What You Need to Know About Estate Planning -- Part One: Planning for Lifetime Incapacity or Disability

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   Many people today have the misconception that only wealthy families need to be concerned about estate planning. Nothing could be farther from the truth.  Actually, smaller estates or families with smaller incomes have more to lose from not doing proper planning.  Probate court costs, legal fees, and taxes (both state and federal) can cause heavy financial burdens on families who have failed to plan or have planned inadequately. Most of these problems, however, are avoidable through careful estate planning.  Every household, especially Christian households, should make estate planning a priority. 

   Estate planning can be divided into three phases: (1) planning for lifetime incapacity or disability; (2) planning for the distribution of assets after death, including honoring the Lord with your substance by giving generously to the Lord’s work; and (3) planning for the after-death management of assets on behalf of minor, handicapped, or immature beneficiaries. 

Phase 1: Lifetime Incapacity or Disability 
   In planning for lifetime incapacity or disability, management is the key issue. An incapacitated or incompetent person is one who is unable to manage his medical, legal, financial, or personal affairs. The incompetent person needs someone to step in and manage those affairs for him/her. There are two ways to find a manager: First, through the public probate system, or second, through private estate plan documents referred to as advanced directives or powers of attorney. This is a crucial choice that each individual must make. 

   If an adult person becomes incompetent and does not have the proper legal documents, the probate court system is the only, and mandatory, alternative. The probate court procedure is called guardianship.

   A spouse, family member, or someone close to the incompetent person will have to petition the local probate court to be appointed guardian.  If the petition is approved, the court gives the guardian legal authority to manage the incompetent person’s affairs. Generally, this guardianship procedure is time consuming and can lead to significant legal fees and court expenses.  It is not unusual for the guardianship procedure to cost from $3,000 to $5,000 or more, depending on the jurisdiction and the specific facts of the case. As a result, the preferred choice is to plan ahead with private legal documents that are designed to avoid the guardianship procedure.

   By choosing private legal documents before incapacity instead of defaulting to the probate court guardianship procedure, a person may appoint his/her own private power of attorney agent to manage financial, legal, and medical affairs. This advanced planning helps the family to avoid probate court involvement and most, if not all, related legal fees. 

   While a variety of powers of attorney are available, the two most common for estate planning are the general Durable Power of Attorney and the Durable Power of Attorney for Health Care. The general Durable Power of Attorney grants broad legal and financial authority, usually to a spouse or adult child, for the private management of the incapacitated person’s affairs. The Durable Power of Attorney for Health Care grants the authority to a health care agent —  again, usually the spouse or an adult child — to manage the incapacitated person’s medical affairs. Both documents are available to the general public at minimal cost. Through these private legal documents, a person may avoid the guardianship process and costs associated with it. Wise choices in these matters can provide confidence that an individual’s desires are carried out and that God will be honored through thoughtful and cost-effective planning. 
Attorney Joseph Helm
McLario, Helm, Bertling & Spiegel, S.C.
N88 W16783 Main St.
Menomonee Falls, WI 53051-2890
Tel:  (262) 251-4210

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