Trusts & Powers of Attorney

Everyone needs a will, regardless of the worth of his or her estate. A will directs the distribution of your assets and allows the transition process to go more smoothly. However, there are also other legal documents that can be useful to have, particularly if you get into a situation in which you are unable to make decisions for yourself. Consult with an estate-planning attorney to determine which documents you need.

A Living Trust

A living trust is a written agreement set up while you are alive, and it becomes a will substitute for the assets it contains, such as your home, savings, jewelry, etc. The distribution of assets will happen according to the trust's instructions. A revocable trust can be changed or revoked at any time by the person who established it. Irrevocable trusts have estate tax advantages, but these trusts are used less frequently, because most people do not like to give up the flexibility of changing the terms.

Consider establishing a living trust to:

To have the best outcome it is advisable to transfer all of your assets into the trust. These assets should be reregistered in the trust's name. Believe it or not, it is a fairly simple process to set up a trust, and it can be done by a banker or broker who is familiar with all of the details. Acting as your own trustee and naming someone else a successor trustee gives you full control over the living trust's assets. If you die, then the successor trustee will act in your behalf. Obviously it is very important to select the correct successor trustee, and if you are married, it is usually your spouse. If you are single, you can select a friend or lawyer to handle the trust.

Although trusts work well in many situations, they may not be something that you need. The best way to determine whether or not a trust is for you is to discuss it with your financial planner or estate attorney.

Powers of Attorney

A power of attorney (POA) allows whomever you designate to act on your behalf in case of illness or injury or extended travel. You retain the right to revoke or modify the POA at any time.

A "durable" POA stays in effect if you become mentally incapacitated. It is one of the safest, simplest, and least expensive ways to protect your assets in the event of your incapacity. Without POA documents, a family member would have to petition the court to appoint a guardian for you.

There are two types of POAs that you should have: a financial POA and a healthcare POA. It is recommended that these be two separate POAs: one to cover your healthcare directives and the other for your financial affairs. The people that you pick to have the POAs should, ideally, have some expertise in the areas of health and finance, respectively.

A durable healthcare power of attorney (HCPOA) allows you to provide advance directives for a range of personal healthcare decisions. It enables you to provide guidelines and instructions about the extent of medical care and healthcare interventions that you want under various circumstances. This HCPOA goes into effect or is triggered when your mental or physical condition make it impossible for you to understand or communicate an informed decision on treatment modalities. This will relieve your family and friends of the burden of making these difficult decisions for you.

Living Wills

A living will is a document that you establish while you are alive and can make decisions for yourself. A living will is a directive to your physicians and family members in the event of a terminal illness or injury that would prevent you from expressing your wishes regarding your medical care.

This document allows you to state your wishes regarding the use of life-sustaining equipment and procedures, whether to withhold or withdraw treatment if you are a candidate for life support, but are considered terminal. A living will serves as both a legal document and as a supplement to discussions you might have had with family members to reassure them of your wishes. Regulations on living wills are different from state to state, so if you have moved or are retiring in a different state, be sure to revise your will and living will in accordance with that state's requirements. The documents should be clearly defined and state the triggering events or conditions, who has the authority to make decisions and which treatments are, or are not, withheld. Remember to give copies to your attorney, to family members involved in the will, and to your physician.

I recommend strongly to my clients that you have financial and healthcare POAs as well as a living will for any catastrophic illnesses or events. When you have all of these documents you will be prepared for any situation. If you really love your family and friends then give them the tools that they will need to make the correct choices for you, at a truly difficult time in all of your lives.

Cindy Diccianni is a Registered Nurse, a Certified Senior Advisor (CSA), a Certified Long Term Consultant (CLTC), a Registered Investment Advisor and a Registered Representative with Leigh Baldwin & Company member NASD and SIPC. She is affiliated with Ortner, O'Brien & Ortner Advisory Group, Inc., Malvern PA. Her passion is assisting clients in creating financial freedom. You may contact her at Cindy@taxlegalfinancial.com.

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