Friday, June 21, 2024

Elderly Planning - What You Need to Know

man involved in estate planningLegal and financial issues are probably among the most difficult for aging adults and their children to address, but they are also among the most important.

In order to help your parents, you will probably need access to their financial information and you may, at some point, need the legal right to act on their behalf.

The legal documents most critical to planning for one's future are:

None of these documents can be signed by someone who is mentally incapacitated, so this kind of planning should not be put off. Most of the documents are state-specific, and some can be obtained online for little to no cost. But you would be well advised to consult with a lawyer even if you create and fill out the forms yourself.

Health and Estate Documents

Beyond the documents listed above, more information and documentation may be needed.

It is helpful to locate as many of these documents as you can and be sure that they are current and in a safe place. The Legal and Financial Document Locator (pdf) can help you with this task.  This will help you get all banking, insurance, and other information located in the event that you will need it in the future.

If you do find yourself responsible for handling your loved one's financial affairs, or even acting as an advisor, you will need to get a full picture of his or her assets and obligations. Creating a Monthly Budget (pdf) will give you a better understanding of your loved one's cash flow. If you or your loved one is comfortable using a computer for financial tasks, most banks and businesses offer free automated bill paying. One way to simplify is to have your loved one's regular income (Social Security, Retirement, etc) directly deposited to a checking account.

Also, if your loved one uses a computer, it may be wise to figure out which online sites he or she is engaged in.  For instance, your mom may have loaded digital photos with an online photo storage website.  Her primary physician may now be using an online health record also.  Writing down her password and information now will allow you to retrieve the information should she become incapable of remembering it for any reason. 

Legal Documents - A Will

Making sure that things like a will are in order - before they are needed - is sometimes difficult to discuss or even think about.  All adults should, however, have a valid and up-to-date will.  In many ways, this is a future planning process that can also serve as an exercise to clarify financial issues that need adjustment in the present.

A signed and dated "letter of instruction" for the executor is a great idea also. This letter covers the kinds of things that are typically not spelled out in wills: who gets the oil painting of Great Aunt Mary, for instance, or what's to become of Fido? (Note that Letters of Instruction are not legally binding, but in most cases they are still a good way to express one's wishes, and are usually followed).

Storage: The original of a will should be kept in a safe place, such as a lawyer's office, but probably not in a safety deposit box, which may be sealed and inaccessible for some time after the owner's death. Keep copies of the will and letter of instruction with other important papers for regular review.

Other Accounts and Policies:  Also, note that the will only covers items that are part of the estate: personal belongings, money, property, investments, etc. Many items of value are not considered part of the estate, including all policies and accounts with named beneficiaries. Just as important as regular review of a will is the regular updating of named beneficiaries in policies.

Power of Attorney

A "Power of Attorney" is a legal document which gives one person the legal right to act for another. Powers of Attorney can be limited or broad, specific or general, short term or long term. The kind of Power of Attorney that will be the most useful for the family caregiver is a Durable Power of Attorney, which authorizes the loved one's agent to act for him or her, either immediately on signing or in the event that he or she becomes incapacitated. The latter is called a "Springing Power of Attorney" and requires a pre-determined event to go into effect (the loved one is declared incapacitated by one or more doctors, for example.)

A "Durable Power of Attorney" is a powerful tool, and must be respected as such. Your loved one may be hesitant to give up the handling of his or her affairs, and should not be pressured to do so prematurely. One approach is for the loved one to sign a Durable Power of Attorney but place it with a trusted third party, to be given to the named agent when and if it becomes necessary. The most important thing is that a signed Power of Attorney does exist, and that its existence is known by the concerned parties.

Advanced Medical Directive

The "Advance Medical Directive" lets you plan ahead for the medical care you would want if you could no longer express your wishes. It may include a "Living Will," which lists specific treatment that you may or may not wish to receive, as well as a section to name a "Durable Power of Attorney for Health Care," who would be able to make decisions for you if you were incapacitated. A living will takes effect only if you can no longer make decisions for yourself and you are either permanently unconscious or have an end-stage medical condition.

Since forms differ from state to state, you should be sure that you use the correct form for your state. Completed, signed forms generally require witnesses, and may or may not require a notary's signature. Copies should be made available to your health care providers and kept in an easily accessible place.  As noted above, even if you complete these documents yourself, it is a good idea to review it with your lawyer.

Read more about Advanced Health Care Directives and Living Wills


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