Estate planning, guardianships, and the administration of probate estate and trusts can be complex and confusing. Each case is unique. Make a careful list of your assets, your family members, and your service providers, then contact your attorney. Everyone should have the following three documents:
1. A Durable Power of Attorneyauthorizes another individual to manage your property if you are disabled or otherwise unable to manage your property.
2. An Advance Directive authorizes others to make health care decisions for you during periods of incapacity and provides specific instructions to the medical profession as to management of a final or terminal illness. A simple HIPAA release can be added to this document to allow your care providers to talk with your agents before you become fully incapacitated.
2. A Last Will and Testament names a person to manage your affairs after your death, and governs the disposition of your property at death. The probate court will supervise this process.
Many people also create trusts, which generally allow your family to avoid or at least minimize the probate process. Specialized trusts can also provide additional care for special needs beneficiaries, hold assets for beneficiaries who are too young to manage their inheritance, or address other specific needs – including asset protection.
Guardianship – If you do not have these documents in place, and you become mentally disabled, your family will need to go to the probate court to obtain a guardianship. This is a time-consuming and expensive process, which typically occurs at the time of a crisis. The probate court is a helpful resource, but most families in the guardianship context wish they could spend time with their ill relative, rather than spending time at, or preparing for, the court house.
Nursing home costs – Many people believe that when full nursing care is needed, the government will cover the cost. This is NOT true. The only program that assists with skilled nursing care is Medicaid, which is a welfare program based on financial need. The application process requires submission of five years of financial records, showing that the applicant has not gifted assets away in order to apply for help.
Long Term Care Insurance – Like any kind of insurance, this product involves the payment of premiums in exchange for a promise to cover certain services. There are many different types of policies. Talk with an insurance agent who handles these policies routinely for further information.
No matter which documents you choose, the estate planning process will involve the same core discussion. Be ready to tell your attorney:
1. The approximate value of your assets and the nature of those assets. List bank accounts, valuable person property, real estate, marketable securities, insurance products, or retirement assets such as a 401k, IRA, SEP or pension.
2. Family dynamics; including your marital status, the marital status of your children and other intended beneficiaries, and the existence of competency issues among you, your children, and intended beneficiaries.
3. Identify the individuals who will make medical decisions for you when you are incapacitated and who will manage your estate (or trust) while you are incapacitated and upon death.
Deborah A. Fauver is an attorney at Cooper Cargill Chant, with offices in North Conway and Berlin, NH. Additional information about the firm and the estate planning process can be found at www.coopercargillchant.com