Number 3 Reason For Living Trusts: Managing Property upon Incapacity
|
| |
| |
Ed. Note: Older adults have planned many aspects of retirement, but failed to create an estate plan. Explore how living trusts can prepare for incapacitation.
By Michael P. Pancheri, Esq.
Reason #3: Managing Property upon Incapacitation. One of the major concerns that many of us have today is not about dying - it’s about living too long! We see it all around us - we worry about our parents living in their own home. We worry about their bills being paid and whether someone will walk off with their money. In many cases, we are powerless to help them because all of their property is in their own name. Unfortunately, without doing some prior planning, the only option we have is to file an application with the probate court to have a guardian appointed for them. That’s a gut wrenching experience because all their personal and financial affairs will have to be paraded before total strangers, and they will be forced to suffer the indignity and humiliation of being declared incompetent.
It doesn’t have to be that way. Many people try to avoid that result by putting certain properties (particularly checking and savings accounts) in joint name with a son or daughter. That enables the son or daughter to pay their bills, but it doesn’t provide a lot of help with other financial matters. It also creates more problems when the parent dies because those accounts pass automatically to the son or daughter and leaves the other children out in the cold.
A better solution is a durable power of attorney. A durable power of attorney allows you to designate the people you want to help you with your financial affairs. However, as good as a durable power of attorney is - and I’m a firm believer that everyone over the age of 50 ought to have one - it does have some shortcomings. First, your attorney-in-fact may find some financial institutions difficult to work with. Second, it may not give your attorney-in-fact all the powers needed to manage your affairs. For instance, if you were making gifts to family members on a regular basis, your attorney-in-fact would not be able to continue making those gifts unless that was specifically stated in the document.
A much better solution is a revocable living trust. Living trusts allow your successor trustee to take over whenever you resign or become incapacitated. There is generally no interruption in the management of your property, and there is no court supervision. Revocable living trusts also enjoy a greater level of acceptance throughout the legal and financial community, and almost all states provide a broad range of statutory powers regarding the management of trust property.
While it is true that a living trust isn’t effective unless your property is in the trust, a durable power of attorney will enable your attorney-in-fact to transfer property into your trust if you can’t do it on your own.
Link to the series:
Number 1 Reason For Living Trusts: Protect Property for Beneficiaries
Number 2 Reason For Living Trusts: Reduce or Eliminate Estate Taxes
Number 3 Reason For Living Trusts: Managing Property upon Incapacity
Number 4 Reason For Living Trusts: Avoid Probate
Number 5 Reason For Living Trusts: Avoiding a Will Contest
Number 6 Reason For Living Trusts: Secure Your Privacy
Attorney Michael P. Pancheri is the founder and CEO of the Living Trust Network. You may contact him by email at info@livingtrustnetwork.com. You may also contact him at the Living Trust Network's web site at http://www.livingtrustnetwork.com
|
|
| |
|
|
|
| |
