When an emergency or sudden death arises, you can suddenly find yourself in a position of having to make difficult decisions to handle the situation, as well as consider estate planning options, according to The Union in “Estate planning in a time of crisis.”
As you work to make decisions, there are three documents you’ll wish you had when dealing with a medical crisis for a loved one: a health care directive, a durable power of attorney and a living trust.
When a loved one needs help in making decisions and discussing their situation with doctors and other care providers, a health care directive grants you the authority to speak on their behalf. The law requires health care professionals to have legal permission to speak with a representative about highly personal and confidential information. The law requires medical professionals to perform life-saving procedures, which are sometimes painful and unwanted. If the wishes of the person are not correctly documented, it is not possible to stop these procedures from being initiated.
The most common need for this document, is what kind of on-going care is needed and wanted for the loved one, who can no longer express their wishes or care for themselves without help.
Any asset owned by an incapacitated person that is not titled in the name of their trust cannot be overseen by the successor trustee. The person who is named a durable power of attorney is permitted to control and direct these assets, including transferring them into the trust.
Retirement accounts, 401(k)s, IRAs, Deferred Compensation Benefit Plans, SEPs and all other assets or benefit plans not titled in the trust name can be administered only by the person named the durable power of attorney.
If there is no power of attorney at the time a loved one becomes incapacitated, the only way they can access funds outside a trust is to have a guardian appointed for their loved one. The court must be involved in every part of their life, as long as their loved one lives.
A living trust is a legal document that provides for the smooth transition of management, administration and distribution of assets by the grantor, the person who is putting their assets into their trust during their lifetime. When that person is no longer legally competent, the successor trustee takes over with all the legal powers outlined in the living trust document.
This document gives clear legal authority so that assets can be managed, income can be distributed and bill paying and distribution of the estate at death can take place.
An estate planning attorney can advise you on creating an estate plan that fits the unique circumstances and preferable, before the situation becomes a crisis.
Reference: The Union (Sep. 9, 2018) “Estate planning in a time of crisis”