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Estate Planning Issues to Consider as You or Your Parents Age
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For most of us, birthdays are both celebrations and milestones. Maybe you've just reached age 50 or 65 and are starting to think about what's ahead. Or perhaps your mom or dad has just turned 80 and you're beginning to notice small changes, like forgetting family birthdays or not maintaining the house like before. Growing older provides mixed experiences: a chance to grow in wisdom and deepen relationships while facing the possibility of illness and disability, loss of loved ones and unwanted changes in memory, lifestyles and appearance.
While none of us can predict the future, we can anticipate issues and prepare for them. Through the estate-planning process and its related tools, you can address possible incapacity and extended care issues.
Communication is key
No one likes to think or talk about growing old struggling to take care of yourself. It's easy to put aside thoughts about old age and poor health and deal with them later. But none of us know when we - or our parents - may face death, serious illness or disability. The need for extended care or to have someone else make decision about our health and our money may happen suddenly and unexpectedly. Those caring for us may not know our wishes.
For many people, it's difficult to talk about money and other serious issues with children, parents or other loved ones. However, it's critically important that you communicate your wishes and relatives and caregivers and introduce them to the members of your estate-planning team - like your financial advisor, attorney, and accountant.
No planning = No control
Just as many people die without a will, many people face incapacity and the need for extended care without the legal documents that provide directions about their wishes and care preferences. In such cases, the court creates a conservatorship. The public process usually involves hearings to prove your incapacity, attorney fess and court costs as well as the appointment of guardians to make decision about your finances, medical care and lifestyle. The court might appoint a family member or an independent third party such as a social worker to serve as your conservator. The court-appointed conservator will make decisions based on what he or she believes is best for you and will not necessarily know or consider your preferences or wishes.
Consider these legal documents
While it's uncomfortable to think about possible incapacity, it is prudent to have a plan for the possibility. The following legal documents allow you to choose someone in advance to make decision for you when you are incapable of making them, whether due to disability, age or illness. Consider these tools:
Durable power of attorney - This legal documents authorizes another individual to step in and manage your financial affairs while you are alive but unable to make decisions for yourself. The person you name can be any one you trust with your finances including a spouse, partner, child or friend. Authority can apply to all your financial dealings or be limited to particular assets or accounts. Typically, this power of attorney goes into effect at the time of your incapacity.
Health care directive - This legal document combines a health care power of attorney and living will. Under this type of power of attorney, your designated agent makes health care decisions for you when you are unable to in the future. The document also expresses your wishes concerning the use of life-sustaining procedures in the event of terminal illness or irrevocable circumstances.
Revocable living trust - As its name implies, a revocable living trust is created while you are alive and can be changed or be completely revoked at any time during your lifetime. A revocable trust becomes irrevocable (unchangeable) when you die or become incompetent. This type of trust may include instructions for managing your assets in the event of your incapacity. A revocable living trust can be viewed as putting your finances in a basket. If it becomes necessary, it is simple to hand off the basket to your successor trustee to make decisions about your money and carry out your wishes stated in the trust.
A plan you can count on
None of us have a crystal ball that shows our futures. Because we can't see what's coming - or know what's in store for the people we care about - we often worry about the things we can't control or avoid thinking about the things we can. However, we can prepare for possible incapacity through the estate-planning process, create legal documents that name financial and health care decision-makers and communicate our wishes to family and friends.
Estate planning is essential for peace of mind at any age.
Elements to Consider
Legal documents are in order:
- Durable power of attorney
- Health care directive
- Revocable living trust
Communicating your wishes and introducing your estate planning team.
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All rights reserved.
Neither Ameriprise Personal Trust Services nor Ameriprise financial advisors are authorized to give legal or tax advice that goes beyond the scope of its fiduciary responsibilities associated with serving as investment agent or trustee. For legal or tax matters that go beyond these roles, clients will need to consult their own legal and/or tax advisors.
Financial advisory services and investments available through Ameriprise Financial Services, Inc., Member NASD and SIPC. Securities and mutual funds available through Ameriprise Financial Services, Inc. are not deposits or obligations of, nor guaranteed or insured by neither the FDIC nor any other federal or state agency and may involve investment risk, including loss of principal. Ameriprise Financial Services, Inc. is part of Ameriprise Financial, Inc.
Ameriprise Bank, FSB, is separate from Ameriprise Financial Services, Inc. and is not a broker-dealer. Ameriprise Financial Services, Inc. and Ameriprise Bank, FSB are subsidiaries of Ameriprise Financial, Inc.
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