If you become incapacitated, you won’t be able to manage your own financial affairs. Many are under the impression that a spouse or adult children can automatically take over for them if they become incapacitated. The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, the individual may have to come back to the court every year and show how he or she is spending and investing each and every penny.
To have your family to be able to immediately take over for you, it’s essential that you work with an attorney to create the proper legal documents to designate a person or people that you trust so they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home. Many people mistakenly think that a simple will can effectively protect you in the event that you become incapacitated. The truth is, your will does not take effect until after you die.
In addition to planning for the financial aspect of your affairs during incapacity, it’s critical that you establish a plan for your medical care. The law allows you to appoint someone you trust – for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a durable power of attorney for health care where you designate the person to make such decisions on your behalf. In addition to a power of attorney for health care, having a living will informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
If you are in a long term relationship that does not include marriage, you need to take particular care to create an estate plan or your loved one could be left out of the decision-making process regarding your care in disability in addition to the benefits of your estate. If you should die without a will or trust, the government will impose a statutory order, called intestate succession, for the orderly distribution of your estate to blood relatives. At Casebolt Law Firm, PLC, we are sensitive to the unique needs of our unmarried clients with life partners and would like to help you attain peace of mind knowing that your loved one will be able to be there for you in sickness and to receive the benefits of your love after your death.
PROVIDING FOR MINOR CHILDREN
It is important that your estate plan address issues regarding the upbringing of your children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to provide for special counseling and resources for your spouse if you believe they lack the experience or ability to handle financial and legal matters. You should also discuss with your attorney the possibility of both you and your spouse dying simultaneously, or within a short duration of time.
A contingency plan should provide for persons you’d like to manage your assets as well as the guardian you’d like to nominate for the upbringing of your children. The person, or trustee in charge of the finances need not be the same person as the guardian. In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances. Otherwise, the decision as to who will manage your finances and raise your children will be left to a court of law. Even if you are lucky enough to have the person or persons you would have wanted selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.
Other issues to consider in this respect is whether you’d like your beneficiaries to receive your assets directly, or whether you’d prefer to have the assets placed in trust and distributed based a number of factors which you designate, such as age, need and even incentives based on behavior and education. All too often, children receive substantial assets before they are mature enough to handle them properly, with devastating results.
You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills you feel are necessary. Make sure that your plan does not create an additional financial burden for the guardian.