What should you consider when it comes to legal issues?
There are several things that should be examined when dealing with legal issues, whether you are a caregiver or someone receiving care.
There could be different options available when responding to a health care crisis. It’s important to work with a legal professional who has a comprehensive knowledge of options available, can be creative in planning, works within a holistic team, and also understands the emotional aspects of what the family is going through.
Aging Legal Considerations
Here are a few important terms, along with misconceptions of solutions that are available:
- Trust: An arrangement whereby a person (“trustee”) holds property within a legal agreement as its owner for the good of one or more beneficiaries. Usually, trusts are used to avoid probate and assist with future management of the assets that are inside the trust. Traditionally, there are two different types of trusts, revocable and irrevocable, which can have many different variations of rules and guidelines.
- Irrevocable trust: A type of trust where its terms cannot be modified, amended, or terminated without the permission of the grantor’s named beneficiary/ies. By practical use, irrevocable trusts can be crafted where you can change the beneficiaries and withdraw assets (income and principal) if drafted properly. The more access the granter or beneficiary has to the assets, sometimes the less asset protection they will have. Usually, this type of trust will operate under its own Tax ID Number, and depending on the provisions, may or may not file its own tax return.
- Revocable trust: A trust whereby provisions can be altered or cancelled dependent on the granter. Usually, this type of trust will not file its own tax return and will operate under the Tax ID Number of the Granter (person funding the trust).
- Grantor: A person or institution that makes a grant or conveyance to the trust (funds the trust).
- Power of Attorney (POA): The authority to act for another person in specified legal or financial matters. In many states, people are not required to recognize the POA unless the state has a statutory POA that requires financial institutions to accept it.
- Advance directives: A written statement of a person’s wishes regarding medical treatment. Also sometimes referred to as a Living Will or Healthcare Power of Attorney.
- Probate court: A segment of the judicial system that primarily handles such matters as wills, estates, conservatorships, and guardianships.
- Joint tenants with right of survivorship (JTWROS) is an asset owned by at least two people, where all tenants (owners) have an equal right to the asset and are afforded survivorship rights in the event of the death of another account holder. The concept also applies to real estate property and brokerage investment accounts. This type of ownership will help avoid probate when one owner dies if there is a surviving owner. JTWROS ownership can vary slightly depending on what state you live in or where the property is located.
- Guardianship: The position of being legally responsible for the care of someone who is unable to manage their own affairs. A guardianship is traditional to care for the person entirely.
- Conservatorship: A legal concept whereby a court appoints a person to manage an incapacitated person’s or minor’s financial and personal affairs. A conservatorship is traditionally to care for just the financial aspects of the person.
- Community Property: These states are community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI. If you live in one of them, there are additional financial, tax, and estate planning considerations that need to be made with your advisor. The first state to adopt this was in 2016.
If your estate documents haven’t been recently drafted or updated, make sure to add in a digital assets provision.
The first state to adopt this was Michigan in 2016. This provision will allow your POA to deal with your electronic accounts (e.g. bank, social media, etc.). With more people handling finances online, this is becoming more important to include in your plan.