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Financial and Legal Information for Caregivers
What You Need to Know
By Melissa Granberry |
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Click here to view a printable version of this article
As a caregiver, you know that it can be difficult for loved ones to make financial, legal and health care decisions once their health begins to deteriorate. For example, a family member suffering from dementia may no longer be able to pay bills or give instructions on medical care. When this happens, having legal documents already in hand can be a great comfort in knowing that you’re fulfilling your loved one’s wishes on both financial and medical matters.
Wills
Having your loved one prepare a will is often the first step in planning for the future. A will directs how property and possessions will be distributed after death.
When the will is prepared they should also choose a personal representative, or "executor," to carry out tasks such as contacting the beneficiaries and settling any outstanding debts. Without a will, the state courts will determine who receives the assets, which can be a long and expensive process – and may or may not match up with what your loved one would have liked.
Powers of Attorney
If your loved one has a will, this may be an excellent guide to determining their wishes; however, it only comes into play after their death. Decisions about their care when they’re alive require other documents, such as powers of attorney to handle financial and health care issues.
Powers of attorney are legal documents that allow your loved one to choose a trusted individual to act on their behalf; however, there are several different types to consider.
For Finances
With a general power of attorney, your loved one can choose someone to handle financial affairs, such as writing checks or selling stocks. It is only effective, though, while they are still mentally competent.
Jan Warner, an elder law and matrimonial attorney in South Carolina, suggests establishing a durable power of attorney, which carries the same responsibilities, but remains valid if your family member is no longer able to make decisions.
If your loved one is mentally and physically able to conduct business, then delegating authority to another person may not yet be necessary. With a springing durable power of attorney, the document can be written so that it only goes into effect when your family member becomes incapacitated. "Incapacitated" can be translated many different ways, so it is important to specifically define the criteria that must be met.
"If your family member is capable of understanding what a power of attorney is, then establish and sign one right away," says Diedre Wachbrit, an estate planning attorney in Thousands Oaks, Calif.. "Otherwise, your family will have to go to court to prove incapacity, and it can be an involved process."
For Health Care
Your loved one may also create legal documents to give instructions on their health care. The names of these documents vary by state and may be called one of several things, such as a power of attorney of health care, an advanced health care directive or a living will.
"These documents are a way of providing an outline of instructions for future medical care," says Wachbrit. "They also allow your loved one to name a person to make medical decisions for them if they can not make them themselves."
Trusts
A trust is another tool that your loved one can use to plan for the future. This legal arrangement allows assets to be transferred to the trust and managed by a selected individual: the trustee.
By establishing a trust, families can avoid probate, which is the court process of validating a will. Probate can be time consuming, and the court fees are expensive, ranging from thousands to hundreds of thousands of dollars, according to Wachbrit. Though setting up a trust may initially be expensive, she says that it can more than pay for itself when your loved one plans to leave an inheritance.
Legal Advice?
While you can create wills, powers of attorney or health care directives through forms found right on the Internet, using an elder law attorney might be a better choice. They can make sure that no steps are missed in the process.
Hiring an elder law attorney was a tremendous help to Glendora Horton, of Columbia, S.C. After building a new house and establishing a will, she and her husband felt comfortable knowing that their affairs were in order. Tragically, Horton’s husband soon suffered a stroke and was left incapacitated. Though their will was intact, they did not have a power of attorney to allow Horton or their children to carry out her husband’s responsibilities.
However, Horton’s attorney arranged for a representative from the state to meet with her husband and verify his mental and physical condition and helped them get all the necessary legal documents in place.
Planning now will leave you with less to worry about in the future and more peace of mind today. Take the first step and talk to your family about preparing all the necessary paperwork – before it's truly necessary.
Family Matters
Caring for a family member can be the most loving gift a person can give, but this gift can also raise some uncomfortable questions, such as:
- If one sibling puts his or her career on hold to care for a parent full time, should other family members compensate that sibling?
- Should a larger portion of the inheritance be given to the caregiver?
- Will any inheritance be remaining after the cost of long-term health care?
These are important questions to address, and family members should sit down together and discuss how each should be handled. An attorney can prepare a written agreement outlining family members’ expectations to help eliminate discord down the road.
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