Who do you Trust if you need financial help?
No one plans to be disabled. No one wants to be incapable of handling their own finances. But it’s silly to pretend we don’t get old, injuries don’t happen, and illness doesn’t strike. The best way to protect yourself, your family and your assets is to plan what happens if you can no longer act on your own behalf.
Durable Power of Attorney (DPOA)
A DPOA is a legal document giving authority to someone else to act for you on financial matters. These powers can be granted at the moment of signing or they can “spring” into effect only when you become incapacitated. A Health Care Power of Attorney (HPOA) manages your health care and lifestyle when you need them. These two can be the same person, however many believe it is better to name a professional manager for the financial DPOA and a trusted family member or friend for the HPOA.
Revocable Living Trust
A revocable living trust does everything a durable power of attorney does and much more. A trust names a trustee to manage assets and also names the beneficiaries of the trust, specifically, who is to receive the trust income now and the people or charities to receive trust assets when the trust ends.
Most people initially serve as their own trustee and name a successor trustee to serve at incapacity. Others name a professional trustee from the outset. Living trust benefits include:
- Professional asset management by a corporate trustee;
- Flexibility. It’s easy for you to alter, amend or revoke your trust;
- Your primary estate plan. After death, assets avoid the probate process and circumstances are shielded from public scrutiny;
- Your trustee MUST do what you direct in the document.
Create both a DPOA and a revocable living trust for comprehensive planning. The trust handles nearly everything and the DPOA can control assets left out of the trust inadvertently and may be used for financial decisions unrelated to the trust.
Make sure you including a gifting power in your DPOA to enable continued gifts to charitable entities you have supported in the past. Make sure your attorney includes language allowing your trustee to also make these generous gifts to your favorite community organizations like the Library Foundation.
Special thanks to our friends at CoreFirst Bank & Trust Department for assisting us with these articles.
