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Mary Owens: Estate planning in a time of crisis

Many of us have experienced the unexpected “telephone call” from a hospital or loved one that a sudden negative medical event has occurred involving a member of your family.

The first thought always goes to “Will they be OK?”

As your heart sinks into the reality of the situation, more and more issues race through your mind. How long will they be in a hospital? Do they have to go to a nursing home? Who is able and willing to care for them? The list goes on and on.

A sudden medical crisis within your family can turn your life upside down if the ill person was not prepared with the correct documents so their family members can assist them with their immediate and long-term needs.

There are three documents that are critical in dealing with a crisis:

A health care directive

A durable power of attorney

A living trust

Health care directive

When a loved one needs assistance in meeting with physicians and other health care professionals, it is imperative that, when the need arises, the document is already in place that grants this authority. The delivery of health care, and the communication of the needs of the health care plan to loved ones can be significantly delayed without this critical document.

The law requires health care professionals to have the permission needed to communicate highly personal and confidential data to the appropriate person who is assuming responsibility of the ill person. The law also requires the medical professional to perform lifesaving procedures that can be painful and unwanted if the wishes of the ill person are not legally documented. But the most common need for this document is not the need of the immediate crisis at hand, but rather the ongoing care of the loved one who did live and now is unable to care for themselves without assistance.

A medical directive allows the appointed healthcare overseer the right to speak with any medical professionals and direct care for the ill person in accordance with their wishes. It also allows the healthcare overseer to communicate with health insurance providers and Medicare.

Without a health care directive, the process of assuming the coordination of medical care will be challenging and burdensome, and in most cases, will require the court systems getting involved.

Durable Power of Attorney

Any asset owned by the ill or incapacitated person that is not titled in the name of their trust cannot be oversee by the successor trustee. Only the person who is named on the ill or incapacitated persons durable power of attorney may direct and control theses assets. This distinction in very important to understand.

Retirement accounts, including 401(k)’s, Individual Retirement Accounts, Deferred Compensation Benefit Plans, SEP’s, Simple Retirement Accounts, all employer and employee benefit plans, unincorporated businesses and all other assets or benefit plans not titled in the trust name can only be administrated and managed by the person who is appointed in the durable power of attorney documents.

If no power of attorney exists at the time in incapacitation of a loved one, the only remedy they have available to them to access funds outside a trust (except assets held as joint tenants) is to turn to the court system and have a guardian appointed for the loved one. This means the court systems, with all their costs and delays, are a permanent part of their lives for as long as the loved one is alive.

Everyone should take note, the process of becoming a guardian and the court requirements of future asset and income accounting and the court administrative process should be avoided.

Few benefits come from this costly and exhausting administrative requirement. Instead, a trusted loved one should be put in charge via a durable power of attorney. It is my preference that the successor trustee and the durable power of attorney are the same person in most situations.

Living Trust

A living trust is a legal document that provides for the smooth transition of management, administration and distribution of its assets by the grantor(s) (the person(s) who is/are putting their assets into the trust) during their lifetime.

When the grantor(s) is/are no longer legally competent, physically able, or choose to voluntarily resign, the successor trustee(s) takes over with all the legal powers that were granted to the successor trustee(s) as outlined in the trust document.

This is an important document that gives clear legal authority to the successor trustee(s). In the time of immediate crisis, the successor trustee(s)can take charge of the assets until the grantor is able to manage their own affairs once again.

If the grantor(s) is/are never able to manage their affairs again, it allows the successor trustee(s) the permanent authority to manage the assets, distribute income as needed, manage the affairs such as bill paying and distribute the estate at death of the grantor(s). All these actions can be taken without the need for the court system to intercede into the private affairs of the grantor(s).

If the grantor is married, usually the surviving spouse continues to serve as the sole trustee. If both grantors are unable to serve, the successor trustee(s) then step in to assume the responsibilities the trust document outlines. In times of crisis, assets can be managed by successor trustee(s) shortly after the critical life changing incident occurs.

These three documents are essential to the successful and efficient administration of your affairs during periods of crisis or incapacitation. Please consult your legal council if you do not have your estate affairs in order. It is the most loving thing you can do for your family and friends.

Reduce your stress, and theirs, to the best of your ability.

Mary Owens, Principal/Branch Manager, RJFS, 426 Sutton Way, Suite 110, Grass Valley, CA 95945, 530-272-7500. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Owens Estate and Wealth Strategies Group is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax, legal or mortgage issues, these matters should be discussed with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Mary Owens and not necessarily those of Raymond James.


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