Proper Estate Planning requires a variety tools. The knowledgeable attorneys at Bluegrass Elderlaw, PLLC get to know you and your goals to properly structure your plan for the future.
A Power of Attorney is a legal document that gives someone you name authority to act on your behalf in certain circumstances.
There are two basic types of Powers of Attorney: Financial/Legal Power of Attorney and Health Care Power of Attorney
Financial Power of Attorney
A Financial Power of Attorney (sometimes also called a Legal Power of Attorney) authorizes someone (your agent or Attorney-in-Fact) to make financial transactions on your behalf. You can tailor your Power of Attorney to give your representative broad or narrow power.
General Power of Attorney – gives extensive power to act on your behalf including: borrowing money, buying or selling real estate, and conducting bank transactions.
Limited Power of Attorney – gives narrow power to conduct a specific financial action at a specific time on your behalf.
Health Care Power of Attorney
A Health Care Power of Attorney gives a trusted person the ability to make medical decisions on your behalf should you become incapacitated. This is different from a Living Will that outlines under what circumstances you want to receive life-sustaining procedures.
Choosing your Attorney-in-Fact
The person who you name is called your Attorney-in-Fact or agent. It is very important to choose someone you trust deeply to act on your behalf. Think carefully before choosing the person you are entrusting with your money and/or your very life. Given the stakes, it is important to have a licensed attorney prepare your Power of Attorney.
If you are in need of a POA or have older POA that may need updating, contact us.
Last Will and Testaments
A Will is a document that directs how your assets will be distributed upon your death. It also names the person who will be in charge of the distribution. This person is called the Executor or the Personal Representative. Without a will, the probate court will direct your estate to be divided among those entitled to receive under the laws of intestacy.
A Will can additionally protect minor children by naming a guardian for them. Your Will can also set up trusts for inheritance and contain a Supplemental Needs Trust for individuals receiving government benefits.
Like powers-of-attorney, a will must be drafted precisely and contain elements required by statute. Only a qualified attorney, like the ones at our firm, should write your last will and testament.
There are two basic types of Trusts: Revocable and Irrevocable.
Revocable Trusts are often called Living Trusts. Revocable trusts are often used as a planning tool and they can be changed any time until the death of the grantor. The grantor is the person who sets up the trust. The grantor transfers ownership of assets (real estate, stocks, financial accounts) to a trust which is administered by a Trustee (someone appointed by the Grantor), and provides for successor trustees without court intervention. This Trust allows you to designate who will receive your assets and who will manage and distribute them after your death or disability outside the probate process. However, it provides no asset protection from Medicaid requirements and is subject to estate and inheritance taxes.
A revocable trust can be a wonderful option for planning for minor children or adults with money-management issues.
These trusts are not a right fit for every family; only an attorney with knowledge about your finances and family situation can evaluate if this device is right for you.
An irrevocable trust is generally a gift of assets to a third party trustee for the benefit of someone other than yourself. Gifts over annual federal gifting limit consumes a portion of the federal uniform gift allocation but no tax is imposed until the monetary threshold is reached. These trusts can be used to reduce the size of an estate, provide liquidity or protect assets from Medicaid eligibility with a 5 year look back.
Another type of irrevocable trust is a special needs trust. More information about those trusts and special needs planning is available here.
If you are interested in utilizing a trust as part of your estate or Medicaid planning, contact us.