FAQ

A comprehensive estate plan includes the following:

• Incapacity planning by answering important questions now in case you are unable to later:
  • Who will make medical decisions for you when you cannot?
  • What are your end-of-life wishes?
  • How do you want your property and money managed on your behalf while you are incapacitated?
• Death planning by enabling you to give what you have to whom you want in the way you want
• Legacy planning by conveying your traditions, values, hopes, and dreams to your loved ones when you have died

• Although you may not have prepared an estate plan, state law has created one for you.
• Using the state’s default law, the courts will decide who will
  • make financial and medical decisions for you if you cannot,
  • get your stuff and when they will get it, and
  • care for your minor children.

• Probate is the court process that determines
  • whether you have a valid will at your death,
  • who will be appointed to wind up your affairs, and
  • who will receive your accounts and property.
• The downsides of probate are that it is
  • expensive,
  • time-consuming, and
  • a matter of public record.

You may need probate if you die

• owning accounts or property in your name only,
• without a will, or
• with a will.

Potential solution: Joint tenancy with right of survivorship

Problem:

• Accounts and property are now vulnerable to joint owner’s creditors.
• A joint owner is now a co-owner of the account or property.
• There may be gift tax consequences.

False. When you add a child or anyone else to your bank account, you are making that person a co-owner of the account. Your child can pay bills using the money in your bank account, but your child can also use the money for any other purpose. This is because your child now co-owns the account.

In addition, because the bank account would be deemed owned by your child, it would be susceptible to division in a divorce, seizure in a lawsuit, and theft by a predator.

False. If you name someone as an agent or attorney-in-fact under a financial power of attorney, you allow that person to handle the types of financial transactions that are listed in the document. However, just because your agent can handle these matters does not mean that you cannot also handle them. The only reason you would not be able to manage your own financial affairs is if you were mentally unable to (otherwise referred to as being incapacitated).

Proactive planning can prevent you from becoming a statistic of elder financial abuse. The first step is to make sure that, while you are mentally able, you put your wishes regarding the use of your money and property into a legally binding, written document such as a financial power of attorney, last will and testament, or revocable living trust. This way, should you lose the ability to manage your finances, your explicit wishes are already expressed in these valid documents, eliminating a loophole that someone could use to take advantage of you.

The second step is to make your wishes known to your loved ones, especially if you have decided to add someone to or leave someone out of your estate plan. By having an open conversation with your loved ones while you are alive and well, you can answer any questions and clear up any misunderstandings that they may have before it is too late. This includes updating your loved ones periodically if your wishes change. This will ensure that everyone is on the same page and can keep a watchful eye should suspicious changes occur down the line.

If you give money or property outright to a child, the money or property will automatically be theirs. This means it can be spent as the child wants, used for calculating and paying a divorce settlement, seized as part of a lawsuit, or stolen by a financial predator.

Alternatively, if you place the money and property you want your child to receive into a trust, you can protect it from some of these issues. First, you can determine how much and when your child will receive the money or property. This can allow you to spread the money and property over a period of time—for example, one-third at age forty, one-half at age forty-five, and the remainder at age fifty). This can also incentivize desirable behaviors, such as requiring that the child graduate from an accredited college or university to receive the money or property, or offer maximum protection by giving the trustee the absolute discretion as to when or if your child receives the money and property from the trust.