Sunday, December 9, 2012

The Importance of Choosing a Quality Living Will

Most of us have heard of a "Living Will." It is document in which you write out your health care wishes, including any desires you may have about the use of "aggressive and/or invasive" life-sustaining medical treatment. It is to be used if questions arise about what kind of medical care you would or would not want, in situations where you are too ill or injured to make your wishes known.

A "medical power of attorney" or "health care proxy" document is somewhat different. It allows you to name someone you trust to make health care decisions for you, if you are ever too ill or injured to make those decisions for yourself. He or she must always consult your Living Will, and can only make decisions in your behalf that you have not already made for yourself.

The term "Advance Directive" is an umbrella term, and it refers to both Living Wills and Medical Power of Attorney documents.

Naming someone as an "agent" (or as a proxy, surrogate, or representative decision-maker -- the terms vary according to the laws in your state) can be very important. Although most states allow family members to make health care decisions for their loved ones, it is often difficult for families to agree on what should be done.

Sometimes their desires might supersede your own. Further, you may find that the person you trust most, or the one you feel is most capable, is not a family member. Consequently, it is usually best for you to name the person you want making these decisions. Although he or she can still consult with others, the final decision is his or hers alone. This can avoid the distress of disagreements, or even critical delays in medical care at times of contention.

Now that you know the purpose of a Living Will and a Medical Power of Attorney (or proxy appointment document), you need to consider the kind of forms you should use.

Most people simply select the standard form available in their state -- often called a "statutory" advance directive. Many of these forms are available for free on the internet, and they are usually quick and easy to complete.

However, a large body of research has identified many short-comings in these documents. Virtually all of them have been found to be overly simplistic, confusing, laden with legal jargon, and so vague and unclear in the kinds of terms they use that even physicians themselves are often unsure how to apply much of what has been recorded in them.

Sometimes these documents may even be biased in ways that inhibit or outright limit an individual's ability to fully express their personal wishes. For example, one legal research group found their state's advance directive to be "more protective of provider liability than patient rights" (see: Tyminski, MO. Journal of Law and Health. 2004-2005;19(2):411-49).

Another research group emphasized that, "...the development of statutory forms occurs in the legislative arena, [so] their content is the result of a political rather than a 'scientific' process," and because of "political compromise,...many of the forms ultimately passed by the legislatures are not optimal from a consumer perspective" (see: Hoffmann, DE; etal. Journal of Law, Medicine & Ethics. 1996;24(1)(Spring):5-17). They concluded by noting that the use of biased, confusing, and vague documents was potentially "dangerous," as these documents are typically used to address life-sustaining medical care wishes.

The American Bar Association has agreed, and has emphasized that the "statutory advance directive is not necessarily the exclusive, or even the best, pathway for individuals to follow," and they suggest alternative documents in situations where the existing content is too limited (see: Patient Self Determination Act State Law Guide, 1991, page 18. Government printing office, Washington, DC).

There are a great many alternative advance directive documents available, and many can be obtained via the internet. For example, the National Healthcare Decisions Day website (http://www.nationalhealthcaredecisionsday.org/takeaction/advance_directive) offers links a variety of such documents.

Regardless of the form chosen, a quality living will is crucial. It should guide and assist individuals in fully and clearly expressing their health care wishes. When a comprehensive array of options are presented, it can inspire important thinking, discussions, and decisions far more effectively than trying and "brainstorm" them all alone.

In addition, it aids an individual in fully writing out instructions that are important. Wishes that are not written down are very difficult to even remember, much less to follow-up and honor.

It should be emphasized that an appointed representative can only make quality decisions if useful and complete information is available. Otherwise, he or she may be forced to chose according to his or her personal preferences, instead of being able to determine what you might actually want. Further, should anyone question the decisions of an appointed representative, it is ideal when he or she can point to specific evidence of one's wishes whenever possible.

Certainly every adult should complete an advance directive. But, it is also important that the documents chosen are well crafted and highly effective for the important purposes intended.

Tips in Making a Family Tree for Your Estate Plan   Retirement Planning: It's About More Than Just Finances   Preparing and Writing Your Own Living Will   Planning For Your Personal Effects   How to Include Your Pets in Your Estate Plan   

Understanding the Legal Process of Probate

Probate is a complex legal process that involves the distribution of a deceased person's estate to their beneficiaries. Typically, there is an existing will which specifies how the estate should be administered. A surrogate court will make a decision on the validity of the will. The instructions of the deceased will be examined during this process. And an appointed executor of the estate will act as the personal representative of the estate and will hear the interests of heirs and other parties that have any claims against the estate.

During this legal process, the deceased person's property is retitled out of their name and transferred to their beneficiary. This legal proceeding can last for several weeks or several months depending on whether or not their are any objections to the administration of the estate. Before any disbursements can be made, all creditors need to be notified and legal notices have to be published.

It is the responsibility of the trustee to settle any unpaid debts by distributing the descendants assets. In many cases, a petition to appoint a personal representative may need to be filed and Letters of Administration obtained. If there are any pending lawsuits involving the estate, these will have to be resolved before the administration of the estate. This is why this process could take many years to resolve.

If there are any real estate assets, they may need to be sold in order to pay off debts or to settle a law suit. Any estate taxes must be also be taken care of if applicable. It is important to have a lawyer that specializes in these proceedings handle the court issues regarding the estate. This will make the process go much faster and smoother. There are certain legal steps that must be followed in a timely manner.

When a probate case is opened with the court, the executor takes an account of the decedent's property and will be responsible for paying any debts. After the debts have been paid, all taxes must be paid as well, including the estate tax. After all of the applicable taxes have been paid, the remaining property can be administered to the beneficiaries. This will be as instructed by the decedent in the will.

If there are any parties that do not agree with the distribution of assets, the may contest the administration of the estate. This contest may be based on several factors that must be addressed in court. In such an event, the personal representative must abide by the fiduciary duties of the estate and hold the assets in an interest bearing account until a settlement or decision is reached.

If at all possible, it is best to avoid probate. This legal process can last from a few months to several years. It can mount up in legal costs and delay beneficiaries from receiving their monetary administration of the estate. There are many ways to avoid this process. One popular way to to have a Living trust. The original owner of the trust can transfer their assets to a Trust account which the owner controls. When the owner of the trust dies, the listed beneficiaries in the trust will then have ownership of the property of the trust. A living trust protects the deceased assets and the heirs from a public probate process.

Tips in Making a Family Tree for Your Estate Plan   Retirement Planning: It's About More Than Just Finances   Preparing and Writing Your Own Living Will   Planning For Your Personal Effects   How to Include Your Pets in Your Estate Plan   

Getting The Most From Your IRA

If you have a traditional IRA that's large enough for you to plan on passing it on to a beneficiary, you're likely interested in finding out how to make the IRA last as long as possible. As you probably know, the IRS requires owners of traditional IRA's to take a required minimum distribution (RMD) from the account each year, beginning on April 1 of the year after you reach age 70 ½. The amount of your RMD will vary each year, because it's determined by taking the balance of the account on December 31st of the previous year, and dividing that number by the number of years left in your life expectancy, as determined by the IRS.

Roth IRA's differ from traditional IRA's in a number of respects, with one of these differences being that the Roth IRA does not have an RMD. So, it may make sense for you to convert your traditional IRA to a Roth if you are trying to avoid the RMD, along with other considerations. When you do this, keep in mind that you'll have to pay income tax on the amount you convert, but you won't be required to touch the money in the account.

The rules are different for beneficiaries, though. Whereas you, as the owner of the account, have no RMD associated with your Roth account, your beneficiary will have to take a required minimum distribution each year. Just like for a traditional IRA, the beneficiary's RMD will be calculated based on his or her life expectancy, so it makes sense to choose a young beneficiary if you want him or her to get the maximum benefit from the account. You'll also want to choose a contingent, or alternate, beneficiary. This way, if your primary beneficiary passes away before you do, your IRA passes to another person and not to your estate. You don't want your IRA to pass to your estate because, worst-case scenario, this could result in a requirement that the account be cashed out completely within five years.

If you're worried that your chosen beneficiary will cash out your IRA instead of maximizing its value by taking only the required minimum distributions, there are some estate planning strategies you can use. Talk to your estate planning attorney to find out how to make sure your IRA - and your beneficiary - are protected.

Tips in Making a Family Tree for Your Estate Plan   Retirement Planning: It's About More Than Just Finances   Preparing and Writing Your Own Living Will   Planning For Your Personal Effects   How to Include Your Pets in Your Estate Plan   How to Avoid a Guardianship   

3 Things to Consider in Choosing an Estate Planner Or Why You Should Have One at All

Estate planning or inheritance planning is a speciaialized art, one that comes with practise and experience.

To go back one step though, you might ask yourself why the need for an estate planner - in an act of modesty I have witnessed so often that I have lost count, people always say their affairs are much too simple to warrant engaging an estate planner. Often this is false modesty.

An estate planner would at a minimum be a qualified and competent in drafting a will, from the information required to compose the will, he would be able to inform the client of the likely situation if nothing were done - after all, doing nothing is sometimes a viable option. Many clients would on account of the simplicity of their estates require nothing more than a will and a complete set of power of attorney documents, which can often be had for well under a couple of hundred pounds.

A decent estate planning professional would provide a service hard to replicate by any other professional.

In the first instance, one would be urged to avoid kits; forms; templates; books indeed anything that requires of you more than basic biographical or factual information - the DIY approach often assume that the person making the arrangements is skilled and experienced in such matters - I saw a client recently who wanted to leave the majority of her assets to her children, but a small gift to her sister - the manner in which she worded her request meant the sister would have got her gift free of inheritance tax, while her children would have been lumbered with a hefty inheritance tax bill - on explaining the potential consequence of her preferred wording she agreed that she wanted her children to have no inheritance tax liability while it was of secondary importance if the value of the gift that her sister received would have been diminished by any taxes.

In the main, you are buying the experience of your estate planner. The DIY approach fails to bring context to your estate planning. While a do it yourself will might be cheaper, than engaging the services of a professional, like most things in life, what we pay for is what we get. A suitably experienced solicitor, paralegal or estate planner would be adept at finding out the personal and financial details of your life and document the basis of arriving at the will that you finally draw up.

The point of engaging the professional is not merely to produce the document - while this might be seen as some as an end in itself, but to guide you through the process of ensuring that when you are no longer of this world, your wealth is applied in the manner you would have wanted. That your loved ones get the maximum inheritance you would have wanted them to, with a minimum of fuss; expense and interference from outsiders including the taxman.

A client recently said to me that it was all very well leaving his wealth to his family, but he failed to see the merit of lumbering them with a mountain of paper work and potential liability to taxation - his was rather an interesting point as there were 2 factors for him to consider, the first was that if the status quo applied at the time of his death, as there was [relatively] little cash in the estate, a good proportion of the assets he was looking to bequeath would have had to have been sold to meet the tax liability, the second point was that with simple manipulation of his estate, there potential liability to inheritance tax was reduced to zero. This brings to mind what a client told me only last week 'I hear the government is broke, but my money would do far more good in my family than in the treasury'.

In sum a professional estate planner would save you and your family far more than he or she costs you - plus to put a cash value on the hassle that is avoided, it pays to consult a professional.

Tips in Making a Family Tree for Your Estate Plan   Retirement Planning: It's About More Than Just Finances   Preparing and Writing Your Own Living Will   How to Include Your Pets in Your Estate Plan   

Protecting Your Loved One With a Special Needs Trust

If, like Sabina and me, you have a loved one who is disabled, then you know how important government assistance programs can be to their well-being. But to qualify for these programs, your dependent must have limited finances. So, any inheritance you leave him or her could potentially put their eligibility for government assistance at risk.

So, how can you provide for a loved one without interfering with government assistance?

What you need is a Special Needs Trust.

This unique legal document allows you to provide for your dependent's supplemental needs without disqualifying him or her from programs such as Social Security and Medicaid.

Upon your death, any funds you intended for your disabled dependent will be transferred to a special trust, created for the sole purpose of providing for your dependent. Because the funds are not in your dependent's name and are managed by a third-party trustee, your dependent can continue to benefit from government assistance.

Of course, there are restrictions on what the trust can pay for but in general, you're allowed to provide for any supplemental needs, such as cable television, travel expenses, education, entertainment and the like. The trust can also provide your dependent with home health care services, a car, clothing and even pay for medical expenses. Just remember than any asset that requires a title or deed must be in the name of the trust and not your dependent.

This allows you to ensure that your disabled dependent is well provided for and enjoys a rich and happy life while still qualifying for those much-needed government programs.

Who Should Be Trustee?

Choosing a trustee for a Special Needs Trust is especially important because the person you choose will have authority and control over the funds in the trust. That means you need to be able to trust this person completely, especially if your dependent is mentally handicapped and unable to recognize any misappropriation of funds. Many people choose a parent or sibling of the disabled person to act as trustee, but you can select anyone you want, including a law firm or a financial institution.

Tips in Making a Family Tree for Your Estate Plan   Retirement Planning: It's About More Than Just Finances   Preparing and Writing Your Own Living Will   How to Include Your Pets in Your Estate Plan   Planning For Your Personal Effects   How to Avoid a Guardianship   

Last Will and Testament Template - Ensuring That Your Loved Ones Are Taken Care Of

When considering how to get your last will and testament drawn up you may have been told that any old piece of paper will do. This may be true in some states and in many cases, however it is important for you to keep in mind that if your will gets contested in any way the more legal your document looks the better the chances that it will hold up in court. While you do not need a lawyer it is important that you take the time to find a last will and testament template with which to make out your will if you want it to be taken seriously.

There are various laws in different states regarding wills so it is very important that you take the time to research the laws in your state before you set out to make your own will. There may be several steps you need to take, a certain way you need to make your will out, and you will need to have it witnessed in some way to make sure that it is uncontestable in a court of law. This is where a template can be very useful when making your will, you can use the template to get the general elements of a legal will but then you can edit it to reflect the laws in your state.

There are several elements that need to be in every will, you of course will need to identify yourself and your estate. This is important to ensure that people understand that it was actually you who wrote the will. A brief description of all of your general assets should be present, but this does not have to be overly specific, a description such as a home and its contents, monetary assets and life insurance will be sufficient.

You will need to name your beneficiaries and what is being left to them next, this is where you must be more specific because it is one the one part of the will that gets disputed the most. You should name alternate beneficiaries if something happens to the person named first, and you should also list any gifts, trusts or debt cancellations you wish to take place.

Finally you need to name an executor and address any issue of guardianship for your child, then sign your name and date it. There should also be a place for a witness to sign or notarize as well. By using a last will and testament template you can ensure that your document is as accurate and legal as possible and that there will be little chance of it being overturned in court.

Tips in Making a Family Tree for Your Estate Plan   Retirement Planning: It's About More Than Just Finances   Preparing and Writing Your Own Living Will   How to Include Your Pets in Your Estate Plan   

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