Serious Illness: Finances and estate planning

Costly medical bills, the potential need for nursing home care, the possibility of dying, and the need to provide security for a surviving spouse are a few important reasons to get financial affairs in order.

Just as people usually get to a point where they need a health care representative to make decisions when they can’t, it’s wise to appoint someone to make financial decisions should that time come.

Planning ahead ensures that family members will be provided for in the manner of your choosing.

Power of Attorney: Someone to handle your finances, just in case

During the course of an illness, it may become difficult to get to the bank, file taxes, go to the assessor’s office, or balance the checkbook. Yet to protect you, most financial institutions will not discuss your finances with anyone who is not listed on your account. These circumstances can become a significant problem if you become homebound or bedridden. To alleviate this quandary, consider choosing a trustworthy person to be your “durable power of attorney.” Once you have made your choice, legally all you need to do is fill out a durable power of attorney form available at any stationary store. Be sure to find out if it must be notarized to be valid.

Giving someone power of attorney means that person has the right to make financial decisions in your place. For this reason, you must choose the person with care. If you have any doubts about the individual you have in mind, hold off on making a final decision.

Giving someone power of attorney, however, does not mean you lose control of your finances. You can continue to make all decisions and carry out all your transactions as usual. But if something happens to you and you become incapacitated, the person who has durable power of attorney may act in your stead. You have the option of limiting the person’s rights to managing your banking, taxes, or specific accounts.

You may also revoke durable power of attorney at any time. Simply send a written notice to each of your financial institutions and consultants. (The word “durable” does not mean “forever.” It simply means that if you become mentally incapacitated, e.g., from a stroke or Alzheimer’s disease, the person may continue to make financial decisions for you.) Until a durable power of attorney is revoked, it remains valid as long as you are alive. At such point that you pass on, however, the person serving as your durable power of attorney will no longer have access to your assets or decision-making rights regarding your finances.

Some people choose to open a joint checking account with the trusted person, which is a less-formal arrangement than durable power of attorney. This enables the cosigner to write checks after the death has occurred, which can simplify tasks such as bill paying. This setup does not allow the person to sign your taxes or conduct other legal transactions for you. If you decide you want to change the arrangement, however, it may be a little more difficult to revoke shared access to a joint account than it would be to revoke a power of attorney.

A durable power of attorney can only be granted while the individual who is ill is still mentally sound. If you have a terminal illness, there will likely come a time when you will not be able to make decisions for yourself. Without a durable power of attorney in place, especially if you are not married and you become mentally incapacitated, the courts would appoint someone to make financial decisions for you. This person might be a family member or even an attorney. You can safeguard your estate against a court appointment by selecting a durable power of attorney ahead of time.

If you become mentally incapable and have no legal spouse and no paperwork in place, the court will appoint decision makers for you. In general, two types of decisions must be made-one regarding health and well being and the other regarding finances. A person appointed to make decisions in these two areas is called a “guardian.” A person appointed simply to look after the financial side of things is called a “conservator.” To learn more about power of attorney, guardianships, and conservatorships, go to the National Guardianship Association website or talk to an attorney who specializes in elder law.

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Power of Attorney: Someone to handle your finances, just in case

During the course of an illness, it may become difficult to get to the bank, file taxes, go to the assessor’s office, or balance the checkbook. Yet to protect you, most financial institutions will not discuss your finances with anyone who is not listed on your account. These circumstances can become a significant problem if you become homebound or bedridden. To alleviate this quandary, consider choosing a trustworthy person to be your “durable power of attorney.” Once you have made your choice, legally all you need to do is fill out a durable power of attorney form available at any stationary store. Be sure to find out if it must be notarized to be valid.

Giving someone power of attorney means that person has the right to make financial decisions in your place. For this reason, you must choose the person with care. If you have any doubts about the individual you have in mind, hold off on making a final decision.

Giving someone power of attorney, however, does not mean you lose control of your finances. You can continue to make all decisions and carry out all your transactions as usual. But if something happens to you and you become incapacitated, the person who has durable power of attorney may act in your stead. You have the option of limiting the person’s rights to managing your banking, taxes, or specific accounts.

You may also revoke durable power of attorney at any time. Simply send a written notice to each of your financial institutions and consultants. (The word “durable” does not mean “forever.” It simply means that if you become mentally incapacitated, e.g., from a stroke or Alzheimer’s disease, the person may continue to make financial decisions for you.) Until a durable power of attorney is revoked, it remains valid as long as you are alive. At such point that you pass on, however, the person serving as your durable power of attorney will no longer have access to your assets or decision-making rights regarding your finances.

Some people choose to open a joint checking account with the trusted person, which is a less-formal arrangement than durable power of attorney. This enables the cosigner to write checks after the death has occurred, which can simplify tasks such as bill paying. This setup does not allow the person to sign your taxes or conduct other legal transactions for you. If you decide you want to change the arrangement, however, it may be a little more difficult to revoke shared access to a joint account than it would be to revoke a power of attorney.

A durable power of attorney can only be granted while the individual who is ill is still mentally sound. If you have a terminal illness, there will likely come a time when you will not be able to make decisions for yourself. Without a durable power of attorney in place, especially if you are not married and you become mentally incapacitated, the courts would appoint someone to make financial decisions for you. This person might be a family member or even an attorney. You can safeguard your estate against a court appointment by selecting a durable power of attorney ahead of time.

If you become mentally incapable and have no legal spouse and no paperwork in place, the court will appoint decision makers for you. In general, two types of decisions must be made-one regarding health and well being and the other regarding finances. A person appointed to make decisions in these two areas is called a “guardian.” A person appointed simply to look after the financial side of things is called a “conservator.” To learn more about power of attorney, guardianships, and conservatorships, go to the National Guardianship Association website or talk to an attorney who specializes in elder law.

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