Disability Protection: Estate Planning Tools
Good estate planning is not just about death. What if you become disabled, temporarily or for an extended period? Who will pay your bills? Who will manage your affairs?
You can put your mind at rest by including disability planning in your estate plan. That way, you can relax knowing that someone you know and trust - not the courts! - will handle your affairs if you're incapacitated. Without disability planning, your loved ones could face obstacles when they try to deal with your bank, brokerage, insurance companies, even your utility companies! They may even have to secure a guardianship, a costly and time-consuming process.
The elder law attorneys of The Karp Law Firm can answer your questions about disability planning. Establishing a Durable Power of Attorney, owning assets jointly, or creating a Living Trust (also known as a revocable trust) are some of the estate planning strategies that can help ensure your affairs can be managed by the people of your choice. More about these strategies:
Durable Power of Attorney
The Durable Power of Attorney gives someone (or more than one person) legal authority to conduct your business affairs if you are unable to do so. Florida recognizes two types of Durable Power of Attorney:
The Immediate Power of Attorney allows your agent to immediately begin handling your financial affairs.
The Springing Power of Attorney enables your agent to act only when you are incapacitated.
NOTE: The Florida Power of Attorney Law changed on Oct. 1, 2011. A Springing Power of Attorney executed before that date continues to be honored. However, for documents signed on and after Oct. 1, 2011, only the Immediate Power of Attorney will be valid in Florida. See Legal Update.
A Power of Attorney does NOT automatically give your agent the ability to do anything you could do yourself. Your Power of Attorney must specifically identify the powers you give to your agent; for example, to buy and sell property, etc.
Financial institutions may be reluctant to honor a Durable Power of Attorney because of liability concerns. It is essential to have your Durable Power of Attorney properly drafted by a qualified Estate Planning Attorney.
Own Assets Jointly
Many spouses co-own assets. Many parents co-own assets with their adult children. This allows the co-owner to step in and manage that asset should you become incapacitated. However, joint ownership is not always wise. It can present significant disadvantages for couples whose estates are taxable. And when your child is a co-owner of your asset, that asset becomes vulnerable to your child's creditors, lawsuits, etc.
A Living Trust (aka revocable trust) is an instrument that allows you to appoint one or more successor trustees to manage trust assets. But since there are other tasks that will be required beyond handling trust assets alone – for example, dealing with your pension provider or changing your address at the post office -- we always recommend that clients with a Revocable Trust also include a Durable Power of Attorney in their estate plan. Living Trusts detailed information.