The Elder Law Practice of H. Todd Whatley

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Estate Planning

WHAT IS THE MOST IMPORTANT DOCUMENT FOR AN ELDERLY PERSON TO HAVE?
In my opinion, I feel that the most important document for the elderly person is the Durable Power of Attorney. A Durable Power of Attorney is a document that will allow someone else to manage your financial, housing, and medical needs. It is a good idea to have a Durable Power of Attorney if you are over the age of 18. However, it is imperative that you have one if you are elderly. This Durable Power of Attorney allows you to choose who will do this job. It provides convenience for you and your family when you are “out of pocket” and especially if you become incapacitated. Having a good Durable Power of Attorney allows you to avoid a guardianship (in all but very rare circumstances).

HOW CAN I AVOID PROBATE?
Everyone wants to avoid probate if at all possible. What is probate? Probate is the process of transferring assets from the name of someone who died to someone else’s name either based on the wishes expressed in a will or if there is no will, then by the rules of the State of Arkansas.

Probate is time consuming because it requires:

• court,

• filing fees

• and depends on a judge’s schedule.

These same reasons make it expensive.

Probate can be avoided by making sure that assets are not in your name at your death. Please understand that a Last Will and Testament will NOT protect you from going through probate. Your will simply tells the judge how you want your assets to be divided as it goes through probate.

You can avoid probate in a number of ways.

• The most popular method of avoiding probate is by creating a Trust.

  • A trust is a legal entity that can hold property. We transfer all allowed property into the trust so that it is not owned by you at the time of death.

  • Since property is not owned by you at death, it does not have to go through probate. Also, if you have a taxable estate, then a trust can save you hundreds of thousands of dollars in taxes if done correctly.

  • This sounds great, but trusts are not the “end all” they are touted to be. If they are needed, they are beautiful. However, they are more expensive at the beginning and they must be carefully maintained through the years.

  • If you do not have a taxable estate and you have a simple distribution plan, you can avoid probate in other ways that are much cheaper (and involve very little attorney participation).

• Payable on death (or sometimes called Transfer on Death) designations of bank accounts is a great way to make sure assets transfer to someone else at your death.

• We can also do about the same thing with your home by creating a Life Estate Deed which passes the house to someone at your death. However, there are some significant Medicaid issues with that process. So transfer the deed only with proper advice from an attorney that has a good understanding of Medicaid.

END OF LIFE HEALTH CARE ISSUES
The end of life issues became very prominent in our society during the summer of 2005 with Terri Schiavo. She was an example to all of us for the importance of have a good Advanced Directive (or Living Will). This document tells the health care personnel what you want done, or don’t want done, when you are permanently unconscious or terminally ill. You need to have this document done appropriately so that your wishes are honored rather than ignored.