What ever boomer still needs to know
This is Part III of a continuing seriesIn the first part of this series we explored Social Security, “delayed retirement credits,” “representative payees,” SSI (or Supplemental Security Income) and reverse mortgages. In the second, we visited senior issues pertaining to certain health care and health benefits. In this, the third part of the series and the fourth we will take a look at “forward planning.”When I use the term “forward planning,” I’m thinking about looking ahead and – well – making plans. Senior aspects of forward planning (although certainly not limited to seniors) are matters related to wills, living wills, estate planning and conservatorship.First, what is the difference between a “living” will and just a plain, old (presumably, not living) will? A will is a written testament that directs who gets your stuff when you die. A living will is, on the other hand, a written instrument, recognized in many states, which directs what, if any, life-sustaining treatment the author of the living will does, or does not want employed if he or she becomes terminally ill or permanently unconscious. Just as a living will should not be confused with a will, neither should it be confused with a “living trust,” which is something all together different. A living trust is an estate planning device that directs the handling of certain property or assets. (More on living trusts in Part IV).What often goes part and parcel with a living will is a “durable health care power of attorney.” A “power of attorney,” generally, is a written instrument whereby you invest another person (most times, a close relative) to act for you in certain prescribed circumstances where you do not wish to act for yourself. A power of attorney becomes invalid and will end if you become incapacitated unless the power of attorney granted is a “durable” power of attorney. A durable power remains effective even if you become incapacitated. A durable power of attorney can be limited or general. A limited durable power of attorney restricts the person to act in your behalf as regards only some defined ways and not in others (say, to pay your bills but not to transfer monies between your various investments). A general power, on the other hand, invests the person with broad authority to act in your behalf. Powers of attorney generally entrust your designee to act in your behalf in business dealings. In some jurisdictions, there are also “springing” powers of attorney which become effect only upon some “triggering” event, such as the occasion of your incapacity.Whereas a general power of attorney relates to business functions, a durable health care power of attorney relates strictly to medical matters. A durable health care power of attorney designates some trusted person on your behalf to make medical decisions for you in the event you cannot make such decisions for yourself. In some states, particularly in the aftermath of the Terri Schivao debacle, reforms have created something called an “advance health care directive.” With general powers of attorney, durable health care powers of attorney and advance directives, “back-ups” can be named in case the person you’ve elected declines to act or cannot do so owing to their own incapacity or death. Clearly, it is essential that you discuss your wish to appoint someone, and obtain their consent, before you do so. Whether a durable health care power of attorney or an advance directive (which in some states are simple forms which simply need to be signed before a notary), once created, you should give copies to your primary physician and to your family.If you want control over who will inherit your property and in what proportions following your death, you need a will. Not only can you direct to whom your stuff will go, but if you still have minor children, you can express your desire as to who should be their guardian when you are gone. You can also spell out your funeral and burial wishes and appoint as “executor” the person whom you like to carry out your wishes. The executor will collect and manage your assets, pay off your remaining debts and distribute your property. A will may be handwritten, but it is always best to consult with an attorney. If you insist upon a handwritten will, great care must be taken, including revoking any prior wills. Wills should be periodically reviewed and updated to make sure that the reflect your current circumstances and your current wishes.If you die without a will, you are considered to have died “intestate” and to whom your property goes, and in what proportions will be dictated by the relevant intestacy statutes of the state in which you reside, regardless of what may have been your contrary desires. If you have no “kin” and die without a will, your property will go to the state and your hard-earned may go to filling potholes.If you die with a will (or “testate”), the executor named in your will takes command of your estate and is appointed as your “personal representative.” He or she will settle your affairs and distribute your testamentary “devises” to your beneficiaries. While this can take some time, it is almost always more efficient than “probating” your estate. “Probate” is the legal process by which the court assumes administration of your estate. While probate can take place when there is a will (particularly where a will is challenged or contested), it is mandatory when a person dies intestate, or without a will. Depending on the jurisdiction, provisions can often be added to a will whereby it is expressly spelled out that the estate shall not be probated. Further, to avoid a will contest, some states permit the testator (or “testatrix,” if female) – the person who is the subject of the will – to provide that any beneficiary who contests the will is, by the act of contesting it, excluded as a beneficiary. The intent is, obviously, to prevent internecine squabbles.While wills can dispose of and distribute most of what you own, they generally do not control the distribution of life insurance proceeds, retirement plan assets, certain jointly owned assets, “transfer on death” or “pay on death” accounts and the assets of revocable living trusts. To insure that the first two of these – life insurance proceeds and the assets or retirement accounts – you should make sure that the named beneficiary is who you intend. When you are creating (or updating a will) is a good time to make sure the beneficiaries of retirement plans and life insurance policies are who you intend, as well.In the next part of this series, we will continue looking forward as regards certain estate planning devices, inheritance taxes, financial planning and investment, and certain other money matters.Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley. He is a member of the Colorado State Bar Association Legal Ethics Committee and is a former adjunct professor of law. Robbins lectures for Continuing Legal Education for attorneys in the areas of real estate, business law and legal ethics. He may be heard at 7 p.m. Wednesdays on KZYR radio (97.7 FM) as host of “Community Focus.” E-mail address: firstname.lastname@example.org.Vail, Colorado
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