I only have one parent left out of two biologicals and two in-laws and I cherish her, honestly, I do. But after this week, I’m dangerously close to taking up smoking…..
DO YOU WANT DAISIES OR DANDELIONS? IT’S YOUR CHOICE!
When someone dies, the family is left with the responsibility to decide what to do with the body, where to bury the remains, and what type of funeral service should be held. It’s hard enough to deal with death. It’s even more difficult to plan a funeral your family thinks you might have wanted.
In most states, you can name a funeral agent to carry out your documented funeral wishes. This is expecially important if you are not married but may want a partner or special friend to carry out your wishes. Unless you name someone as a funeral agent, state preference laws generally give the parents the legal authority to decide what to do with your body and where to bury the remains.
You can prepare a durable power of attorney for finances giving your agent the right to manage your assets when you can’t. However, some organizations don’t recognize a durable power of attorney as authority to act on your behalf. You must complete another form authorizing a designated agent to manage these assets on your behalf.
Make sure the agent you named in your durable power of attorney for finances has the right to complete these forms for you.
These assets have special rules:
Q. How can you give someone the right to manage your social security benefits?
A. Treasury department regulations do not permit a power of attorney or a durable power of attorney to be used to manage your social security benefits. A family member or other person must complete a Social Security Representative Payee form designating a “representative payee” to act on your behalf regarding social security benefits.
Social Security will then send your social security benefits to the representative payee. The representative payee is required to prepare and file an annual report describing how they spent the money on your behalf.
The representative payee is also obligated to report any change in circumstances impacting your eligibility to receive social security benefits.
Q. How will your attorney-in-fact be able to manage your brokerage accounts?
A. Brokerage accounts have special rules for your attorney-in-fact. If your attorney-in-fact needs to buy or sell stocks held in physical form or held in a brokerage account, your attorney-in-fact will need to add a medallion signature “guarantee” to their power of attorney form. The medallion signature is a stamp provided by a financial institution guaranteeing to a transfer agent that the signature of your attorney-in-fact is actually their signature.
Requests to buy or sell stocks are reviewed by someone referred to as a Transfer Agent. The Transfer Agent cannot authorize transactions requested by your attorney-in-fact without the medallion signature guarantee evident on the power of attorney form.
Your attorney-in-fact may need to locate a bank participating in the medallion signature program. The bank should be one the attorney-in-fact does business with that is willing to guarantee its signature. The bank will place the medallion stamp on the power of attorney form.
Q. How will your attorney-in-fact get access to your safe deposit box?
A. If you open a safe deposit box in the name of your trust, the trustee or successor trustee has the legal right to access the safe deposit box.
When you open a safe deposit box in your name, or as a joint tenant, ask whether your bank will accept your power of attorney as authorization for your attorney-in¬fact to access your safe deposit box. Some banks will not. These banks may require you to complete a separate form they provide designating a safe deposit box agent. The box renters will complete the form naming a safe deposit box agent in the presence of a bank employee, which gives the bank greater assurance about the validity of the authorization.
Banks and other financial institutions struggle with accepting your power of attorney. Currently, there is no way for banks to know if you have revoked your power of attorney or changed the name of your attorney-in-fact.
A Last Will and Testament
- If you have a will and become incapacitated, nothing in your will can help manage your assets while you are living.
A Living Trust
- If you have a living trust, your co-trustee or successor trustee can continue to manage trust assets without a court supervised guardianship.
- A court supervised guardianship costs money and requires the courts to supervise how someone manages your assets.
A Testamentary Trust
- A testamentary trust is created after you die. It does not provide value if you become incapacitated.
WHY IS PLANNING FOR OLD AGE IMPORTANT?
Consider the following facts contained in a government study called “The Dilemma of An Aging Society.”
In 1900, the usual place of death was at home; in 2000, it was in the hospital.
In 1900, most people died in accidents or as a result of acute infections and they rarely endured long periods of disability. In 2000, people spent, on average, two years severely disabled on the way to death. Acute causes of death (such as pneumonia, influenza and septicemia) are in decline, whereas deaths from age-related, chronic, degenerative diseases (such as Alzheimer’s, Parkinson’s and emphysema) are on the rise.
A 2006 Rand study funded by the government tried to envision the future needs of elderly people who are terminally ill and classified them into four groups:
The first group will die after a short period of sharp decline. This is the typical course of death from cancer. Roughly 20 percent of all deaths are of this type. This type of death peaks around the age of 65.
The second group will die following several years of increasing physical limitations, punctuated by intermittent acute life-threatening episodes. This is the typical course of death from chronic cardiac or respiratory failure. Roughly 20 percent of all deaths are of this type. This type of death peaks around the age of 75.
The third – and largest – group will only die after prolonged dwindling, usually lasting many years. This is the typical course of death from dementia (including Alzheimer’s disease) and disabling stroke. The trajectory towards death is gradual but unrelenting, with steady decline, enfeeblement and growing dependency, often lasting a decade or longer. Roughly 40 percent of all deaths are projected to be of this type. If you live past the age of 75, it is common for someone to die from dementia or a disabling stroke.
The other 20 percent will die as a result of some sudden and acute event, like an accident.
These statistics are astonishing. Eighty percent of us need to make planning for incapacity from both a legal and a financial perspective just as important as planning for death.
Planning for old age is about “Elder Law.” Elder law is a term describing a set of legal and financial rules and practices we will encounter as we grow old, or as our parents grow old. In fact, many of the topics considered to be “elder law” relate to anyone who becomes unable to manage their financial affairs or make their own health care choices, no matter whether they are young or old.
Planning for old age involves the creation of various legal documents referred to as advance directives. If your mental capacity becomes compromised as you age, or if you suffer an unexpected accident or illness, your spouse or your children may need to help manage your finances or your health care. Sounds simple. It’s not.
The fact is incapacity, like dying, is an event in your life where laws decide who has the authority to manage your affairs for you when you can’t. These are the laws your family, physicians and friends will be required to follow if you become unable to make decisions on your own behalf. Your family will find they need multiple documents signed by you to act on your behalf, each one serving a different purposes.
Long Term Care
Planning for old age also requires an understanding of what long term care will cost and how your and your family will pay for long term care if it becomes necessary. According to the Congressional Budget office, the U.S. will spend $393 billion in 2008 for long term care, not including unpaid services provided by famiy and friends.
Many older people and their children are surprised to find they have no personal insurance to cover the cost of long term care.
If the only insurance you have is Medicare and Medigap, the cost of long term care must be paid from your personal assets unless you have Long Term Care Insurance.
These resources are useful when planning for old age:
- Durable Financial Power of Attorney
- Other Financial Directives
- Living Wills
- Health Care Power of Attorney
- Other Health Care Directives
- Long Term Care Insurance
FACT : Incapacity can happen to any one
Although planning for death is important, planning for mental or physical incapacity is just as important. A recent government study stated “eighty percent of people over the age of 65 will spend one to ten years under the care of a caregiver”. In less than two decades it is expected that some 30 million people will suffer from some form of dementia. If this happens to you, someone must manage your health care and your money.
Planning is not just for the elderly. Terri Schiavo was 26 years old when she had a heart attack and slipped into a “permanent vegetative” condition. She then lived for fourteen years until she was allowed to die following enormous expenses to her family while incapacitated.