It is a universal truth that human beings age. The passing of time affects the body in many ways, eventually causing the inevitable conclusion. It may be heartbreaking for those in the dearly departed’s life when they pass away, but it is the natural course of life.
The reality is, we all leave things behind, and planning for the inevitable is essential to easing the burden on our loved ones when we go. Protecting your assets is necessary both before and after you pass. Let’s look at some commonly asked questions about asset protection planning, and help you plan for the future.
What Can Be Done to Protect My Assets?
When a person’s physical health begins to deteriorate, the individual’s mental health often begins to decline as well. It makes the job easier for predators to come out of the woodwork and prey on those who may not have the mental capacity to make the right decisions with their finances or wellbeing.
That is why these legal actions need to be taken to protect the important things and people in your life:
#1. Power of Attorney (POA)
As individuals begin to rely on others, many of their everyday activities will eventually have to be decided for them. Stories in the news about the elderly or disabled being taken advantage of are alarming, and unfortunately, a more pervasive problem than we may think. Bank accounts have been drained, and family homes have been signed away without anyone knowing until it is too late to recover them.
By having a power of attorney, someone you (the principal) trusts will be able to make financial, medical, or legal decisions they cannot. It can be very limited or as broad as the principal would like.
A power of attorney can be terminated for the following reasons:
- The principal dies
- The court invalidates the POA, or the principal revokes it
- The principal divorces the spouse who is the POA
- The agent is unable to carry the responsibilities outlined in the POA any longer
#2. Create a Trust
There are times when an individual will leave the estate to someone who is not old enough or does not have the mental capacity to take care of themselves, let alone a large inheritance. The estate can sometimes be squandered before a child reaches adulthood or the assets signed over to someone else without the heir’s knowledge.
This is why a trust is the best option to ensure assets are adequately taken care of after the decedent passes. Trusts are a legal entity created to benefit the designated beneficiaries under the laws of the state and valid trust instrument. A trustee has a fiduciary responsibility to manage the trust’s corpus (assets) and income for all the beneficiaries’ benefits.
There is the risk the trustee could mismanage the trust. Still, the legal responsibility of carrying out specific duties concerning assets can have serious legal ramifications if they abuse their power. The beneficiaries can take legal action against the person managing the trust and have a new trustee appointed if they feel the trustee isn’t performing their job in good faith.
#3. Create a Will
The most common course of action to take when planning for the future is to create a will. Having a will to outline your final wishes prevents infighting, unnecessary expenditures for legal disputes, and much worse.
If someone dies without a will, this means the laws of intestacy are in effect. Intestacy rules mean either the spouse or the next blood relative are the ones who will receive the estate. It doesn’t include common-law spouses or step-children.
An executor of the estate will also spend a lot of money and time trying to decide who gets to divide the assets and how they are distributed.
The executor is responsible for getting the court to grant probate, which means paying debts, collecting and valuing assets, and paying the taxes before the assets can be given to the heirs. This process may be watched by the probate court to ensure the decedent’s property is taken care of according to the outline in their will.
Estate Planning is Essential to Protecting Your Estate and Your Family
Dealing with death and planning for what comes after can be difficult and uncomfortable, but it doesn’t have to be. With ProvenLaw, you can work through these complexities together with expert legal counsel and get the help you need to decide on the delicate estate planning choices you will need to make to ensure that your loved ones are well cared for in the event of your passing.
Crucial to those choices, estate planning documents are best created by professionals well-versed in estate planning and capable of handling the carefully custom tailored needs of you and your family.
Whether you need to adjust an existing trust or are looking to create a new will, please contact us for your complimentary personal consultation and we’ll get you on the road to peace of mind.