In addition to the asset transfer part of the estate planning process, there is another element that you should address. A comprehensive estate plan will account for situations that you may face toward the end of your life, because you may not always be in a position to express them yourself.
Aging and Cognitive Decline
The overall average life expectancy is 78 years, but this includes people that pass away at ages. For older folks, it is actually significantly higher than this all-inclusive average.
According to the Social Security Administration, the life expectancy for a 67-year-old woman is 87 years, and it is 85 years for a man of this age. Right around one third of elders that have reached the age of 85 have contracted Alzheimer’s disease.
Alzheimer’s is the leading culprit, but there are other causes of cognitive impairment. If you do nothing to prepare for this eventuality, and you become unable to handle your own affairs, the state may be petitioned to appoint a guardian to act on your behalf.
In addition to cognitive impairment, there are people that can no longer communicate sound decisions on their own because of physical ailments.
Now that you can see why it is important to take certain precautions, we can get to the point of this post. You can empower representatives in advance and take the matter out of the hands of the court. This is done through the execution of legal documents called durable powers of attorney.
Most people are aware of the fact that a power of attorney is used to name someone else to act for you in a legally binding manner. The “durable” designation is key, because this document will remain in effect upon the incapacitation of the grantor.
With a living will, you can state your life-support preferences. Once this document has been executed, the choices that you record would be honored if you are ever in a life-support situation. There would be no need for a representative to make them on your behalf.
However, there can be other medical decision-making scenarios that have nothing to do with life-support. To account for this, you can name an agent in a durable power of attorney for health care.
The Health Insurance Portability and Accountability Act (HIPAA) was originally enacted in 1996. It is in place to protect patient privacy, and it prevents medical professionals from sharing many forms of information with anyone other than the patient.
With this in mind, you should include a HIPAA release to give your health care agent the ability to speak freely with your doctors. It should be noted that you can sign a release to give any other person the same access.
Your incapacity plan can also account for financial matters. If you are using a living trust as your primary estate planning device, you would act as the trustee while you are alive and well. To account for incapacity, you could name a disability trustee to assume the role if it becomes necessary.
When it comes to assets that are not in a trust, you can execute a durable power of attorney for property. If you have a living trust, it would make sense to name your living trust trustee as the agent, this is not a requirement.
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Since you are on this site, you must be interested in learning more about estate planning, and we hope that you found this post to be of value. There are explanations of many different aspects of the process on this blog, and it is just one of the resources that you can access on our site.
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