Wednesday, November 21, 2007


Peace of Mind for You and Your Family
(At least as to planning for incapacity)
Christina C. Forbes, Esq.

People of any age – and particularly people with children or assets or both – need to make arrangements for when they are incapacitated and for when they pass.

One of the greatest gifts any parent can give their child, or a spouse to his or her partner, is the peace of mind of knowing that if anything should happen, a power of attorney or a trust and a will have been prepared so that transitions are taken care of.

Power of Attorney (POA):
· A POA designates someone to act on your behalf if you are away or incapacitated
o A durable financial power of attorney allows someone you trust to manage your assets. If it is not durable, it will be useless if you are incapacitated.
§ You have complete choice as to when the POA becomes effective and who is your agent and who is your successor agent.
§ Some financial institutions require you to use their forms. Plan ahead.
§ To sell real estate your state may require a special POA and it may have to be filed with the register of deeds.
§ You choose all of the powers to be exercised by your agent.
o A health care power of attorney designates who can make medical decisions for you when you are ill or incapacitated. It also has a section or a separate document that describes your philosophy of life and how you want to be cared for under the many different medical conditions.
o These two documents provide a safety net and give a trusted friend or loved one the security that they can care for you and that you have told them what you want.
o You can also designate who would be your guardian or conservator if one were needed (in the event the POA is determined to be inadequate).

Revocable or Irrevocable Trust
· A trust is a much more powerful tool than a POA to assure that your assets and property are managed the way you want. Whether a trust avoids probate is much less important than that it assures that your trustee controls your property the way you want when you cannot.
o The trustee can also be a bank or other fiduciary.
o A revocable trust allows you to change it or eliminate it during your lifetime.
o An irrevocable trust cannot be changed except by a court, for good cause.
o Your property and assets will be managed by your trustee in accordance with your instructions in the trust.
§ You can provide for where and to whom your property will be distributed on your death.
§ You can pour all of your remaining assets into your trust at your death, through your will.

· A will is essential to distribute your property and assets to those you choose. If you don’t have a will, the law provides how everything will be distributed. You don’t need a trust, but you do need a will.
o In a will you designate your personal representative or executor, the person who will be responsible for opening probate and for making sure your wishes are followed.
o You decide which legatees will get what.
o You decide whether legatees will pay the taxes, if any, or whether the estate will pay them.
o You also decide how and where you want to be buried and who will be in charge of your funeral (if you haven’t already taken care of that).

Why plan ahead?
If you are incapacitated, either by accident or illness, someone will need to be appointed to manage both your person and your property. This involves a lengthy court process, is expensive, and can subject families to the stress of possible dispute as to who should be appointed.
If you leave no will, your family, friends and or loved ones may have differences of opinion as to who should be named the executor or personal representative (which is expensive), the law will dictate which heirs will receive distributions, all taxes and debts will be paid by the estate (instead of a legatee to whom you may convey a house subject to a mortgage, for example).
Planning ahead provides peace of mind for you, your family and your loved ones.

Lawyer or book or internet?
You can download a lot of materials from the internet; you can buy a lot of books on how to do all of these things. But, you get what you pay for.
A lawyer will help you to ask a lot of questions that you might not think of and that the books and internet sites won’t give you. Some books don’t give you very good advice. A lawyer will make sure that you have considered all of the ramifications of your choices, so that you can make choices that actually achieve your objectives.
Any lawyer? You will pay most lawyers the same amount to prepare your documents. You will get a better product, by far, by consulting with a lawyer who specializes in estate planning and disability planning.

Good luck.
On a personal note, I always have a great feeling of relief when clients have finally signed their POA and will and trust documents. They now have a safety net that is more comforting than a big broad hammock under a tree.