A Word to the Wise on Charitable Opportunities

A generous spirit is a blessing to the giver and those who receive. However, an informed giver is the wisest of all. When making charitable donations, due diligence is advised, to ensure that you are giving to a legitimate organization, ensure that your donation has its desired outcome and ensure maximum tax benefits.

What Makes a Charity Legitimate?

Start by identifying charities with missions in alignment with your values. When you identify a charity, make sure the charity is legitimate by checking the IRS website. The charity must be registered as a 501(c)(3) with the IRS. However, do not rely solely on the IRS to vet the charity. Learn about the charity’s finances and mission using Candid or CharityWatch. How much of your donation will pay to advance the charitable mission and how much will go for administrative expenses? Knowing whether the charity has substantial funding or is run on a shoestring budget may determine your own giving.

How Do Donor Advised Funds Work?

A Donor Advised Fund (DAFs) is an account created for you, one established by a charity, or established by a financial institution. The main appeal of the DAF is its simplicity: you receive an immediate tax deduction upon making a contribution to the DAF, the account grows tax free and you can “advise” the fund regarding the charity to be benefitted, as well as the amount and timing of distributions.

In addition to the tax deduction, the donor does not pay capital gains taxes on assets placed in a DAF. If assets have appreciated, the donor may deduct the current market value of the asset instead of what was originally paid.

DAFs are growing in popularity because of their convenience and tax benefits. However, donors are advised to adhere closely to IRS rules for DAFs and keep careful records. The IRS keeps a close eye on DAFs to ensure they are legitimately supporting genuine charities.

There seems to be as many DAFs as there are charitable organizations benefiting from them. Depending upon which you chose, there may be a minimum required investment, and fees vary.

Will a DAF Work with your Estate Plan?

A DAF can be used to convey significant assets out of the estate as part of building a legacy. The DAF can be structured to be funded over an extended period of time or as a one-time gift at a date of your choosing. A DAF can also be funded through a last will or as a charitable beneficiary of a trust. A DAF can also be the beneficiary of a life insurance policy.

Charitable Giving to Build a Legacy

Whether you are supporting an on-going community program or endowing a new building at your alma mater, charitable giving can achieve a greater sense of purpose for you and your family.

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What are Digital Assets in Estate Planning?

Cryptocurrency grabs the headlines. However, the digital assets of most Americans have little to do with bitcoin and Ethereum. Their digital assets are online accounts, streaming subscriptions, financial accounts, credit cards, emails, websites, gaming credits, gambling accounts, airline miles and any of the approximately 150 online accounts owned by the average person. It can make your head spin just thinking about it.

All of these are considered “digital assets.” They all need to be addressed in an estate plan. They may have financial value, such as emails containing work product, investment accounts or commerce-driven websites. Sentimental value drives many court cases against Big Data, especially when photos and personal correspondence cannot be accessed by family members of the deceased.

What Should You Do to Protect Digital Assets?

Start with a complete inventory. It may be daunting but imagine how much harder it would be for your spouse or adult child. There are commercially available password protection systems. However, a pad of paper will do just as well. If you create a spreadsheet on your computer, be sure to encrypt it to prevent access by bad actors.

Your list should include the following:

• URL or website address
• Name of the company
• Account number and name
• Password and Username
• Any additional access information, i.e., third party verification (TPV) where a code is sent by email or text to verify the user.
• Whether the platform allows the user to give another person access after death, often referred to as a “Legacy Contact,” or if you can provide directions to have the account deleted after death upon proper notification.

To date there is no universally established guideline for platforms to give another person access to digital assets. It falls to the user to create an inventory for their digital executor.

What Does a Digital Executor Do?

A digital executor is the person assigned to address your digital assets when you die. This is a relatively new role in estate planning. However, it is vital when we manage and live so much of our lives online. Just as the executor will have an easier time of gathering, managing and distributing your assets, the digital executor will be more effective when digital assets are organized.

Unlike traditional assets, digital assets typically leave no “paper trail” in the form of paper account statements or paper files. If digital assets are not accessed and managed, they will be lost. Many millions have been lost even before their owner died because of lost passwords, digital keys, or digital wallets.

How Do I Appoint a Digital Executor to my Estate Plan?

The digital executor is appointed in your last will and testament. They do not take the place of the traditional executor, so the language will need to clearly state their role as digital and not traditional executor. Make sure your state recognizes this role and the proper way to include it in your estate plan.

What Happens if I Do Not Have an Estate Plan?

Without an estate plan, or without a last will and testament, your digital assets may become vulnerable to hackers and scammers. Just as thieves read obituaries and probate documents to target victims, hackers look for abandoned apps, websites and social media accounts to uncover vulnerabilities.

What if I Own Cryptocurrency and NFTs?

If your estate includes cryptocurrency and/or NFTs, especially if they are of significant value, you will want to take additional steps to protect them upon your death. If no provisions have been made to place these assets in a trust, they may be considered part of your estate and require probate. The decentralized nature of crypto is a great strength, but also an attending weakness. Practically speaking, this decentralization means your crypto needs to be securely transferred and someone will need to have access to crypto keys – the string of randomly generated numbers and letters serving as passwords. If you have digital wallets, your digital executor will need to know how to access the information.

An Estate Plan Protects Yourself and Your Loved Ones Too

While a last will and testament helps protect, preserve and distribute your assets postmortem, a comprehensive estate plan also protects you while you are living. A power of attorney, medical power of attorney, living will, HIPAA release form and other essential legal documents empower others to act on your behalf if you are incapacitated. Having a comprehensive estate plan protects you, everyone you love and everything you own.

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Finding A Fiduciary and Fiduciary Responsibilities

It is not always easy to decide on the best person to be your fiduciary. For example, what about a family with a family business? An adult child who has taken on a leadership role in the business may be too busy to serve as a fiduciary, even though she is the most dependable and qualified candidate. At the same time, the least dependable and unqualified candidate may be her younger brother. What happens when the younger brother is not appointed to serve? Will he feel relieved or regard being passed over as a personal affront?

For every scenario, even those that seem impossible to solve or improbable, there is a solution.

Making a Business Decision, Not a Personal One

The choice of a fiduciary is most successful when the decision is made based on facts and not emotions. The fiduciary needs to have the following qualities:

• Personal Integrity.
• Skill at financial matters.
• Organizational skills.
• Respect for your values and decisions.
• Ability to deal with family members and others who may resent their role.
• Need to be discreet and able to maintain privacy.
• Ability to recognize when they need outside professional help.

A fiduciary is legally obligated to act on behalf of the person who legally appointed the fiduciary, putting that person’s interests ahead of their own. An example is when the fiduciary is appointed as trustee over a trust. The fiduciary owes a duty of loyalty to the maker of the trust, to include while the fiduciary holds “legal title” over the trust assets.

A fiduciary also must disclose any conflicts of interest to any potentially impacted parties. The fiduciary is required to account for their actions and document all actions taken in their role. This is a serious responsibility and needs to be treated as such.

A Fiduciary for Incapacity vs. An Executor

The person who takes on the responsibilities of managing your finances while you are living may be known as a fiduciary, agent, or attorney in fact. The control given through a power of attorney document can be as narrow or as broad as you wish. In some cases, the fiduciary appointed under a power of attorney is given the ability to do everything from paying bills to voting your shares in a corporation. In others, the authority is limited to paying bills.

The executor is a person appointed in your last will and testament to carry out the directions in your last will after you die. The executor must be approved by the probate court when your last will is submitted for probate, before taking any actions on behalf of your estate. The probate court issues “letters testamentary” authorizing and empowering the executor to act. The executor has no power and takes no action while you are living.

A Fiduciary vs. A Trustee

A trustee is the person in charge of managing a trust, a separate legal entity created by an individual (the grantor) to take assets out of their estate for the benefit of the grantor or others. The trustee is a fiduciary to the trust, but not to the person who created the trust. The trustee is responsible for carrying out the directions in the trust.

Should a Younger Family Member be a Trustee?

Trusts often last for decades. While sometimes it is appropriate to appoint a spouse, sibling or the eldest adult child, a trust designed to last for several generations may need to have younger secondary trustees added. If the trust lives longer than the secondary trustee, it may make sense for a professional fiduciary, like a bank or trust company, to become the fiduciary.

Can a Fiduciary Be Penalized?

The fiduciary has access and control over money and property. If the document grants broad powers for the fiduciary, they must exercise their judgment. However, if they make decisions contrary to the intent of the last will or the trust, the fiduciary could be accused of fiduciary abuse. If the decisions are honest mistakes and transactions are correctly documented, it is less likely they will be sued for breach of fiduciary duty. However, fiduciaries need to exercise great care to protect themselves, as well as the interests of their clients.

Final Thoughts

Being asked to serve as someone’s fiduciary is both an honor and a major responsibility. Talk with the people you are considering to put in this role to ensure that they understand what is being asked of them. The more communication between all parties involved, the better.

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Estate Planning Considerations for Women

Women face certain challenges in estate planning which do not always present themselves until after a spouse has died or when a divorce occurs.

Statistically, women live longer than men, Therefore, it is important for them to have a full and complete understanding of the couple’s estate plan and finances. There will be a greater chance they will need assets to last for a longer period of time than for their husbands, in addition to planning for incapacity.

Overcoming Traditional Financial Roles Through Estate Planning

One spouse often takes care of finances. This leaves the other spouse with no knowledge of how assets are managed or how to access accounts. Upon the death of the first spouse, the surviving spouse is left to identify accounts, untangle how payments are made, etc. Addressing this information gap, so both spouses are familiar with all assets and liabilities, leads to better estate planning and avoids additional stress after the first spouse dies.

Women in second marriages may be more at risk for financial hardship, if the estate plan has not been updated since their spouse’s prior marriage. If beneficiaries on a will, insurance policy, or retirement accounts have not been updated, the prior spouse could end up inheriting the lion’s share of the current spouse’s estate. All estate planning and financial documents should be updated.

The task of raising children or caring for elderly parents continues to fall on women more than men. This results in lower lifetime earnings, which leads to smaller Social Security benefits. Married women who expect to claim their spouse’s Social Security benefits should educate themselves about survivor benefit claims. If a woman has been divorced after a marriage lasting at least ten years and has not remarried, she may claim benefits based on her ex-spouse, regardless of whether her ex has remarried.

Planning for Life is Part of Your Estate Plan

After devoting decades to raising children and caring for elderly parents, women are apt to brush off concerns about aging. Single, divorced, or widowed women, with or without children, need to have an estate plan to protect them during their lifetime.

A general durable power of attorney is needed to name an agent (also known as an attorney in fact) to act, if a single woman is unable to manage her financial affairs because of illness or injury. Similarly, an advance health care directive, which includes a durable power of attorney for healthcare decisions, names a trusted person to make healthcare decisions in the event of incapacity. Married couples also need these documents. However, they are even more critical for a single woman, so family or friends may step in if and when they are needed.

Last Will and Testament

The last will and testament is used to distribute assets, including real estate, financial accounts and personal possessions. It is also used to name an executor, the person who will be in charge of managing the estate: gathering assets, paying creditors, filing with the probate court, filing final personal income tax returns, paying estate taxes (state and federal), and at the appropriate time, distributing assets as per the directions in the last will. Make sure that the person you wish to serve as your executor is able to carry out these tasks. A spouse, adult child, niece, nephew, or trusted friend may serve as your executor.

Estate Planning for Women at Any Age or Stage

Whether a business owner, homemaker, stay-at-home mom or dedicated caregiver, women need estate planning to protect themselves, their loved ones and their futures. An estate plan is one of many ways to accomplish this.

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Having “The Talk” with Aging Parents

Caring for an aging parent is a mixed blessing for adult children. They know they are lucky to have their parents with them.; However, watching parents age and endure the challenges of aging can be heartbreaking. Even in the best of circumstances, loss of hearing, vision, agility and overall health is sad to witness.

Conversations with parents about aging may be difficult at first, especially if the family is not accustomed to talking candidly about money, illness, or death. However, there are matters to address which, if ignored, can turn their later years into a daily crisis struggle of conflict and paperwork.

Estate Planning Basics for Aging Parents

If parents do not have a Last Will and Testament, a General Durable Power of Attorney and an Advance Health Care Directive, now is the time to have these fundamental documents created. While assets having a surviving joint owner or a designated beneficiary are not subject to probate, other assets are. Without a Last Will, the state will determine who inherits any such assets. This can include assets ranging from real estate to tangible personal belongings, and everything in between. In a worst case scenario when no Last Will has been created, or it has been created improperly, the entire estate may be subject to probate. This means the process of settling debts, taxes, expenses and making inheritance distributions will be completely overseen by a court and all documents become part of the public record. On the other hand, having a Last Will, even if there are few assets, will allow parents to control which of their loved ones inherits their “probate” assets.

Trusts are a popular way to administer assets without probate, particularly if the keeping “family matters” and assets private is important. When a Trust is created, assets are then titled in the name of the Trust and are managed by the Trustee. Depending on the type of Trust created, there may be tax benefits, and assets can be passed to the next generation far more efficiently. If the Trust continues to administer the assets long-term for ones once inherited, there may be significant creditor protection available. For example, a Trust may protect the inheritance from a divorce, lawsuit, or even bankruptcy. In addition, a Trust can keep the inheritance in the direct family line of your parents.

Two Kinds of Power of Attorney are Needed

Having a General Durable Power of Attorney for aging parents prevents a host of significant problems. For example, what happens when parents need a family member to step in and run their financial affairs? This document gives an “attorney in fact” (commonly a trusted a family member) legal authority to pay bills, file tax returns and make day-to-day financial decisions. Without it, the family will be required to petition the court to assign a guardian, an expensive and time consuming process. With an “immediate” General Durable Power of Attorney, the attorney in fact has authority to act the moment it is signed. Alternatively, with a “springing” General Durable Power of Attorney, they have authority only when the parent is deemed “incapacitated,” as defined in the document itself.

A Durable Power of Attorney for Health Care Decisions, also known as a Healthcare Proxy, is part of the Advance Health Care Directive. In fact, the terminology varies somewhat from state to state. This document is equally important as the General Durable Power of Attorney. A Durable Power of Attorney for Health Care Decisions allows a spouse or other person to be appointed healthcare agent. In this role, the agent may be involved in medical decisions and speak with healthcare providers. A HIPAA Release is also needed, so the healthcare agent may have access to the parent’s medical records and talk to the health insurance company.

Planning for End-of-Life Decisions

This is the hardest discussion for children to have with loving parents, and with good reason. No one wants to contemplate their death. However, without this conversation and the legal documents to support it, the parent may be placed or taken off of life support too soon or too late! To help make these decisions clear now so they will be honored later, a Health Care Treatment Directive or Living Will must be included as part of the Advance Health Care Direction planning. Beyond that, parents and their children also need to discuss “final arrangements,” to include burial or cremation and the type of funeral or memorial service they want. This is especially necessary if the family includes a difficult sibling or other family member who could torpedo the process. These decisions and instructions should be reduced to writing.

Peace Mind Arises from Planning

Having an estate plan in place during the later years of life creates peace of mind for aging parents and their adult children. When there is time for important decisions to be made thoughtfully as memorialized through a carefully prepared estate plan, the family can set them aside and get back to enjoying life together.

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Special Needs Planning for a Loved One

Do you have a family member with special needs or know someone who does? If yes, then you need to know about special needs estate planning. Its focuses on two issues: protecting disabled a loved one with special needs during his or her lifetime and securing protection when primary caregivers, usually parents, are no longer available because of incapacity, illness, or death.

Plan now to be sure your loved one will be well cared for in the future.

Several key steps need to be taken to ensure that a disabled family member remains eligible for means-tested government programs, like Medicaid and Supplemental Security Insurance (SSI). A small inheritance or a judgment from a personal injury case could jeopardize eligibility.

What is a Special Needs Trust?

Special Needs Trusts (SNT) are used to provide additional funds without compromising eligibility. The assets are owned by the trust, not the beneficiary with special needs. The trust makers, usually the parents, should appoint secondary trustees to manage the trust after they have passed. The goal is to “supplement” government benefits, not “supplant” them. For example, the SNT can provide funding for a specially equipped van or wheelchair, recreation and entertainment, medical and dental expenses not covered by other benefits.

A certain level of protection needs to be created to prevent or discourage anyone from exploiting disabled individuals. This can be achieved by placing available assets in a SNT and ensuring that the trustee selected is responsible and vigilant. Because the rules governing eligibility are very strict and eligibility is subject to ongoing scrutiny, a professional trustee may be an appropriate fit.

What is an ABLE Account?

ABLE Accounts (Achieving a Better Life Experience) are tax-advantaged savings accounts for individuals with disabilities and their families, similar to college savings accounts. The beneficiary of the account is the account owner and income earned is not taxed. Contributions can be made by anyone, must be made using post-tax dollars and are not tax deductible. The funds can be used for any qualifying expenses for costs not covered by insurance, Medicaid, or Medicare.

Using Advance Directives for Disabled Adult Children

Once a child turns age 18, parents lose legal standing to make decisions about health care and finances. One way to maintain control is for parents to encourage their newly minted adult sign Advance Directives, including Powers of Attorney and Healthcare Powers of Attorney. These documents allow parents to continue to be involved in the individual’s healthcare and finances.

Do You Need a Guardianship?

In other circumstances, a guardianship is necessary. Guardianships are more restrictive than Advance Directives. All decisions are made by the guardian, to include where the person lives, with whom they socialize, where they work, what type of medical care they receive and more. In addition, all financial matters are handled solely by the guardian. A guardianship should be customized to suit the individual and family circumstances.

The parent’s last will and testament needs to be crafted differently when the family includes a disabled individual. The family would be wise not to rely on siblings to do the right thing and leave all of their assets to their able children. Any assets intended for the disabled family member should instead go into the SNT, so they can be used as needed under the supervision of the trustee.

Why is a Letter of Intent so Important?

A letter of intent for a person with special needs is a significant help for future caregivers. Use this letter to share the lifetime of knowledge you have about your child’s likes, dislikes, routines, interests, food preferences, family members and friends. While this is not a legal document, it is important to help maintain stability when parents are no longer around to provide loving care and support.

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Estate Planning for Veterans

Estate planning is especially important for veterans and their families, during and after active duty. Spouses and children receive some military and veteran benefits. However, there are additional steps needed to protect yourself and your family.

Last Will and Testament for Military Families

A last will accomplishes several tasks in addition to property distribution. If there are minor children in the family, the last will is used to nominate a guardian and a successor guardian who will raise any minor children if both parents die. A letter of instruction with information about your children’s likes, dislikes, etc., will be helpful for anyone taking over their care, unless the guardians know your children very well.

The last will also includes the name of an executor of your choosing, who will carry out directions in the last will. Include a successor executor in case the first executor is unable to serve or declines to serve.

Military Power of Attorney and Health Care Power of Attorney

Estate planning includes planning for incapacity. If you were injured while serving your country or experience an illness or injury after service, you’ll need someone to manage your financial life. A Power of Attorney is used to appoint a person to take charge of your financial affairs. However, during active duty you’ll likely want a Military Power of Attorney (MPOA) to give a family member the ability to do tasks, like filing tax returns, buying or selling a home and obtaining military ID cards. After service is completed or retirement, a POA will serve the same purpose.

The Health Care Power of Attorney gives a person of your choosing the ability to be involved in your medical care, if you are unable to communicate your wishes. Parents or spouses don’t always have this right automatically, and some health care providers are more flexible than others when it comes to discussing medical care with your next of kin. If you have sustained any injuries or developed conditions as a result of your service, this document is especially important, as your ability to communicate may be at greater risk.

A Letter of Instruction on VA Benefits

Veterans know the military is famous for bureaucracy, regulations, and red tape, so you or anyone helping you (e.g., spouse, family member or friend) should be prepared to be tenacious and diligent in advocating for you, especially when trying to obtain VA benefits for you.

Your estate planning documents should include a letter of instructions regarding your military service and discharge papers, either Discharge Papers DD Form 214 (Certificate of Release or Discharge from Active Duty) or, if the discharge form was corrected, a DD Form 215.

Protecting Your Estate Planning Records

To ensure your important documents can be accessed when they are needed, make sure they are located in a waterproof, fire-safe container in your home. Your family members may not be able to get them, if they are placed in a bank safe deposit box. Tell a trusted family member or friend where they are stored, in case of an emergency.

Make Prior Planning a Priority

Many Americans put off having their wills and estate plan created. This is a mistake, causing additional stress and expense to the family during an already difficult time. Think of your estate plan as a gift to your family, preparing for the worst and hoping for the best.

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What Trust is Best for Your Family?

There are as many kinds of trusts as there are circumstances resolved by trusts. Which trust is correct for you depends on what you are trying to accomplish and if you want the trust to function while you are living, after death, or both.

A revocable trust is one of the more commonly used trusts. The person who creates it, the grantor, is typically the trustee charged with managing the trust. With this dual role, the grantor has total control and can even amend the terms of the trust itself. However, the revocable trust offers no unique protection from creditors or estate taxes. When the grantor dies, the trust becomes irrevocable.

An irrevocable trust is created by a grantor. However, the grantor has no control over assets. The trustee is responsible for administering the trust and following all directions of the trust documents, including asset distribution. On the upside, an irrevocable trust can be created and funded with special creditor protection and estate tax savings.

Other frequently used trusts include:

Medicaid Asset Protection Trust

The Medicaid Asset Protection Trust (MAPT) protects assets from being counted for Medicaid eligibility. The trust must be created and assets must be transferred into the trust five years before the individual applies for Medicaid. As long as the trust owns the assets, they cannot be seized by Medicaid to reimburse the state for long-term care costs.

Special Needs Trusts

A Special Needs Trust (SNT) is created to benefit a person with special needs without putting their eligibility for government benefits at risk. There are different types of SNTs. They must be created with the assets of a third party, not with the assets of the SNT beneficiary. The rules for “means-tested” government benefits are strict and require expert assistance to navigate them safely, when seeking to make a gift or leave an inheritance to someone receiving such benefits.

Charitable Trusts

There are different types of charitable trusts. Some provide income to the grantor now and principal to charity later. Others provide income to the charity now, and principal back to loved ones later. Regardless, all charitable trusts benefit charity and provide some tax benefits to the grantors who establish them. They are best for people who would be making charitable contributions anyway, since there are other ways to manage tax liabilities.

Generation-Skipping Trusts

The goal of a Generation-Skipping Trust (GST) is to pass wealth along to a grandchild, great-niece or great-nephew or anyone who is at least 37 ½ years younger than the grantor. In 1976, the generation-skipping transfer tax was created to generate federal taxes paid when assets are in a GST trust and the heir receives more than the allowable generation-skipping estate tax credit allows.

Irrevocable Life Insurance Trust

Commonly, known as an ILIT, this type of trust owns life insurance policies while the insured is alive. The grantor creates and funds the trust with cash. The trustee applies for and owns (as trustee) a life insurance policy on the grantor. When the grantor dies and the life insurance proceeds are paid to the trustee on behalf of the ILIT, the proceeds are then owned by the trust and not part of the grantor’s estate. This lawful maneuver keeps the life insurance proceeds free from potential estate taxes and available to provide “liquidity,” if needed by the grantor’s estate should estate taxes be owed.

Other types of trusts include a testamentary trust created under a last will to administer an inheritance as an alternative to a lump sum inheritance distribution. In addition, there are specialty trusts associated with certain states known for “trust-friendly” laws; credit shelter trusts for estate tax planning, and more.

One characteristic shared by all trusts, however, is the fact that they can be very complicated to legally create and to properly fund. Trust planning is not a “weekend DIY project.” The assistance of an estate planning attorney is essential for the design, implementation, and maintenance of a trust.

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Guardianship Duties for An Incapacitated Adult

When an adult becomes incapacitated and no advance planning has been done, someone needs to become a guardian to care for the incapacitated person. That individual is then known as the “ward.” This requires a court proceeding, where the court decides who should become the guardian. When this happens, the incapacitated person loses many of their fundamental rights, including the right to vote.

Guardianship procedures are more costly than creating a comprehensive estate plan, which includes planning for incapacity.

How does a guardian handle the ward’s finances?

The guardian is required to act as the ward’s fiduciary, putting the interests of the ward before their own. The guardian must keep meticulous records and be able to account for every dollar spent. In most cases, the guardian reports to the court on an annual basis. The guardian’s own finances must be kept completely separate from the ward’s accounts. No funds from the ward’s accounts or any trusts created for the ward should ever find their way into the guardian’s account (known as “commingling”), even if it would be far more efficient for cash management.

The guardian also may be responsible for applying for government benefits on behalf of the ward, overseeing the sale of the ward’s home and managing the ward’s investments. If the guardian is only responsible for finances, they are often known as a “conservator” to distinguish this more limited role.

Does a guardian get involved in day-to-day living arrangements?

In most cases, the guardian is also responsible for the person’s care, including housing and daily living. Accordingly, it is the guardian’s responsibility to ensure the ward has a safe and clean place to live and receives any care needed. This may be at the ward’s home with a caretaker, at the guardian’s home, or in an assisted living or full-care facility. The guardian is expected to be actively involved in the ward’s life, while overseeing the ward’s general well-being.

What kind of health care decisions is the guardian responsible for?

Health care decisions are also the guardian’s responsibility. The guardian is charged with making medical decisions in the ward’s best interest and, to the best of their ability, to make decisions just as the ward would have, if the ward were able to do so. The guardian speaks with the ward’s health care providers and works with them to make sure that the ward gets any care needed. The guardian should honor the preferences and consult with the ward, if possible.

Am I responsible for the ward’s expenses?

The guardian is responsible for managing the finances of their ward. However, they are not expected to use their own financial resources for their ward. Nevertheless, a guardian may be held responsible if assets are available and the guardian is not keeping bills current. Simple errors or oversights may be treated severely by the court. Therefore, detailed records and an attention to due dates are very important for the guardian.

Generally speaking, if you are acting in good faith, with diligence and care, the guardianship should not be an overly burdensome responsibility. In an ideal situation, even if one person in the family is the legal guardian, other family members are involved in their loved one’s life to ensure the best possible quality of life.

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Estate Planning Checklist

Estate plans, like Rome, are not built in a day. It takes time to map out how you want your estate distributed after death – and decide who will be in charge of your finances and health care in case of incapacity.

An Updated Last Will and Testament

Regardless the value of your estate, a last will legally distributes assets after death according to your wishes. Your last will should be reviewed every two to three years to reflect changes in your life and changes in the law. Your last will should also be updated when there is a death, divorce, marriage, birth, relocation, or other significant event.

A revocable living trust is a popular alternative to a last will. If properly prepared and “funded” with your assets, your living trust can avoid probate, unlike a last will.

Review Named Beneficiaries

Any asset with a named beneficiary is distributed outside of your probate estate. For example, perhaps you started a retirement plan (e.g., whether employer-sponsored or your own individual IRA) years ago. Have you forgotten who you designated as the beneficiary at your death? Whoever is designated will inherit the asset. This could be someone who is no longer part of your life, like an ex-spouse. If the designated beneficiary is now deceased, then the retirement plan will become part of your probate estate. It is a prudent practice to regularly review your beneficiary designations for retirement plans and life insurance. Make sure that you also have both primary and contingent beneficiaries.

Create an Inventory of Assets

An inventory of all assets is necessary every few years, or when there is a sizable change in the value of the estate. The inventory should include account names and numbers, contact information if the asset was purchased through a financial advisor or broker, the original “basis” of the asset when acquired and the asset value at the time of the inventory. This information, and other private information, should not be included in your last will. It becomes a public document when filed with the probate court after death.

Planning for Incapacity

A general durable power of attorney (POA) appoints someone you know and trust to be in charge of your financial life, if you are ever incapacitated. This person, known as an agent or an attorney in fact, can then legally perform tasks as simple as paying household bills or as complex as selling your home or business. Ask any candidates you are considering whether they are willing and able to serve, before committing them to the POA. While you are at it, always name a secondary agent, in case the first predeceases you or cannot serve.

As with the POA, a medical or healthcare power of attorney is used to appoint your health care agent in the event of incapacity. Your healthcare agent can make your medical decisions, talk with doctors and other healthcare providers, and be involved in your ongoing care. The agent will also talk with your loved ones during critical times. This is ideally someone who can stay clear-headed during emotionally-charged situations.

End of Life Planning

A living will or healthcare treatment directive guides your healthcare agent and loved ones when it comes to your wishes in the event of a terminal illness or injury when you have little chance of recovery. It clearly states your wishes about being kept alive through artificial means, whether to exhaust all options or to allow you to die.

This document can be difficult to contemplate and should be given careful thought. Not only should it be discussed with your physician, but also with your loved ones. Having these difficult discussions will take the burden from your agent and loved ones, who otherwise would be left to guess about your wishes. In the absence of such planning, too many families end up fighting for control over such decisions in court.

Estate Taxes and Inheritance Taxes

Given the current high federal estate tax exemption of $12.6 million per person, few American households need to be concerned with federal estate taxes for the next year or so. However, there are states with their own estate taxes with much lower exemption limits. Some states have inheritance taxes, which are levied on heirs based upon their relationship to the deceased. Other states have both their own estate taxes and inheritance taxes! Consequently, estate tax planning is part of every comprehensive estate plan.

Summary

This brief “checklist” is a good starting point for creating and maintaining your estate plan. As you can see, proper estate planning is not a “set it and forget it” experience. Like your home or automobile, your estate plan requires ongoing maintenance to perform as intended when needed.

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