King & Wood, P.A.

Millennials and Gen Z Need Estate Plans Now

“Though ‘estate planning’ may bring to mind visions of rich families squabbling over the ancestral silver, it isn't just for the wealthy or older people, financial planners say.”

People with modest assets, young adults and parents should all have estate plans to protect themselves while they’re living, protect their children and provide a means for transferring assets of any size to heirs of their choosing. This is estate planning in a nutshell, with details furnished in a recent article from yahoo! finance, “Why millennials and Gen Z should have a basic estate plan.”

Most people first think about estate planning when they have children. It’s a good reason, as a will is used to name a guardian who will raise the children if both parents should die. Otherwise, a court will decide who should raise the children, and it isn’t always a family member. However, this is far from the only reason to have a will.

All adults should have two essential documents: a durable power of attorney and a healthcare power of attorney, also known as a healthcare proxy. These documents give other people, referred to as “agents” or “representatives,” the legal power to act on behalf of the adult if they cannot do so. We don’t like to think about becoming incapacitated. Nevertheless, it happens, and when it does, having these estate planning documents makes it possible for another person to act on your behalf.

If there is no power of attorney, the family will need to go to court to have someone named as a guardian of the incapacitated person. The process is both stressful and costly. Having a POA is far easier. When you have an estate planning attorney create a POA, you also get to name the person you want to be in charge. The court may not choose the person you would have wanted.

Wise parents have their children sign a healthcare power of attorney when they turn 18. Unless this happens, the parent may no longer be part of the newly-minted adult’s healthcare, including talking to doctors, discussing health insurance issues and being involved with decision-making.

If it seems unnecessary for an 18-year-old to have a last will and testament, there are more than a few reasons for doing so. First, an 18-year-old who has been accumulating cryptocurrency might have assets to protect. In the same way, parents don’t have the right to make medical decisions for an 18-year-old; they don’t have any say over their property. If the young adult has bank accounts, digital assets, car loans, or student loans, the parent will be better protected if there is a simple will. If there is no will, the grieving family will have to go through probate, the court process of determining who will receive the young person’s assets.

Having a young adult think about having a will is a good life lesson. As they age, they must update their plan to reflect life’s milestones. Estate planning is an evolving process similar to owning and maintaining a home.

Young adults working and with retirement accounts should be mindful of who they name as their beneficiary on retirement accounts, insurance policies and any other financial account allowing a beneficiary to be named. These assets don’t pass through probate but go directly to the designated beneficiary. Keeping a list of these accounts and who was named as a beneficiary is also good practice for young adults.

Younger adults who tackle estate planning early on are setting themselves and their families up for success in the future. Many estate planning attorneys start working with one generation and are happy to advise their children as they grow into adulthood.

Reference: yahoo! finance (Nov. 18, 2024) “Why millennials and Gen Z should have a basic estate plan”

Can Unmarried Couples Plan for Aging Together?

“Eventually, most older couples will face health crises and the need for caregiving. If they haven’t vowed their mutual marital commitment ‘til death us do part,’ their roles and responsibilities can be murky.”

Choosing to marry or not marry in one’s later years has implications beyond whether the couple should send out holiday cards together. For older unmarried couples, navigating health care needs becomes a serious issue, as explained in a recent article from The New York Times, “For Older Unmarried Couples, Caregiving Obligations Can Be Murky.”

The article begins with the example of a couple who have been together for nearly two decades, maintaining separate residences but mainly living in the woman’s home. She began developing memory loss and fell several times. One family member finds the presence of her partner comforting. However, her partner acknowledges concerns about problems in their future. He spoke with her family and suggested they move into a continuing care retirement community where care is adjusted as needs change.

The woman’s daughter objected. She holds power of attorney and makes many decisions for her mother, which doesn’t bode well for their future together. For now, the couple remains in their homes and relies on home care aides. However, this may not last long.

There’s no road map for the aging process for unmarried couples or couples who maintain separate residences. However, as the number of unmarried partners among older Americans grows, this may change. Census data from 2023 shows nearly 400,000 Americans over age 75 are living together without the legal protection of marriage.

Remaining single has its advantages. Passing along an estate to children is far easier if the couple doesn’t combine their finances through marriage. They don’t risk losing pensions or Social Security benefits if they marry, nor do they need to take on the other person’s debts. For seniors in America, medical debt and the cost of long-term health care are financial risks.

Unmarried partners need to be proactive about estate planning to protect themselves and prepare for the future. Each should have an estate planning attorney prepare advance directives, health care proxies, durable powers of attorney and wills. Having these documents prepared will help the individuals clarify their wishes in terms of medical care in the event of serious illness or incapacity.

The potential conflict between unmarried partners and biological children should be treated with great seriousness. A beloved partner will not have any say in their loved one’s medical care, unless they are named as the health care proxy. An adult child who resents an unmarried partner could keep the couple apart if one were hospitalized or moved to a nursing facility.

Older unmarried adults need to embrace estate planning and not put off taking care of this task. A tendency to procrastinate could leave their long-term loved partner out of any aspect of their lives if this is not addressed.

Caregiving responsibilities often drive decisions in a crisis if no advance planning has been done. If the couple is living in the home owned by one member of the couple and the owner has to go into a nursing care facility, the healthy partner could be evicted.

Having an experienced estate planning attorney create an estate plan, including the power of attorney, healthcare proxies and other important documents, protects couples so they can help each other and make decisions before a crisis strikes.

Reference: The New York Times (Nov. 10, 2024) “For Older Unmarried Couples, Caregiving Obligations Can Be Murky”

Wealth Protection Through Estate Planning

“Estate planning is crucial and beneficial in many ways since it documents all your assets—from real estate, bank accounts, investments and business interests to personal items, like family heirlooms and even your monthly subscriptions.”

Without a well-prepared estate plan, wealth can be lost to taxes, administrative costs, or disputes among heirs, both in and out of court. With an up-to-date estate plan, changes to tax laws are proactively addressed and wealth can be protected and passed across generations. A recent article appearing in Medical Economics, “Estate planning is your first line of defense against wealth loss—Here’s what you should know,” explains how an estate plan creates a framework to minimize taxes, avoid the costs and complications of probate and ensures that your wishes for your estate are followed.

Documenting assets is one task that is done when creating an estate plan. When records are not clear, transferring assets can become complicated. A comprehensive record-keeping system can store documents like deeds, life insurance policies, asset inventories, family videos and photographs online.

Many financial records are already online through client portals by major financial companies. The key to incorporating these records into an estate plan is remembering where all the information is stored and being willing to share access information with a trusted family member or friend. The person you name as an executor of your will or a trustee for a trust is the most likely candidate to be provided with this information.

There are many steps to having a solid estate plan. However, there are also many missteps. Here are some of the most common pitfalls to avoid:

Failing to update an estate plan. All the documents in your estate plan, including a Will, Power of Attorney, Healthcare Proxy, HIPAA Release Form, Trusts, Advanced Directives and more, must be updated to comply with changing laws and changes in your life.

Making a careless decision about the executor or trustee can be disastrous. The eldest child does not have to be the one to be in charge of your estate. Neither does the person you love if their life is a trainwreck. The person to be named executor and/or trustee needs to be someone you know to be extremely responsible, reliable, good with money management and a solid moral compass.

Digital assets are often ignored when it comes to estate planning. However, this new asset class needs to be included. If you have email, you have a digital asset. You have digital assets if you have email, cryptocurrency, websites, social media content, online subscriptions and photos stored in the cloud. Suppose no plan is made to create an inventory of accounts and name a digital executor. In that case, your estate becomes vulnerable to identity theft, valuable cryptocurrency could be lost forever and there may be nothing your loved ones can do.

Most family fights have to do with unequal asset distribution after the death of a parent. A clear estate plan is one way to preclude confusion about what you want to happen after death. Talking about your estate plan while you’re still able to have these uncomfortable discussions is one way to help establish your wishes. You may want to create a Letter of Intent or make a video to express your reasons for making certain decisions. This may not be legally enforceable. However, it will serve to document your wishes.

Estate planning is not just about distributing assets after death. By establishing an estate plan, the family is better prepared to deal with the loss of a loved one and can focus on healing together instead of battling over their inheritance.

Reference: Medical Economics (Oct. 17, 2024) “Estate planning is your first line of defense against wealth loss—Here’s what you should know”

Estate Planning for Unmarried Senior Couples

“Creating an estate plan for an unmarried couple is already challenging. However, when the cohabitating couple is in their golden years, it’s especially tricky.”

An increasing number of couples at various stages of life are choosing to live together without marrying, making estate planning a bit more challenging. This is true whether the couple is relatively young and has children or if they are seniors, according to a recent article from Kiplinger, “Estate Planning and the Legal Quirks of Retiree Cohabitation.”

From one perspective, living together without being legally married provides an advantage: you have your own estate plan. You may distribute assets after death with no obligation to leave anything to a partner or their biological children. In many jurisdictions, the law requires spouses to leave a significant portion to their surviving spouse. This doesn’t apply if you’re cohabitating.

However, there are downsides. For example, a surviving unmarried partner doesn’t benefit from inheriting assets without estate taxes. A non-spouse transferring assets may find themselves generating sizable estate or income taxes. To avoid this, your estate planning attorney will discuss tax liability strategies.

Owning real property together can get complicated. Consider an unmarried couple buying a property solely in one person’s name, excluding the partner to sidestep any possible gift taxes. If the sole owner dies, the partner has no claim to the property. The solution could be planning for property rights in the estate plan, possibly leaving the property outright to the partner or in trust for the partner’s use throughout their lifetime. It still has to be planned for in advance of incapacity or, of course, death.

Regarding healthcare communication and directives, special care must be taken to ensure that the couple can be involved in each other’s care and decision-making. By law, decision-making might default to the married spouse or kin. Without a designated healthcare proxy, a cohabitating partner has no legal authority to obtain medical information, make medical decisions, or, in some cases, won’t even have the ability to have access to a hospitalized partner. A healthcare power of attorney is essential for unmarried couples.

For senior couples living together, blending families can be challenging. However, blending finances can be even more complex. Living together later in life can create many concerns if there are former spouses or children from a prior relationship. If a senior decides to marry, they are advised to have a prenuptial agreement so children from previous unions are not disinherited. If a potential spouse has big issues signing such a document, it should raise a red flag to their motivation to marry.

While living together without the legal protection of marriage is an individual decision and may be seen as a means of avoiding legalities, it needs to be examined from the perspective of estate planning to protect both parties and their families. Couples must prepare for the future, for better or worse, in sickness and health.

Reference: Kiplinger (Dec. 6, 2023) “Estate Planning and the Legal Quirks of Retiree Cohabitation”

How Does Estate Planning Protect Young Children?

“To make sure that your children are taken care of if something happens to you, it’s important to appoint a guardian, establish a trust and ensure there’ll be financial support.”

Once you have a child, you’ve got a bundle of joy—and a lifelong commitment to caring for the child, sometimes even after they reach adulthood. What would happen if something happened to you and your partner? To be sure your child or children are taken care of, you’ll need to take these estate planning steps, as explained in a recent article from Kiplinger, “To Protect Your Kids, Consider These Estate Planning Steps.”

Appointing a guardian. Planning for the absence of parents from a physical and financial perspective needs to be done. Parents need to establish a guardian and have the person named in their will. It may be a good idea to name a secondary guardian if something happens and the primary guardian is unwilling or unable to serve in this role.

Create a trust. Parents should consider creating a trust for their children to ensure that there is money to provide for their care if both parents die. A child under the age of 18 is a minor and, as such, may not legally hold title to property. A trust is used to hold assets for the child’s benefit. The language of the trust would have instructions to provide for the children’s education, health and support.

There are two basic trusts to consider. A revocable trust is created during a person’s lifetime and can be changed anytime by the trustmaker. A testamentary trust is created as part of a will. Neither trust needs to be funded until the person passes away, at which time the property of the decedent is placed in a trust if the will contains the correct instructions. An estate planning attorney will be able to structure this plan.

Assign a trustee. This person manages the trust assets for the children's benefit. They need to be financially responsible people who can manage the funds for the children. The trustee can be a family member but should not be the same person chosen as the guardian. Keeping these roles separate ensures that the guardian will not misuse funds. Another option is to hire a professional to serve as the trustee. Professional trustees, including banks or financial advisors, usually charge a percentage of assets. In some cases, estate planning attorneys serve as trustees for minor children.

Establish terms of distribution. It’s up to the parents to decide how their children should receive trust assets. They can mandate principal distributions at certain ages, like a certain percentage at age 20, another at 30 and the balance at 40. While the parent dictates the terms of distribution while the children are minors, the trustee will be the one to decide on distributions for food, health, education, or extracurricular activities.

How do you be sure there will be money for your children? Parents should purchase life insurance, since most young parents don’t have a lot of liquidity. Term policies are the least expensive and can be for ten, twenty, or thirty years, during which the policy is guaranteed if the premium is paid. Whole life insurance is another option. However, it is more expensive.

Start a 529 college savings fund. These accounts can be funded through automatic withdrawals from a checking account, or family members can be encouraged to make gifts to these accounts. In some states, there are state income tax benefits for residents. The growth is tax-free if the funds are used for qualifying educational expenses.

When the child becomes a legal adult. Once a child celebrates their 18^th birthday, they are legal adults, and parents lose their rights. New adults should have a healthcare proxy so someone can make medical decisions for them in case of incapacity. They should also execute a HIPAA disclosure form so healthcare professionals can discuss their medical care with parents.

If a child has special needs. An estate planning attorney will create a Special Needs Trust to hold assets and name a trustee to manage the funds. This trust allows a child with special needs who may be eligible for government benefits to continue to receive benefits in addition to distributions from the trust.

Reference: Kiplinger (Nov. 19, 2023) “To Protect Your Kids, Consider These Estate Planning Steps”

Florida Guardianship Case Raises Red Flag for Estate Planning

“Many older people are one medical emergency away from a court-appointed guardian taking control of their lives.”

No one likes to think of themselves as being older and vulnerable. However, for one Florida man, a medical crisis and the lack of family nearby led to a terrible series of events. The article's title, from The Washington Post, sums it up: “The retired pilot went to the hospital. Then his life went into a tailspin.”

The former pilot pulled his Ford Mustang convertible into a gas station and appeared so distressed that someone called 911. He was taken to a nearby hospital, where doctors said he had a stroke. He lived alone, as three out of five Americans in their 80s now do. There didn’t seem to be any family members to call. The hospital went to court and argued that the pilot needed a guardian. The judge agreed.

This is not an unusual situation. More than one million Americans are under guardianship, which has been widely criticized for inviting abuse and theft. As Americans age, there is more focus on this arrangement, but few solutions. This man was like many seniors who relocate far from family, and when they show up alone in emergency rooms, they are at risk of falling into the guardianship system.

The court-appointed guardian sold his home for a very low price to a neighbor who was a realtor. An inspector general’s investigation later found “probable cause” for the exploitation of an elderly person and a scheme to defraud. However, the guardian denied any wrongdoing, and there was no criminal investigation.

As it turned out, the pilot, who never married or had children of his own, did have a family. In the past, he had regularly visited his sister, her spouse and a niece and nephew in the Philadelphia area. The visits stopped when his sister developed dementia and died in 2018. His niece said he became harder to reach but eventually would respond to calls and emails until he entered the hospital and no one heard from him.

After the stroke, he was unable to tell anyone to call his family. It’s not clear how hard the hospital tried to reach any relatives.

Like most senior patients, the pilot was covered by Medicare, which pays the hospital by diagnosis, not by length of stay. Generally, in this part of Florida, Medicare pays $23,000 for an elderly stroke patient, assuming a five-day stay. After that, the hospital begins to lose money. Putting a new patient in the same bed would bring in thousands of dollars a day.

The guardian began liquidating his possessions, selling his cars, gun collection, camera equipment and more at an estate sale. She then sold his home before it even went on the market with a private arrangement with a husband and wife real estate team who lived in her community. She sold it to them for at least $100,000 under market value.

While this was happening, a woman who had become an unpaid citizen watchdog after her own father’s horrible guardianship experience uncovered the case, finding court papers about the sale of the house and seeing the undervalued sale. She filed a complaint with the office regulating guardians, hoping it would draw scrutiny to the situation.

At the same time, the pilot’s niece and nephew were searching for their uncle, including writing a letter to the court. However, months went by without a response. Their letter to the court finally got to someone, and the guardian called the nephew. They were happy to establish contact with their uncle, talking with him on FaceTime calls, but had questions the guardian did not answer.

In July 2022, the inspector general’s office issued a critical report stating the guardian had used a “deficient, deceptive and fraudulent” market analysis submitted by the real estate agent. The home was “undervalued and not publicly advertised.” The inspector general’s office urged law enforcement to look into the handling of this home and two other homes the guardian had sold with the same real estate agents. Sadly, the pilot died two days after the state declined to pursue a criminal investigation.

To protect yourself and your family, speak with an estate planning attorney about the documents you need during life: Power of Attorney, Health Care Proxy, trusts, a will and, equally importantly, creating a plan for contact with family members, no matter the status of your relationships.

Reference: The Washington Post (Nov. 4, 2023) “The retired pilot went to the hospital. Then his life went into a tailspin”

Revocable Trusts Make Sense for Retirees

“If you plan to pass assets through a will, just remember that most of the time, that will becomes public once the probate estate is closed. Therefore, if you left one of your childrenout, left your favorite a bit more or are just a private person, you may be better off with a trust.”

Estate plans are not a one-size-fits-all commodity, especially when it comes to trusts. A revocable trust makes sense in many, but not all, cases, says a recent article from Kiplinger, “Four Reasons Retirees Need a (Revocable) Trust.” How can you tell whether or not you need a revocable trust?

Would you prefer to avoid probate? When people tell their estate planning attorney they need a trust, no matter what, there’s usually a family story involved. Maybe a parent created a trust that worked well, or maybe their parents didn’t have a trust, and they had a difficult experience in probate court.

Avoiding probate is a good reason to have a trust. Assets passing through a will go through probate, which is different depending on your jurisdiction. It can be expensive and time-consuming, although it can also be painless. A local, experienced estate planning attorney will know what you can expect.

Trusts are especially useful for people who own assets in multiple states because assets must be probated in each state. With a trust, assets pass to heirs directly and efficiently.

Do you want to control your estate? If some of your adult children are good with finances, but some are not, a trust allows you to structure asset distribution with great specificity. A certain percentage of assets can be released at certain ages, or annual distributions can be made according to any guidelines you set.

Would you prefer your estate to be private? Creating an estate plan is often an emotional process, balancing your goals and family dynamics. These wishes are typically kept private, except those who have some role in creating the plan. If your assets pass through probate, remember the will becomes part of the public record once it is admitted to probate. Anyone, from an estranged family member to a scammer, can see what you gave and who you gave it to. Trusts, on the other hand, are private.

Do you have a plan for incapacity? Your estate plan should contain a number of documents in case of incapacity, including Power of Attorney, Healthcare Proxy and a Living Will. In addition, a revocable trust with a successor trustee will create continuity and simplicity in managing your financial matters. The successor trustee named in the trust document will manage the assets according to the terms of the trust if you become incapacitated. Without such a trust in place, your family would need to go through the legal process of seeking a conservator to manage the assets in the trust.

An estate planning attorney is the best person to discuss whether or not a revocable trust belongs in your estate plan, along with other planning strategies.

Reference: Kiplinger (Sep. 13, 2023) “Four Reasons Retirees Need a (Revocable) Trust”

Estate Planning for Second Marriages

“If you are getting remarried, you obviously want to celebrate. However, it is also important to focus on less exciting matters, like redoing your estate plan.”

Second marriage, goes the saying, is the triumph of hope over experience. It’s a happy event for everyone, but different from the first time around. You might have created an estate plan during your first marriage. Still, chances are your life is a lot more complicated this time, especially if you both have children from prior marriages and more assets than when you were first starting out as a young adult. This is why a recent article from The Bristol Press is aptly titled “Plan your estate before you remarry.”

Here are some pointers to protect you and your new spouse-to-be:

Take an inventory of all assets and liabilities. This includes assets and debts, life insurance policies, retirement plans, credit card debt and anything you own. It’s important to be open and honest about your debts and assets, so that both people know exactly what they are marrying. Once you are married, you may be liable for your partner’s debts. Your credit scores may be impacted as well.

Decide how you are going to handle finances. Once you know what your partner is bringing to the marriage, you’ll want to make clear, unemotional decisions about how you’ll address your wealth. Are you willing to combine all of your assets? Do you want to keep your investment accounts separate?

For example, if one person is selling a home to move into the home owned by the other person, what costs, if any, will they contribute to the cost of the house? If one person has significant debt, do you want to combine finances or make joint purchases? These are not always easy issues. However, they shouldn’t be ignored.

Decide what you want to happen when you die. You and your future spouse should meet with an experienced estate planning attorney to create a will, Power of Attorney, Health Care Proxy and other documents. This lets you map exactly where you want your assets to go when you die. If there are children from prior marriages, you’ll want to ensure they are not disinherited when you die. This can be addressed through a number of options, including creating a trust for your children, making them beneficiaries of life insurance policies, or giving children joint ownership of property.

Even if there are no children, there may be family heirlooms or items with sentimental value you want to keep in the family, perhaps passing to a cousin, nephew, or niece. Discuss this with your future spouse and ensure that it’s included in your will.

Meet with an estate planning attorney. You should take this step even if you don’t have many assets. If you have children, it’s even more important. You’ll want to update your will and any other estate planning documents. If you have significant assets, you may decide to have a prenuptial or postnuptial agreement. The estate planning attorney will also help you determine whether you need a trust to protect your children.

Reference: The Bristol Press (July 14, 2023) “Plan your estate before you remarry”

What Does “Power of Attorney” Mean?

“A power of attorney is a legal document that gives a person the authority to act on another's behalf.”

A power of attorney is a legal document giving one person—the “agent”—the legal power to make legal, financial, or medical decisions for another person. According to a recent article from Nerd Wallet, “What is a Power of Attorney (POA)? Types, How, When to Use,” the POA lets someone act on your behalf if you are traveling, too sick to act on your own behalf or can’t be present to sign legal documents.

You may name any adult, including your spouse, adult child, sibling, or a trusted friend, to act as your agent under power of attorney. It can be granted to anyone who is a legal adult and of sound mind. Ordinary power of attorney designations dissolve if you become incapacitated. However, durable power of attorney designations remain intact, even upon incapacity.

You can give one person power of attorney or divide the responsibilities among multiple people.

Most people don’t know that power of authority authorizations can be very specific or general, depending on your needs. When having an experienced estate planning attorney draft a power of attorney, review the desired scope of your agent’s authority, when it should take effect and the desired duration.

If you don’t have a power of attorney and become incapacitated, a court can appoint someone to act on your behalf. However, court intervention turns a private matter into a public proceeding, and you cannot know if the appointed conservator will follow your wishes.

There are several types of power of attorney. The durable power of attorney remains intact, even when you are incapacitated. The ordinary power of attorney becomes moot once you are incapacitated. A dual power of attorney gives power to two people and requires both individuals to sign off on any decisions.

A dual power of attorney may be useful if you have two children, for instance, and you’d like them to make joint decisions for you. Regardless of how many powers of attorney you appoint, you should always name successor agents for each power of attorney, in case the primary person is unable or unwilling to serve when needed.

A medical power of attorney, also called a health care proxy, is a type of advance directive giving another person to make all health care decisions for you in accordance with your wishes when you are unable to do so. Health care proxy decisions generally cover any type of medical treatment or procedure to diagnose and treat your health. Make sure the person you grant medical power of attorney to is familiar with your wishes and knows what decisions you would want in treatment or for life—supporting measures.

Reference: Nerd Wallet (May 10, 2023) “What is a Power of Attorney (POA)? Types, How, When to Use”

Use Estate Planning to Prepare for Cognitive Decline

“Data from sources like the U.S. Census Bureau shows in no uncertain terms that the U.S. population has grown older over the prior two decades.”

Since 2000, the national median age in the U.S. has increased by 3.4 years, with the largest single year gain of 0.3 years in 2021, when the median age reached 38.8 years. This may seem young compared to the life expectancies of older Americans. However, the median age in 1960 was significantly lower, at 29.5 years, according to the article “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans” from Think Advisor.

An aging population brings many challenges to estate planning attorneys, who are mindful of the challenges of aging, both mental, physical and financial. Experienced estate planning attorneys are in the best position to help clients prepare for these challenges by taking concrete steps to protect themselves.

Individuals with cognitive decline become more vulnerable to potentially negative influences at the same time their network of trusted friends and family members begins to shrink. As people become older, they are often more isolated, making them increasingly susceptible to scams. The current scam-rich environment is yet another reason to use estate planning.

When a person is diagnosed with Alzheimer’s or any other form of dementia, an estate plan must be put into place as soon as possible, as long as the person is still able express their wishes. A diagnosis can lead to profound distress. However, there is no time to delay.

While typically, the person may state they wish their spouse to be entrusted with everything, this has to be properly documented and is only part of the solution. This is especially the case if the couple is close in age. A secondary and even tertiary agent needs to be made part of the plan for incapacity.

The documents needed to protect the individual and the family are a will, financial power of attorney, durable power of attorney and health care documentation. In addition, for families with more sophisticated finances and legacy goals, trusts and other estate and tax planning strategies are needed.

A common challenge occurs when parents cannot entrust their children to be named as their primary or secondary agents. For example, suppose no immediate family members can be trusted to manage their affairs. In that case, it may be necessary to appoint a family friend or the child of a family friend known to be responsible and trustworthy.

The creation of power of attorney documents by an estate planning attorney is critical. This is because if no one is named, the court will need to step in and name a professional guardian. This person won’t know the person or their family dynamics and may not put their ward’s best interests first, even though they are legally bound to do so. There have been many reports of financial and emotional abuse by court-appointed guardians, so this is something to avoid if possible.

Reference: Think Advisor (April 21, 2023) “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans”