As senior citizens advance in age, difficult decisions may eventually need to be made. Seniors who still have the mental capacity to handle with their financial, legal and healthcare affairs should begin legal planning as soon as possible.
It’s not very pleasant to imagine about the possibility of a future illness or injury derailing our lives and depleting our finances, but nobody can be certain what the future will bring. It’s never too soon to start planning for the future from a legal and financial perspective. And the sooner you begin planning for the unexpected twists and turns life may take, you’ll have an advantage at facing the future with peace of mind.
Keep reading to learn about some important steps you should take when estate planning to safeguard your future well into your golden years.
Last Wills & Living Trusts
A last will is a legally binding document that explains what should be done with a person’s assets in the event of their death. It also names the will’s executor, the person who will be in charge of the issues surrounding those assets. A probate court supervises the executor in most cases, to ensure that they carry out the wishes specified in the will.
A trust is defined as “confidence placed in a person by making that person the nominal owner of property to be held or used for the benefit of one or more others.”
A living trust is a trust created during a person’s lifetime, designed to allow for the easy transfer of the trust creator or settlor’s assets, while bypassing the often complex and expensive legal process of probate. Living trust agreements designate a trustee who holds legal possession of assets and property that flow into the trust.
To create a living trust, some or all of a person’s assets are transferred to the trust, and that person has the legal say to name others to be in charge of the trust when she or he dies or becomes incapacitated. The trust can continue to operate after an individual has passed away.
Appointing Power of Attorney
A power of attorney is a legal document allows you to give legal authority to someone you choose to make decisions on your behalf. According to AgeLab, there are 4 types of power of attorney.
General Power of Attorney
In this situation, the agent can perform almost any act as the principal, such as opening financial accounts and managing personal finances. A general power of attorney arrangement is terminated when the principal becomes incapacitated, revokes the power of attorney or passes away.
Durable Power of Attorney
This arrangement designates another person to act on the principal’s behalf and includes a durable clause that maintains the power of attorney after the principal becomes incapacitated.
Special or Limited Power of Attorney
In this instance, the agent has specific powers limited to a certain area. An example is a power of attorney that grants the agent authority to sell a home or other piece of real estate.
Springing Durable Power of Attorney
In some states, a “springing” power of attorney is available and becomes effective when a specified event occurs such as when the principal becomes incapacitated.
In the event that you become incapacitated, you’ll need what is known as durable powers of attorney for medical care and finances. A durable power of attorney simply means that the document stays in effect if you become incapacitated and unable to handle matters on your own.
Most elder law professionals would advise that every aging individual have a Power of Attorney. In the event that you should require long term nursing care or assisted living services, a DPOA will allow the person you have appointed to act on your behalf in seeking senior placement services to provide that care.
It’s never too early to begin to set your medical and financial affairs in order to prepare for our autumn years. If you have any experience with senior estate planning, leave a comment and share your insights in the section below.