HEALTH CARE PLANNING
Planning for the Care of an Aging or Disabled Family Member
Most people assume estate planning only deals with controlling property after their death. Good estate planning is more detailed than that. The risk of loss to estates via disability is greater than the risk via death. Care must be taken to minimize these risks.
Powers of Attorney and Health Care Directives These are documents used to protect estates for people who can no longer make decisions on their own due to mental disability. If you can no longer make decisions relating to your financial affairs, the Power of Attorney enables your agent to take control of your property, pay your bills, sell property to raise cash, make gifts to loved ones and so forth. A Health Care Directive is a document that names an agent to make health decisions and provides detailed instructions as to the type of care you choose to receive if you cannot communicate with your care provider. Agents are typically the spouse, another family member or a friend of the maker of the power. Without these documents, the physical and financial affairs for an incompetent person must be submitted to the court for supervision as a guardianship or conservatorship.
Guardianships and Conservatorships Guardianships and conservatorships are probate court proceedings that appoint agents to manage assets and the physical care of mentally incompetent individuals. They are an expensive and inefficient alternative to managing assets via the power of attorney and the health care directive. They typically require a period of several weeks to get started and require periodic accounting to the court of all actions taken by the guardian. They are a "public forum" in that most, if not all, family members must be given notice to all proceedings and copies of all reports to the court.
Supplemental Need Trust A Supplemental Need Trust is a planning tool authorized by statute that provides a means to control an inheritance for a disabled person in a fashion that does not disqualify that person from receiving government assistance. They are very restrictive in nature, and can only be used to provide for needs that are not otherwise received by government programs. Strict adherence to the statutes could result in the beneficiaries eligibility for certain programs and require all funds in the trust to be turned over to the State. Despite these restrictions, this is a much better alternative than the "old way" of dealing with this issue, which was to disinherit a disabled child and hope someone else would step up and provide assistance after the parents have died.