Providing for incapacity.
Protecting and providing for your family is just one aspect of an estate plan. Providing for your subsequent mental or physical incapacity is also an important part of any estate plan. This includes the appointment of an attorney-in-fact to handle your legal and health care decisions. Without an attorney-in-fact, upon your incapacity your family would be forced to seek a court appointed guardian to handle your affairs. A guardianship proceeding can be both costly and time consuming. Another option is the formation of a living trust which holds your assets and allows a trustee to step in and manage your assets upon your incapacity.
What is a Durable Power Of Attorney?
North Carolina permits a person to appoint an attorney-in-fact to act on behalf of the person and deal with his or her property even though the person may subsequently become incapacitated or incompetent. The power of attorney may be drafted very broad or it may be limited in its scope. A durable power of attorney is not cancelled by your subsequent incapacity, thus eliminating the necessity for a guardianship proceeding in most situations. However, at your death a durable power of attorney terminates.
What is a Health Care Power Of Attorney?
In North Carolina, a properly drafted Health Care Power Of Attorney (“HCPA”) permits a person to designate an agent to make health care decisions for the principal if the attending or designated physician determines that the principal lacks the capacity to make or communicate his/her own health care decisions. The principal may provide instructions to the agent through the HCPA including the principal’s desire regarding life-sustaining procedures.
What is a Living Trust?
A Living Trust is a revocable trust which allows you to provide instructions for the disposition of your assets during your life, upon your incapacity, and upon your death. Since you can name yourself as trustee of your trust, you maintain control and are able to do the same thing you could before. Both spouses can be named as co-trustees so that if one becomes incapacitated, the other spouse is able to manage the trust property. You can also name an institution such as a bank or trust company as a trustee or co-trustee which adds the benefit of a professional to manage your assets and investments.
A Living Trust can be modified at any time, thus allowing flexibility for future changes. However, this power causes the assets of the trust to be included in the creator’s taxable estate thus creating potential federal and state tax liability.
Does a Living Trust help avoid probate?
Unlike a Will, a Living Trust does not need to be probated at your death, thus you are able to avoid the costs and time of probate while still providing for your loved ones.
For assistance, contact our firm for an appointment or Email David