Essential Planning for Seniors (Kiplingers)

6 Essential Documents for Alzheimer’s

Prepare these documents, and update older ones, while you still have the decision-making capacity to do so.

the Editors of Kiplinger’s Retirement Report, , , Kiplinger Washington Editors

KIPLINGER — 9:18 AM ET 11/05/12

Advance-planning documents can help ensure that all your financial and medical wishes are carried out to the letter. This is especially important when Alzheimer's disease and dementia come into play. It's essential to draw up these documents -- and update older ones -- while you still have the decision-making capacity to do so. If you don't have the appropriate documents, a court may step in and appoint a guardian for you. Because of the differences in state law and the complexities involved in ensuring that your instructions are airtight, see a lawyer for help in drawing up these documents.

Power of attorney for finances. This legal document allows another person to manage your finances on your behalf. Naming a competent, trustworthy agent is essential. Many seniors designate a family member for this task. You can build in checks and balances by requiring that the agent provide a periodic accounting to a third party, such as another relative or a lawyer. Or you can require that another individual sign off on any gifts of your property.

Powers of attorney should state the agent's authority to handle specific investment accounts, annuities and other assets -- details that aren't included in some off-the-shelf documents. Make sure the power of attorney is "durable," meaning that the agent's powers continue when the person creating the power of attorney becomes incapacitated.

Living trust. This document can provide detailed guidelines on how your property should be managed if you become incapacitated. You transfer your investments, real estate and other assets into the trust and name yourself as trustee, so you maintain control of the property. You also name one or more successor trustees to manage the property if you become incapacitated, and you include detailed instructions on how the money should be used if you are hospitalized or need long-term care.

After you die, the trust allows the successor trustee to transfer your property to your beneficiaries without having to go through probate. If you have a living trust, you still need a financial power of attorney to manage transactions that may fall outside the scope of the trust, such as dealing with credit card accounts. To provide checks and balances, it's best to name different individuals as your living trust's successor trustee and as your agent under a power of attorney.

Health care directives. A living will documents your wishes regarding life-sustaining treatment. Find living will forms for each state at www.caringinfo.org. Some states combine the living will with a health care power of attorney in one form.

The health care power of attorney allows you to appoint someone to make medical decisions for you if you become incapacitated. You also can include specific instructions on how your agent should make your health care decisions. Laws governing these documents can vary from state to state. Look at the American Bar Association's health care power of attorney guidance, titled Giving Someone a Power of Attorney for Your Health Care, at www.americanbar.org.

Also, seniors looking to include more details in their advance directives might consider the Five Wishes form, which meets legal requirements in more than 40 states. The form, available at www.agingwithdignity.org, allows users to designate a health care proxy and outline the care they want under various medical scenarios.

Standard will. The will identifies the individual's beneficiaries, who will receive the assets in the estate. It also names the executor, the person who manages the estate. The executor will have no legal authority until the person dies. Separately, individuals must designate beneficiaries of their retirement plans on the plan documents themselves; naming beneficiaries for retirement-plan assets in a will is not legally binding.

Letter of instruction. This document will provide your family the financial and other information they need if you become incapacitated. At the very least, the letter should list all of your investment accounts, insurance policies, loans, cemetery plot records, real estate holdings, military benefits, overseas assets and even frequent-flier memberships. It should also provide the location of important documents and the names of key contacts, such as your lawyer, financial adviser and insurance agent. Make sure to include the computer passwords for all of your online accounts.

Your letter also could direct heirs to cancel club memberships and to call current and past employers regarding company benefits and stock options. Include funeral instructions and information you would like in your obituary. You can place all of the documents in a binder. Consider using a booklet, the Family Love Letter (www.familyloveletter.com), as a guide. Make sure to note the location of any items you may have hidden.

Special needs trust. This trust is set up to provide for an incapacitated spouse if the well caregiver dies first. The amount put in the trust will be based on the expected cost of care over the individual's lifetime. Such trusts are drafted so that the assets are not considered to belong to the disabled person. That protects eligibility for certain government benefits, such as Medicaid benefits for nursing-home care, without requiring the ill patient to first spend down all assets. Assets could be spent on extras, such as special therapies, a geriatric care manager or a private nursing-home room. A trustee would make spending decisions.

 

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© 2012 The Kiplinger Washington Editors, Inc.

Estate Planning at Every Age (from Bankrate.com)

8 life stages for estate planning
By G.M. Filisko • Bankrate.com


When you're 40, chances are you're not the same person you were at 20, and your estate plan should reflect the changes you've experienced. Here's a rundown of the estate-planning tools you should have if you're just beginning your life's journey, midway through or approaching the final leg.

Ch. 1: Planning for life

"When you're a child, your parents can make financial and medical decisions for you," explains Gabriel Cheong, an estate planning attorney at Infinity Law Group LLC in Quincy, Mass. "But when you turn 18, they no longer have that legal right. If anything were to happen to you, you'd probably want your parents to control your health care and financial decisions. You'd also want them to be able to talk to your medical providers and have those providers respect your parents' right to make health care decisions, including discontinuing treatment if necessary."
So if you're over 18 and unmarried, execute four documents to make sure your loved ones can carry out your wishes:

1. A general durable power of attorney enables you to designate who will control your finances if you become incapacitated, whether it's your parents or another loved one.

2. A health care proxy allows you to designate who will make medical decisions on your behalf in the same situation.

3. A living will lets you lay out your wishes regarding life-sustaining medical treatment.


4. Finally, a Health Insurance Portability and Accountability Act, or HIPPA, release allows your designated agent to discuss your medical condition without violating patient privacy laws. Without those documents, your loved ones may be forced to go to court to seek guardianship over you to assert those controls.

Single, but committed

"If you're in a long-term relationship but unmarried, create a will or trust if you want your life partner to inherit your possessions," recommends Mark Clair, an estate planning attorney at The Clair Estate Planning and Elder Care Law Firm in Maumee, Ohio. "Otherwise, they'll go to your closest relatives according to your state's law."

We're engaged!

"A prenuptial agreement isn't only for people who have a lot of money," says Cheong. "It's essential for everybody. A lot of people divorce because they've never had conversations about money. A prenuptial agreement forces people to engage in this financial conversation."

Just married

Revise your durable power of attorney, health care proxy and HIPPA release if you want there to be no question that your spouse should control your financial and medical decisions if you become incapacitated. "Think of Terri Schiavo," says Leanna Hamill, an estate planning and elder law attorney in Hingham, Mass., referring to the woman whose parents and husband battled publicly for seven years over the right to make health care decisions on her behalf after she became incapacitated. "She didn't have a health care proxy."
Without a revised durable power of attorney, says Hamill, your spouse also can't administer property solely in your name or property you hold jointly with your spouse. Also specify the person you'd like to make financial and medical decisions on your behalf if an accident incapacitates you and your spouse.

If you don't already have one, this is also the time for a will or trust. "In a lot of states, if you die without a will and have a spouse but no children," explains Hamill, "your spouse will inherit some of what you own, but your parents will also inherit." Rather than risk a fight between your spouse and parents over who should inherit, have a will or trust definitively state who should receive your assets. Also, if you own a home, purchase life insurance that will pay off your mortgage if one spouse dies.
Finally, change your beneficiary designations on such things as health insurance and investment plans so they pass to your spouse. "A lot of people think when they get married, those things change on their own, and they don't," explains Hamill. "Go to your human resources department and ask which documents include a beneficiary. Health savings accounts and flexible spending accounts sometimes have a beneficiary, as do bank accounts payable on death."

The joys of parenting

If you have children, update your will to nominate a guardian to step in if you and your spouse pass away. "Also include provisions in your will or a separate revocable trust so that your child doesn't inherit everything at the age of 18," recommends Hamill.
"A revocable trust allows you to appoint a trustee to handle any money your child inherits. The trustee can use it to support your child as the child grows up, and you can specify at what age your child can receive the money, along with any reasons your child should get it before that age, such as starting a business or buying a house. You can also specify that the trustee can withhold money if your child has a gambling problem, is in the midst of a divorce, or there's another situation that makes it inappropriate to inherit."

You'll also need a separate guardianship nomination -- sometimes called an emergency guardianship proxy -- that nominates a guardian to care for your child if both parents are incapacitated, says Hamill. That's helpful in simpler situations as well, such as when both parents take a vacation and a child needs emergency medical treatment.

Each time you have another child, be sure your estate planning documents address all of your children, and don't forget to increase your life insurance. "You need about $1 million to care for a child from birth to college," says Cheong. "Also, if you have a special-needs child, set up a special-needs trust, which allows you to provide for your child without disqualifying the child from government benefits."

Sing it, Tammy Wynette: D-I-V-O-R-C-E

"If you're separating or divorcing, you probably don't want your spouse to still have all the authority to make decisions on your behalf and access your medical and financial information," says Hamill. "Revoke those documents, including beneficiary designations, or sign new ones. A divorce decree doesn't magically change those things."
If you remarry, revise your will and trust documents to reflect the proper beneficiaries. "Most people want to share with their new spouse but also want to provide for their separate children at their death," says Hillary Gagnon, an estate planning attorney with Jennings, Haug and Cunningham in Phoenix. "Determine which assets you want to leave to your spouse and which to leave to your children."

The middle ages
As you reach your 40s and 50s, recommends Hamill, consider purchasing long-term care insurance, which covers the cost of long-term care or a nursing home.
The golden years
Review your life insurance to determine whether you can reduce it if your children are grown. Also review designations on your durable power of attorney, health care proxy, and HIPPA release to be sure the people you've named are still in your life and willing and able to serve in that role. "A lot of people at this stage," says Hamill, "also start planning their funeral to make sure that's in order."