By Libby Banks, The Law Office of Libby Banks, PLLC
We think of estate planning as being about who will get your assets on your death. But it’s also about who will manage your assets and take care of you and your financial affairs if you become incapacitated. With proper planning, you decide that. Without proper planning, a court may get to make the choice.
Incapacity means you are unable to make decisions for yourself. Incapacity can result from an accident, or arise from health issues, dementia, or plain old age. If you are alive but can’t take care of your financial matters, you need the right legal documents in place to be sure someone else can.
The revocable living trust is the best way to plan for incapacity. When you set up a revocable living trust, you transfer assets from your name to the name of your trust. While you are alive and well, you control your trust and assets as the trustee. You name a successor trustee to take over upon incapacity and on your death. That person steps into your shoes to take care of your financial affairs, without court intervention or constant reporting, court appearances, oversight, and scrutiny. All of your business stays private. If you recover your capacity to manage your affairs, you resume your role as trustee of your trust.
The revocable living trust is a better way to address incapacity than a durable power of attorney – although both are necessary to a proper plan.
The Revocable Living Trust:
• Is readily accepted by financial institutions.
• Holds a successor trustee to a high fiduciary standard.
• Allows your successor trustee to begin quickly and efficiently managing your assets to care for you and your finances.
With a revocable living trust in place, you can have peace of mind that you will be taken care of, and your finances will not fall into disarray if you are incapacitated.
Another consideration is who will make health care decisions if you are unable to make them because of incapacity. You need three additional documents to assure you will be taken care of by those you want to be the decision makers. Those documents, called advance medical directives, include a healthcare power of attorney (sometimes also called a health care proxy), a living will, and a HIPAA authorization. These important documents work together to allow your chosen person to direct your health care if you become incapacitated.
Be sure you are keeping these documents up to date. It’s a good idea to review your estate plan periodically and make sure it still meets your needs. We are happy to help you get an estate plan in place or review your existing plan. Just call the office at 602-375-6752 to schedule your free initial consultation.
