ADVANCED DIRECTIVES & ESTATE PLANNING TOOLS
POWER OF ATTORNEY
What is a Power of Attorney?
A power of Attorney is a legal document that allows an agent to act on behalf of another individual (called a principal) with regard to financial and personal matters. The Power of Attorneys is essential, especially if the principal becomes incapacitated or is otherwise unable to handle his or her affairs. It is also useful to have a Power of Attorney if the principal is planning to be away from home for an extended period of time. Generally, signing a durable, comprehensive power of Attorney is a method of ensuring that someone whom the principal trust is able to protect the principal’s interest in the event that he or she is unable to do so for himself or herself.
For all powers of attorney executed on or after September 1, 2009, the power of attorney must be signed, dated and duly acknowledged, not only by the principal but also by the agent. Further, major gifting by the agent on behalf of the principal (any gift over $500) will now require a second form, called a Statutory Gifts Rider which had additional requirements regarding the appropriate signing. It is essential that an elder law attorney draft the power of attorney for a senior to ensure that all estate and Medicaid planning provisions are added to the document.
Who should have a Power of Attorney?
Everyone should have a Power of attorney. Accidents and illnesses may occur at any time and a power of Attorney will help minimize some of the potential inconveniences during such difficult times. However, all seniors over 60 years of age should strongly consider signing a power of attorney with added estate and Medicaid planning provisions.
What is a “Durable” Power of Attorney?
A Durable Power of Attorney is a power of Attorney that is executed when the principal has capacity and remains in effect in the event the principal becomes incapacitated. Generally, this is the most useful type of Power of Attorney for individuals who are concerned about someone acting on their behalf when they are unable to act for themselves. Effective September 2009, all Powers of Attorneys are durable and not affected by the later incapacity of the principal, unless specifically stated otherwise in the “modifications” sections of the Power of Attorney.
What if I change my mind after I execute a Power of Attorney?
A power of attorney is revocable by the principal. To do so, the principal need only destroy the Power of Attorney instrument and notify any financial had accounts.
What if I don’t execute a Power of Attorney?
If a Power of Attorney has not been executed and a person becomes unable to handle his or her financial matters, it may become necessary for someone – a family member, a creditor or someone else – to go to court to have a guardian appointed. Guardianship proceeding are authorized pursuant to Article 81 of New York State’s Mental Hygiene Law and often become very costly and time consuming.
HEALTH CARE PROXY
Why is a Health care Proxy?
A Health Care Proxy is a document whereby an individual (the “principal”), appoints an agent to make health care decisions on his or her behalf in the event the principal is unable to do so. Health Care Proxies are governed by New York State statue. How is a Health Care Proxy different from a Living Will? While a Living Will is an advance directive made directly by a person specifically indicating his or her wishes, a Health Care empowers an agent to make any and all health care decisions on behalf of the principal.
Who do I appoint as my Health Care Proxy?
Generically, a Health Care Proxy empowers an agent to make any and all health care decisions on behalf of the principal. These decisions may include issues relating to medications, therapy, the change of treating physicians, and any other issues that arise in the course of the course of medical treatment. Under New York State law, unless your agent knows your wishes about artificial nutrition and hydration (feeding tubes), the agent will not have the authority to make decisions about these measures.
Who do I appoint as my Health Care Proxy?
The person you appoint as your Health Care Proxy should be someone who you know well and with whom you have discussed your health care wishes. Your Health Care Proxy should be someone who is capable of making difficult decisions under the most trying circumstances.
Who is a Living Will?
A Living Will is an advance health care directive that expresses the health care wishes of an individual. A Living Will is typically utilizes when there is a medical diagnosis of a persistent vegetative state with no hope of recovery, New York State does not have a Living Will statue.
What do I do with a Living Will?
Once executed, copies of a Living Will should be given to the appointed health care agent as a direction of the individual’s wishes. The individual should keep the original document and should make its whereabouts known to the health care agent.
OTHER TOOLS USED FOR THE ESTATE PLANNING
What is a Revocable Living trust?
A revocable Living Trust is an agreement between an individual (settlor) and a trustee whereby the trustee holds assets for the benefit or the settlor. The trust is funded by the settlor. Hence, title of some or all of the settlor’s assets by naming himself or herself as trustee during his or her lifetime and/or capacity. Thereafter, a successor trustee (usually one of the settlor’s children) may be appointed to assume these responsibilities in relation to the trust.
A Revocable Living Trust is often considered a substitute for a Will. If drafted properly, a Revocable Living Trust enables the passing if an individual’s assets without the need for probate. However, in addition to a Revocable Living Trust, the settlor should also have a “pour- over” Will to account for any assets that may not have been placed into the trust prior to the settlor’s death.
Can I make Gifts to reduce the value of my estate?
Yes, gifting is one of the easiest and most effective methods for an individual to reduce the size of his or her estate. The most often utilized gifting strategy involves making annual exclusion gifts of up to $14,000 per done every calendar year. (Spouses may make annual exclusion gifts of up to $28,000 per done.) GiftS excessing this amount may subject an individual to potential gift taxes, so such gifts should be made with the advice of an estate planning/elder law attorney and an accountant.
What about Life Insurance?
Life insurance is said to be one of the last true shelters. If purchased by the correct entity, life insurance can create tremendous estate tax planning benefits. A key factor in evaluating the benefit of a life insurance policy depends on determining who is the owner and beneficiary of the policy. Such significant issue must be discussed with an attorney and an insurance agent prior or purchasing a policy for estate planning purposes. Taking steps to protect your family and your assets as you age is essential. Take the time to achieve peace of mind and call the Law Offices of Irina Yadgarova PLLC so that your advance directives are properly in place.