Not many years ago, the typical retirement age, 65, was viewed as the onset of old age. Today, gerontologists define matters differently: If you’re between the ages of 65 and 74, you are one of the “young-old.” To be considered “old”, you need to be in the 75-to-84 age bracket. After that, you’re known, demographically, as the “oldest-old.”
Simply put, your chances are good that
you are going to live many years in retirement. But will they be healthy years?
Who
assumes responsibility?
If illness or injury strikes, you want to
know that there is someone on hand to manage the day-to-day finances and your
investments.
Your
spouse might want to assume the responsibilities. However, that may be an
unreasonable burden if he or she is also responsible for being your caregiver.
And, of course, there is the question of his or her health. A long-term plan
needs to take into account the fact that a spouse might not be alive or healthy
when he or she is needed.
Single
people face similar questions. They may not want to burden children or
grandchildren with their finances and their care. Is there even family close by
able to take on the responsibilities?
When
you don’t take action
If you have not done any planning
beforehand, and you become disabled, legal proceedings may be necessary in
order to have someone step in and take over for you. A guardian will have to be
named to manage your assets. It’s not hard to come up with a list of serious
disadvantages to this scenario.
First,
the process can be protracted and expensive. Second, because the legal
proceedings are a matter of public record, you and your family may be exposed
to unwanted publicity. Finally, and most important, because you may not be able
to make your wishes known, the person whom you would want to handle your
financial affairs may not be the person chosen by the court.
As
a result, your financial assets may be put at risk. Decisions may be made by
individuals not in the best position to make them. Indecision or lack of attention
may have the same negative impact on your income, your asset base or both.
One
plan: a durable power
A durable
power of attorney is a legal document in which you give someone the
authority to act on your behalf in the circumstances that you designate.
Although a regular power of attorney lapses in the event that you become
mentally incompetent, a durable power remains in effect.
The
authority that you grant to your “attorney-in-fact” can be as sweeping or as
narrow as you wish. The power to pay bills, collect debts, prepare tax returns,
borrow funds, purchase insurance and fund a trust are among the most common
powers granted. Parents who want to take advantage of the federal annual gift
tax exclusion and make gift-tax-free transfers to children and/or grandchildren
of up to $13,000 in 2012 should spell out that authority in the durable
power-of-attorney document.
A
durable power of attorney can be an effective tool. Unfortunately, some
institutions require that the power be executed on their particular form—simple
if you’re in good health, perhaps impossible if you’re incapacitated. Then,
too, over several years a question of the validity of the durable power may
arise.
A
comprehensive plan: a living trust
For long-term financial and estate management,
give consideration to a revocable living
trust. This arrangement offers you comprehensive protection that can last
as long as it is needed.
You
can create a living trust now. The agreement is revocable—you can make changes
at any time, even cancel it if the need arises. Initially, the agreement calls
for you to retain full control over all investment decisions regarding the
assets in the trust.
The
trustee’s responsibilities may, if you wish, be limited to everyday investment
chores and recordkeeping duties. If you become incapacitated, or upon your
request, the trustee will assume full management of your assets, acting as you
have directed in the trust agreement. In addition to handling your investments,
the trustee’s responsibilities may be extremely wide-ranging. You may authorize
your trustee to use trust income to employ household help, hire nurses and even
pay your monthly bills.
Q&A
on Advance Directives
While you are
doing your planning, you also may want to consider creating an advance directive
regarding your future medical care.
What
are Advance Directives?
• “Advance
directive” is a general term that refers to your oral and written instructions
about your future medical care, in the event that you become unable to speak
for yourself. Each state regulates the use of advance directives differently.
There are two types of advance directives: a living will and a medical power of
attorney.
What
is a Living Will?
• In a living
will you put in writing your wishes about medical treatment should you be
unable to communicate at the end of life. Your state law may define when the
living will goes into effect and may limit the treatments to which the living
will applies. Your right to accept or refuse treatment is protected by both
constitutional and common law.
What
is a Medical Power of Attorney?
• A medical
power of attorney enables you to appoint someone you trust to make decisions
about your medical care if you cannot make those decisions yourself. This type
of advance directive may also be called a “health care proxy” or “appointment
of a health care agent.” The person you appoint may be called your health care
agent, surrogate, attorney-in-fact, or proxy. In many states the person whom
you appoint is authorized to speak for you at any time you are unable to make
your own medical decisions, not only at the end of life.
Do
I need an Advance Directive?
• It’s a matter
of personal choice. There are many benefits to creating advance directives.
They give you a voice in decisions about your medical care when you are
unconscious or too ill to communicate. As long as you are able to express your
own decisions, your advance directive will not be used, and you can accept or
refuse any medical treatment. But if you become seriously ill, you may lose the
ability to participate in decisions about your own treatment.
What
laws govern the use of Advance Directives?
• Both federal
and state laws govern the use of advance directives. The federal law, the
Patient Self-Determination Act, requires health care facilities that receive
Medicaid and Medicare funds to inform patients of their rights to execute
advance directives. All 50 states and the District of Columbia have laws
recognizing the use of advance directives.
If
you are interested in finding out more about advance directives and the laws
governing them in your state, the not-for-profit organization Partnership for
Caring has a Web site at http://www.partnershipforcaring.org, or you can call
them at 1-800-989-WILL.
Taking
action
It’s important
to make your plans while you’re able to do so. Talk over the issues presented
here with those closest to you, as well as with your financial and legal
advisors.
By Thomas Gerrity, Publisher
By Thomas Gerrity, Publisher
© 2013 M.A.
Co. All rights reserved.
No comments:
Post a Comment