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What You Need to Know About the Incapacity Trigger in Estate Planning

December 13, 2016

Filed under: Incapacity Planning — Neel Shah @ 9:15 am

Estate planning is about more than thinking of who will inherit your assets when you pass away. It is also important to think about who will manage your finances, your healthcare decisions, and your assets in the event that you become incapacitated. 

Incapacity planning raises the question of whether or not it makes sense to confer legal authority to another individual or wait until someone has lost capacity to manage their own affairs. Under a power of attorney and agent who has been named is capable of controlling a principal’s financial property and legal affairs other than those assets that are held inside a principal’s trust.

The fiduciary authority’s scope conferred on a power of attorney agent can be extremely narrow or very broad. The majority of estate planning attorneys today will draft broad powers of attorney to cover a wide range of unexpected circumstances. This is primarily because an incapacity event such as a disability is usually unexpected and a very narrowly tailored power of attorney can prevent the agent from being able to do what he or she needs to do. In the event that a power of attorney is effective after it is signed, this avoids delays and difficulties associated with determining the incapacity of the principal and therefore does not need to involve any third parties. To learn more about incapacity planning and how to use a trigger to structure one, consult with an experienced New Jersey estate planning attorney today.

 

Planning Now for the Potential of Alzheimer’s Later

December 11, 2013

Filed under: Incapacity Planning,Long Term Care,Medicaid,Spending Down — Neel Shah @ 9:00 am

More and more senior Americans are forced to deal with the devastating diagnosis of Alzheimer’s. Without planning, an Alzheimer’s diagnosis can be a devastating financial blow to an individual and his or her family. A recent article discusses how individuals can take control of their financial futures by planning now for the potential of an Alzheimer’s diagnosis later.

One potential way through which a person can get funds to pay for medical care is through Medicaid. Medicaid is a need-based program, so a person must meet certain income requirements to apply. If a person is above the threshold to receive Medicaid, he or she must spend-down assets in order to qualify. However, the spend-down of assets must be done carefully,with the oversight of an estate-planning attorney. Importantly, Medicaid employs a look back provision that will disqualify certain distributions of wealth if they occur within five years of a person’s application for Medicaid.

Often, Alzheimer’s patients require more care than Medicaid will cover. One option to fill the gap is through long-term care insurance. These insurance policies provide broad coverage for care received in a patient’s home, assisted living facility or nursing home. It is important to get long-term care insurance early, as rates go up as a person ages. Additionally, it may be difficult to find an insurer after a diagnosis of Alzheimer’s.

Circle of Life: Live Events That Affect Your Asset Protection

November 19, 2013

Filed under: Asset Protection,Business Law,Business Planning,Incapacity Planning — Neel Shah @ 8:06 pm

Asset protection planning does not happen all at once. Rather, an individual’s or family’s asset protection strategies should grow and evolve with them. A recent article discusses several life events that should prompt an individual or family to revisit their asset protection strategies.

  1. A Run-In With The Law: As wealth advisory manager Heather J. Swob explains, “If you’re in a potential liability situation, the advisor should be kept aware. While there are look-back provisions that might keep you from moving assets, the advisor can still provide some valuable advice.”  In addition to advice, it may not be too late to plan.
  2. Engaging in a Business Transaction:  Business owners and investors get sued.  Whether it’s a Partnership dispute, a lender’s claim, an employee lawsuit or some other claim, it’s wise to protect your assets before the onset of such a liability.
  3. A Struggle With Addiction: Although it may be embarrassing or difficult to discuss that you or a family member is struggling with addiction, it is important for your advisor to know what to look out for. According to Swob, “estate documents should be reviewed to keep assets out of the [addicted family member’s] control in the event of a sudden death.”
  4. You Are Experiencing Dementia or Other Deterioration of Mental Condition: If you are experiencing the early stages of dementia or other mental illness, time is of the essence. Once your mental capacity is affected, you may no longer be able to sign off on important documents that you have been putting off, such as a financial power of attorney.