. They can be used to manage assets, with a contingent trustee. For an elderly person, a co-trustee can step in if the grantor loses the capacity to make good decisions.

Planning in advance is the best solution for incapacity. Talk with an experienced estate planning attorney to protect loved ones from having to take draconian actions to protect your best interests.

Reference: Kiplinger (July 7, 2022) “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First”

What are Alternatives to Guardianship?

“We all want to protect vulnerable people from harm. However, taking away all their rights usually isn’t the place to start. Instead, there are several less severe options that could be the right way to go.”

Guardianships are drastic and very invasive. They strip individuals of their legal autonomy and establish the guardian as the sole decision maker. To become a guardian requires strong evidence of legal incapacity, and approval by a judge, explains an article titled “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First” from Kiplinger. They should not be undertaken unless there is a serious need to do so. Once they’re in place, guardianships are difficult to undo.

If an elderly person with dementia failed to make provisions durable powers of attorney for health care and for financial matters before becoming ill, a guardianship may be the only ways to protect the person and their estate. There are also instances where an aging parent is unable to care for themselves properly but refuses any help from family members.

Another scenario is an aging grandparent who plans to leave funds for minor beneficiaries. Their parents will need to seek guardianships, so they can manage the money until their children reach the age of majority.

Laws vary from state to state, so if you might need to address this situation, you’ll need to speak with an estate planning attorney in the elderly parent or family member’s state of residence. For the most part, each state requires less restrictive alternatives to be attempted before guardianship proceedings are begun.

Alternatives to guardianship include limited guardianship, focused on specific aspect of the person’s life. This can be established to manage the person’s finances only, or to manage only their medical and health care decisions. Limited guardianships need to be approved by a court and require evidence of incapacity.

Powers of attorney can be established for medical or financial decisions. This is far less burdensome to achieve and equally less restrictive. A Healthcare Power of Attorney will allow a family member to be involved with medical care, while the Durable General Power of Attorney is used to manage a person’s personal financial affairs.

Some families take the step of making a family member a joint owner on a bank, home, or an investment account. This sounds like a neat and simple solution, but assets are vulnerable if the co-owner has any creditor issues or risk exposure. A joint owner also doesn’t have the same fiduciary responsibility as a POA.

An assisted decision-making agreement creates a surrogate decision-maker who can see the incapacitated person’s financial transactions. The bank is notified of the arrangement and alerts the surrogate when it sees a potentially suspicious or unusual transaction. This doesn’t completely replace the primary account holder’s authority. However, it does create a limited means of preventing exploitation or fraud. The bank is put on notice and required to alert a second person before completing potentially fraudulent transactions.

Trusts can also be used to protect an incapacitated person. They can be used to manage assets, with a contingent trustee. For an elderly person, a co-trustee can step in if the grantor loses the capacity to make good decisions.

Planning in advance is the best solution for incapacity. Talk with an experienced estate planning attorney to protect loved ones from having to take draconian actions to protect your best interests.

Reference: Kiplinger (July 7, 2022) “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First”