By Joy Loverde
There are many advantages for our aging parents to look into the process of estate planning; yet according to the statistics, few people make the effort to put plans in place. There are several reasons why.
For one thing, who wants to make decisions for what happens to us after we die? That question alone is enough to make anyone run in the opposite direction. Another reason whyaging parents don’t make plans is the common misconception that estate planning is only a concern of the wealthy. Also, married people assume that their affairs are legally in order because they own everything jointly with their heirs. These reasons and more will lead to costly mistakes down the road.
The subject of estate planning certainly comes into play when we begin to take on family caregiving responsibilities. In addition to planning for what happens to our aging parents’ assets in the event of death, the foundation of estate planning also includes granting decision-making rights in the event that our aging parents become incapacitated and need someone else to act in their behalf.
In an age where people are living one-third longer than they thought they would, it is wise to investigate estate-planning options with your aging parents today.
Estate planning is less intimidating and easier to grasp once you have an understanding of the terms:
A Will describes how an individual wants his/her estate to be distributed upon death. The document may include provisions for a trust and usually names an executor.
Trustee/Executor are individuals designated by the creator of the will who will see to it that the will is properly executed. A trustee manages a trust and an executor sees that specific provisions of the will are followed, pays estate taxes, debits and expenses. The trustee and executor can be the same person.
Trust is a way to leave money that takes advantage of tax benefits and accomplishes the desires of the person setting up the trust. A trust controls the release of money before or after death. Testamentary Trust is one that is created by, and does not take effect, until the death of the creator of the will.
Living Trust transfers stocks, property and other items from one living person to another, avoids probate and also protects in the event of incapacity. A revocable living trust gives the creator of the trust the right to change the terms of the trust or even end it.
Letter of Instruction is prepared for the beneficiaries of the will and trust. The letter is meant to serve as a guide for closing out the affairs of an individual upon death. Although this letter is not a legal document, the composition should be consistent with the individual’s will. The Letter of Instruction should also include a list of the people to notify when death occurs, as well as covering the disposal of possessions and specifying any particular wishes regarding the funeral.
Durable Power of Attorney gives a person legal right to sign his/her name to business transacted in another person’s name. This power must be arranged while the individual is still competent, and can be terminated at any time upon the person’s written request. NOTE: Financial institutions and banks typically do not honor power of attorney forms other than their own.
Aging parents should resist the temptation to draft their own will. There are specific legal requirements that must be met for a will to be valid. A simple will can cost as little as a few hundred dollars.
Locating the services of an estate-planning attorney can be accomplished through personal referrals. Elderly people on fixed incomes may qualify for free legal services by contacting the local Agency on Aging, and the local Bar Association. Also, call a local law school to find out if community services are offered.
Here are few resources to help in the process. The website for the National Academy of Elder Law Attorneys is www.naela.com and the website for the National Network of Estate Planning Attorneys is www.nnepa.com.
Finally, legal documents and important instructions don’t do a bit of good unless the rest of the family is made aware of their existence. Ask your aging parents to discuss and distribute copies of legal documents with designated family members, and inform you of where the originals are stored.