A lot of people think that the process of estate planning is all about preparing for future monetary asset transfers. Without question, this is definitely a huge part of the equation, but there are other things to consider. A well constructed estate plan will carefully calculate end-of-life issues, and it is important to look ahead pragmatically so that you are prepared for the inevitabilities of aging.
You may be surprised to hear that a very significant percentage of senior citizens become unable to handle all of their own affairs at some point in time. There are many different culprits, but Alzheimer’s disease is at the top of the list. About 13 percent of all senior citizens have contracted this scourge in our nation’s elderly, and the number swells to 40 to 45 percent among people that are at least 85 years of age. In geriatric parlance, these folks are referred to as the “oldest old.”
If you are thinking that you probably will not live to this age so you are not concerned, you should understand some very important facts. The Social Security Administration has a life expectancy calculator on their website. If you plug in some hypothetical numbers, you will find that an individual who is turning 67 on this day is likely to live into his or her mid-80s. Most people certainly expect to live long enough to receive Social Security, so this figure is quite eye-opening.
Plus, there are censuses conducted every 10 years, and the United States Census Bureau uses the data that is collected to examine certain demographic trends. Between 2000 and 2010, the segment of the population that was between 85 and 94 years of age grew faster than any other ten-year subset. As you can see, there is a very good chance that you will live into your mid-80s and perhaps beyond.
Now that we have set the stage, we can answer the question that serves as the title of this blog post. You can prepare for the possibility of incapacity through the execution of legally binding documents called durable powers of attorney. Most people are aware of the fact that a power of attorney is a document that you can use to give someone else the power to act on your behalf in a legally binding manner.
However, a standard power of attorney that is not durable would no longer be in effect if the grantor of the device was to become incapacitated. Durable powers of attorney do remain active, and this is why the “durable” designation is very relevant when you are planning for incapacity. There is a hybrid device along these lines called a springing durable power of attorney. This document would only go into effect if the grantor was to become incapacitated.
There are different types of decisions that may present themselves if you were to become unable to handle all of your affairs on your own. Some of them would be health care choices, and as a response, you could execute a durable power of attorney for health care and name an agent to make medical decisions on your behalf. You should also have a HIPAA release form, because the medical community is not allowed to share medical records with anyone other than the patient unless one of these forms have been executed.
In addition to the medical decision-making, someone has to handle your monetary affairs if you become incapacitated. To account for this, you could add a durable financial power of attorney. We should point out the fact that if you were to use a revocable living trust as your primary vehicle of asset transfer, you could name a disability trustee in the document. This individual would be empowered to administer the trust in the event of your incapacitation.
However, even if you have a revocable living trust with a designated disability trustee, you should still have a durable financial power of attorney. This is because of the fact that all of your property may not be contained within the revocable living trust.
Attend a Free Seminar!
If you would like to learn more about durable powers of attorney and other important estate planning matters, a great opportunity is the knocking at your door. We are holding a number of free seminars, and we urge you to attend the session that fits into your schedule. You can click this link to obtain all the details.