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Financial and Legal Information for Caregivers
What You Need to Know
By Melissa Granberry
If your loved one is mentally and physically able to conduct business, then delegating authority to another person may not yet be necessary. With a springing durable power of attorney, the document can be written so that it only goes into effect when your family member becomes incapacitated. "Incapacitated" can be translated many different ways, so it is important to specifically define the criteria that must be met.
"If your family member is capable of understanding what a power of attorney is, then establish and sign one right away," says Diedre Wachbrit, an estate planning attorney in Thousands Oaks, Calif.. "Otherwise, your family will have to go to court to prove incapacity, and it can be an involved process."
Your loved one may also create legal documents to give instructions on their health care. The names of these documents vary by state and may be called one of several things, such as a power of attorney of health care, an advanced health care directive or a living will.
"These documents are a way of providing an outline of instructions for future medical care," says Wachbrit. "They also allow your loved one to name a person to make medical decisions for them if they can not make them themselves."
A trust is another tool that your loved one can use to plan for the future. This legal arrangement allows assets to be transferred to the trust and managed by a selected individual: the trustee.
By establishing a trust, families can avoid probate, which is the court process of validating a will. Probate can be time consuming, and the court fees are expensive, ranging from thousands to hundreds of thousands of dollars, according to Wachbrit. Though setting up a trust may initially be expensive, she says that it can more than pay for itself when your loved one plans to leave an inheritance.
