When you think about the matter of estate planning, arranging for postmortem asset transfers will probably come to mind. Without question, you have to execute a will or some type of trust to state your final wishes. The ideal course of action will depend upon the circumstances, and there are many possibilities. This is one of the most important financial decisions you will ever make, so you should certainly discuss your options with a licensed estate planning attorney.
A well-constructed estate plan will also address the challenges that you are likely to face toward the end of your life. Clearly, this is not a very pleasant subject to contemplate, but a difficult situation could be much worse if you do not plan ahead in an intelligent manner.
Before we take a close look at the specific actions that you should consider taking, we should share some statistics paint a very vivid picture. The Social Security Administration has a tool on their website that you can use to measure life expectancy at any given age. As you get older, your life expectancy is higher than the average, which is 78 years.
If you use the calculator to estimate life expectancy of someone that is turning 67 on this day, is 85 years for a man, and 87 years for a woman. You may be surprised to hear that the segment of the population is between 85 and 94 years of age is growing faster than any other according to the United States Census Bureau.
When you digest these figures, you can see that is likely that you will live into your mid-80s and perhaps beyond if you are around long enough to collect Social Security. The Alzheimer’s Association tells us that four out of every 10 people that are 85 years of age and older are Alzheimer’s sufferers.
Clearly, people with Alzheimer’s are not going to be able to handle all their own affairs effectively. Plus, this disease is not the only cause of incapacity among elders.
Avoiding a Guardianship
There is a mechanism in place that would provide a solution if you were to become incapacitated without making any proactive plans to address the possibility. Interested parties to petition the state to appoint a guardian to act on your behalf if they feel as though you have lost the ability to effectively handle your own affairs.
This process serves a purpose, but there are some good reasons why you should take steps to prevent a guardianship. One of them is the simple fact that the person that is chosen to act for you may not be the individual you would have selected yourself when you were capable of sound decision-making. Another drawback is the possibility of family members who disagree with the choice of a guardian to act for you.
You can choose your own decision-makers in advance if you execute legally binding documents called durable powers of attorney. The “durable” designation is relevant, because a power of attorney that is not durable would no longer be in effect if the grantor was to become incapacitated. To dig deeper, there is another variation called a springing durable power of attorney. This document would only go into effect in the event of your incapacitation.
You could create a durable financial power of attorney to name someone to handle your financial affairs along with a durable power of attorney for health care or health care proxy. It is certainly possible to name the same person to act in both capacities, but you can have different agents for each respective purpose.
Another incapacity planning document that should be part of your estate plan is HIPPA release. This acronym stands for the Health Insurance Portability and Accountability Act of 1996. This law prevents medical professionals from releasing healthcare records to anyone other than the patient. You could sign a release form your that gives your health care agent the right to see your medical records.
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