Planning for Incapacity
Although no one wants to consider the possibility that a disease, illness, accident, or other tragedy could cause their incapacity, this is nevertheless an essential part of the estate planning process. If you lose your ability to handle your own finances, the court may appoint a conservator to manage your finances for you.
Similarly, if you cannot express your wishes regarding your medical treatment or welfare, the court may appoint a guardian for you. By planning ahead, you can avoid the need for a costly and cumbersome conservatorship and/or guardianship proceeding, and you can specify the individuals you feel are best qualified to make financial and medical decisions for you.
A conservator is a person appointed by the court to manage an incapacitated person’s (the “conservatee’s”) estate. A person may be declared incapacitated by the probate court due to dementia; mental infirmities resulting from an accident, injury, or illness; or if they are under the age of 19. The conservator is responsible for making financial decisions for the conservatee, including but not limited to: payment of bills, taxes and expenses; making investment decisions; the sale, purchase, or rental of property; and the execution of contracts and agreements.
A guardian is a person who is appointed by the probate court to manage and handle the health care, welfare, and lifestyle decisions of a minor or incapacitated adult. Similar to a conservatorship, a person may be declared incapacitated by the probate court due to dementia; mental infirmities resulting from an accident, injury, or illness; or if they are under the age of 19.
Powers of Attorney
A Power of Attorney is a document that allows you (the “principal”) to appoint a representative (“agent” or “attorney-in-fact”) to make certain financial decisions and conduct certain transactions on your behalf. A power of attorney can authorize an agent to handle ongoing financial needs or specific tasks, such as signing a document in your absence.
A Health Care Durable Power of Attorney appoints a proxy to make medical decisions for you in the event you are unable to make medical decisions for yourself. Your proxy can make any type of health care decision on your behalf, not just decisions pertaining to life sustaining care. A completed Health Care Durable Power of Attorney allows you to avoid the necessity for a court-appointed guardianship or protective proceeding and is an essential component of an estate plan.
Revocable Living Trust
In the event you become incapacitated, your successor trustee will manage the trust assets on your behalf, often avoiding the necessity for a conservatorship. See Revocable Living Trusts for more in-depth information on how these trusts work.
Special Needs Trusts
Special Needs Trusts (sometimes referred to as “Supplemental Needs Trusts”) are trusts that are specifically drafted to ensure that a disabled beneficiary will continue to be eligible for government benefits. If an intended beneficiary is the recipient of Medicaid, SSI, or other governmental assistance program, an outright gift or gift in trust may disqualify the beneficiary from receiving continued assistance.
In a Special Needs Trust, distributions are made only to supplement, not replace, the benefits being received. Distributions made by the trustee are discretionary, not mandatory, and are therefore not considered disqualifying under most programs. Special Needs Trusts can be used to receive funds from a personal injury litigation matter on behalf of a disabled person without disqualifying the injured person from Medicaid benefits. Special Needs Trusts can also be used to provide post-minority support for educational purposes to persons who have reached the age of majority (age 19) or to provide support for a mentally or physically disabled child.
A Miller Trust can be used to qualify a Medicaid applicant with income in excess of the eligibility limit for long-term care assistance under Medicaid. The Miller Trust is named as the recipient of the person’s income, whether the income is from their pension, social security, or other source. Upon the death of the beneficiary, Medicaid must be repaid for the benefits received by the beneficiary from any assets remaining in the Miller Trust.
Contact Us for Estate Planning Assistance
We welcome the opportunity to serve your estate planning, probate, and trust administration needs. Contact The Hawkins Law Firm to schedule a consultation with an experienced trust and estate attorney.