Last week we started discussing how to budget and if we should see a financial planner. This week, we will talk more about the parts of finances that are not always thought about unless talking with a professional. This includes setting a power of attorney, estate planning, guardianship, and more!
Set a Power of Attorney
A power of attorney is a legal document that allows someone else to act on your behalf, specifically in regards to financial matters. A power of attorney will become void if you die or become incapacitated. A durable power of attorney is what allows someone to make decisions if you are alive but are unable to make those decisions. Whoever you choose must follow your wishes. They can be really helpful for those with Parkinson's and in those without Parkinson's. New York State law does not allow a power of attorney to grant any power involving health care decisions, medical treatment, or end of life issues. A health care proxy gives a person the power to make health care decisions if you are unable to do so. They are both legal documents that require very specific forms and processes in order to be set up.
To begin this process, higher a lawyer to draft power of attorneys that are tailored to you and your needs. Standard forms can be modified to your needs - you can change power to be limited in some situations and more broad in others. Once you have all the paperwork signed, make several copies and distribute them to several family members.
Estate planning involved providing documentation for the management of your property. Your "estate" can consist of not just your home or car, but everything you own! Checking and savings accounts, investments, furniture, personal possessions, and life insurance. Estate planning is different from a will. A will covers what will happen to your property after you die, while an estate plan can have a will but it also includes other documents that state what will happen if you are alive but incapacitated.
Estate planning should be a priority for everyone, not just those with a chronic disease or those who are wealthy. There are a few parts to it:
We briefly talked about this already but there is more! Anyone over the age of 18 with any assets should have a will. If you have children, you should include who you would like to care for your children in the document. If you do pass away without a will, the state will dictate how your asses will be distributed.
A trust is a legal document that is used to hold, manage, and distribute assets on behalf of your beneficiaries. When you have a trust, you choose a person or trustee who will be responsible for distributing your assets. There are a few different part of trusts:
Revocable trust: This allows the creator of the trust to make changes or cancel the trust.
Irrevocable trust: Once created, the creator or anyone else cannot change the document.
Asset Protection trust: This protects the assets from being subjected to creditor claims if the creator or truster has debt.
Spendthrift trust: This works to protest the inheritance from the recipient's creditors.
Special Needs Trust: This allows people with special needs to be awarded inheritance without it impacting their Social Security.
Charitable Trust: These are often used by those who are more wealthy to reduce tax liability. The prioritize the philanthropic interest of the creator of the trust.
Constructive Trust: This type of trust is typically set up by court order when the court rules that there has been unjust enrichment.
Guardianship (sometimes referred to as Conservator) can be granted over those who are deemed incapable of making their own decisions. Guardianship involves the court in the decision-making process and allows the guardian to make decisions for both estate and health. This is usually a family member, but in some instances a professional guardianship company or the Public Guardian's office can be appointed.
If an individual has no agents acting under powers of attorney, a family member may petition the courts to appoint a guardian of the person to manage a person’s healthcare decisions and/or a guardian of the estate to manage a person’s money and property. However, guardianships are expensive and invasive court proceedings. In many cases having powers of attorney in place can avoid the guardianship process.
This is a legal document that allows you to clearly communicate your wishes, specifically with end of life care decisions. Advance directives typically include a living will, a power of attorney for healthcare, and a Do Not Resuscitate (DNR) order. A DNR oder is what informs healthcare professionals if they should provide CPR.
As you can see, there is a lot to finance. It is not just about your budget, but finance planning should encompass planning for any situation in the future to ensure you and your loved ones are as prepared as possible.