When a family owns land, it can mean many things to different members of the family. Working with a team of professionals to plan for your estate is an important decision to reach the desired outcome for your legacy property.
Incapacity can befall anyone at any time. For the healthy, it may be the result of a sudden illness or injury. For older people, the onset of incapacity may be slower, the progression of an illness such as Alzheimer’s disease or just part of the normal aging process.
The best way to protect your family and assets in the event that disability strikes is to take the necessary steps when there is no doubt that you are fully capable of acting on your own behalf. There are several options you can consider that will protect your wishes should something happen to you.
A durable power of attorney is a legal document that allows you to give someone the authority to act for you. Unlike a general power of attorney, a durable power is not revoked automatically if you become mentally incapacitated. It will survive until your death.
The authority that you grant the individual named in the durable power can be as broad or as narrow as you wish. And the power may be revoked for any reason prior to your incapacity, or in the event that your incapacity proves to be temporary. Regular updating of the power is recommended. Some third parties may reject it if it is more than a few years old.
A revocable living trust can accomplish everything that a durable power of attorney does, and offers its own unique advantages.
A trust agreement delineates what assets are to be placed in the trust and who serves as the trustee and invests the trust’s assets. You also name the beneficiaries of the trust, specifically, who is to receive the income from the trust now and who is to receive the trust’s assets when the trust ends.
You may serve initially as trustee of the trust, but you need to name either a successor trustee to serve should you become incapacitated or a co-trustee who will be authorized to act alone upon your incapacity. Or, if you choose, you can name someone other than yourself to serve as trustee from the outset.
Perhaps the most comprehensive strategy is to create both a durable power or attorney and a revocable living trust. The durable power of attorney can control assets that may have been left out of the trust inadvertently and may be used for financial decisions unrelated to the trust.
It’s also important to consider your medical care should you become incapacitated. The individual that you have designated in your power of attorney and the trustee of a living trust have the authority to make financial decisions only. There is another side of the coin.
For medical care decisions you will need to execute either a living will or a durable power of attorney for health care. (The general term is medical care directives.) A living will is limited in its scope. It lets you express your wishes regarding your care should you be in a terminal condition and, generally, deals with questions as to whether and what life-sustaining treatments should be undertaken. A power of attorney for health care is much like a durable power of attorney: You delegate someone to make the decisions for you based upon guidance that you have set down in the document.
Whatever your wishes are with regard to what treatments and procedures should (or should not) be withheld, it’s important to make your wishes known to your family members and your physician(s) and to put your wishes in writing.
Failure to plan for possible incapacity can exact an emotional toll on your family members. It may also lead to the need for formal court proceedings in order to appoint a guardian for decisions best made in private (with the attendant expenses and potential delays).
When you seek legal guidance, consider consulting someone who is knowledgeable and experienced about the laws of the state in which the documents are executed. You may want to include your tax and financial advisors as well. If you are considering a trust, we would be glad to serve on your team.