Smart advance planning can help preserve family assets, provide for your own well-being and eliminate the stress and publicity of a guardianship hearing.
A guardianship hearing would happen if you don’t plan for your incapacity. A guardianship or conservatorship for an elderly individual is a legal relationship created when a judge appoints a person to care for an elderly person who’s no longer able to care for themselves.
The guardian has specific duties and responsibilities to the elderly person.
FEDweek’s recent article entitled “Guarding Against the Possibility of Your Incapacity” discusses several possible strategies.
Revocable (“living”) trust. Even after you transfer assets into the trust, you still have the ability to control those assets and collect any income they earn. If you no longer possess the ability to manage your own affairs, a co-trustee or successor trustee can assume management of trust assets on your behalf.
Durable power of attorney. A power of attorney document names an individual to manage your assets that aren’t held in trust. Another option is to have your estate planning attorney draft powers of attorney for financial institutions that hold assets like a pension or IRA.
Joint accounts. You can also establish a joint checking account with a trusted child or other relative. With her name on the account, your daughter can then pay your bills if necessary. However, note that this could be a dangerous option. The joint owner will immediately get full access to the account balance as their own funds and the assets held in the joint account will pass to the co-owner (daughter) at your death, even if you name other heirs in your will.
Making a plan for incapacity is crucial to making sure you remain in control of your assets for as long as you live, and even after your death. There are always options when it comes to planning for your future.
Reference: FEDweek (March 5, 2020) “Guarding Against the Possibility of Your Incapacity”