Estate Planning

What Does It Mean To Actually Fund A Trust?

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Funding a trust simply means taking assets that are titled in your name, and transferring them to your trust. By way of an example, if you have a car, you have a title. The car is titled in your name. If you were to put that car into a trust, you would go to the DMV and have the car re-titled from your name to the name of your trust. Funding a trust can also mean that you take an asset that requires a beneficiary designation, and re-establish a beneficiary in the trust name. For example, if you have a life insurance policy, you have a designated beneficiary. You can change that beneficiary’s name to the trust, and that re-titles the proceeds from that life insurance policy to the trust.

Who is ultimately responsible for funding a trust?

The person making the trust is ultimately responsible for funding the trust and ensuring that the assets are transferred to the trust.

What happens if someone does not fund a trust? Does it cease to exist?

A trust does not come into being until it’s funded. A trustee, or the person that’s responsible for controlling the trust, can only control assets that have been titled in the name of the trust. If the assets are not transferred to the title of the trust, then the trust cannot pass control to the trustee, and the assets will be probated just like any other probate.

What are the assets that I can put into a trust?

Almost any type of asset can be put into a trust. However, the common assets that are placed in trusts under normal circumstances include real estate holdings, bank accounts, non-retirement accounts at a brokerage that would stock bonds, tangible personal property, business interests, life insurance policies, and debts that are owed to the trust maker from some other source.

Is there anything that can absolutely not go into a trust?

One asset that should not be placed in a trust name is a qualified retirement account. There are tax implications of titling your 401K or your IRA in the name of a trust. When you take that asset and put it in the name of the trust, the IRS and the government takes that as a sale, or as a distribution of that asset, and so it becomes a tax. For qualified retirement accounts, you want to make sure that you just re-establish a beneficiary designation as the trust. That way, you’re not actually making a distribution. A health savings account is another asset that you don’t want to put in a trust name. Additionally, anything under the Uniform Gift to Minors Act, or the Uniform Transfers to Minors Act should not be placed in a trust name because those accounts technically belong to the minor. Since they belong to the minor, they cannot be transferred into someone else’s trust.

As I stated earlier, you don’t want to put a life insurance policy in the name of the trust, but instead you would put the beneficiary designation as the trust.

You can put any vehicle with a title into a trust, such as cars, boats, motorcycles, and airplanes.  We think of cars as the easiest assets to transfer, but in order to transfer title of those types of assets into a trust, you have to go to the DMV and get a new title in the name of the trust. There are fees associated with this, so if it’s a valuable that has some kind of tax or transfer tax attached, you want to look at that and say, “Maybe I don’t want to put that in the trust because of the transfer tax.”

Do I always need to re-title assets to add them to the trust?

With the exception of beneficiary designations which we’ve discussed, the purpose of the trust is to acquire the title of the assets. That’s what makes the trust a viable entity. Because a trust exists as an entity, the death of the trust maker does not affect the trust. The trust survives, and that’s why there is no need to probate the assets in the trust. So, because of the purpose of the trust, you must re-title your assets in the name of the trust.

For more information on Funding A Trust In South Carolina, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 982-5930 today.

What Are The Components That Make Up An Effective Trust?

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A Trust has three major components. The first is the detailed instruction about the administration of the Trust itself. This answers questions such as, what do you want to happen? Who do you want the beneficiaries to be? How do you want it to be serviced? These detailed instructions are the first component of the Trust.

An effective Trust is used as a long-term planning device and is made up of long-term, mid-term, and short-term plans and their contingencies.

What do you say to people who are hesitant about losing control of their assets in a trust?

A Trust can be named a revocable Trust, meaning that any time the person who made the Trust is living, they can revoke the Trust and move everything back to their individual name. In this type of Trust, you can always regain title and direct ownership of all your property. This is because in a revocable Trust, you can serve as the Trustee and as the beneficiary, giving you power to either leave the assets in a Trust or close the Trust and make it inactive.

How does a revocable living trust avoid probate?

A Trust continues the entity after the death of the person who made the Trust. Probate is where all the assets of the person who passes away are handled. At the death of the maker of a Trust, the Trust owns all the assets. Those assets pass to a beneficiary. Once the Trust is established by placing the assets in the name of a Trust, the Trust becomes a legal entity. When the maker of that Trust passes away, that legal entity does not end; it continues with the assets being allocated according to the Trust to the beneficiaries. The Trust avoids probate because it has a life after the maker’s death.

What is involved in trust administration?

The administration of a Trust really boils down to the Trustee managing the assets according to the terms of the Trust. When the maker passes away, the Trustee must notify the beneficiaries and the heirs if they are listed in that Trust. The Trustee takes care of all the Trust’s assets, strictly for the benefit of the beneficiaries. The administrator can be a person or an organization (such as a bank or law firm), or it could be multiple Trustees. Regardless, the administrator has a legal responsibility to act in good faith always and in the interest of the beneficiaries.

For more information on Components Of An Effective Trust, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 982-5930 today.

What Actually Is a Trust?

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A Trust is a fiduciary relationship between parties, and it allows a Trustee to hold assets on behalf of a beneficiary of those assets. Specifically, a Trust can be created to direct how your assets are utilized and how they pass to the beneficiary. Normally, Trusts are created to reduce an estate tax liability or to protect property in an estate to avoid probate and to direct the use of your assets.

What are the benefits and disadvantages associated with a trust in estate planning?

The most common Trust is a living Trust. Assets placed in a living Trust are for the benefit of a person during their lifetime, and then those assets are transferred to the Trustee’s designated beneficiaries at the time of your death. The largest benefit of having a living Trust is avoiding probate. A Will must be probated, and a Trust is an entity that survives the maker’s death so it doesn’t have to be probated. A living Trust can be more cost effective than the cost of probating a Will. The living Trust can be named as a beneficiary for things such as life insurance policies, 401(k)s, IRA assets, etc.

A Will is made public when it’s probated, but a Trust is not made public. The Trustee can take over Trust responsibilities immediately upon the death of the maker; however, in a Will, there are procedures that must be followed for the executor to take control of the assets. The assets must pass from the deceased’s name to the executor’s control. The living Trust is most popular because it is the most cost effective.

The only major disadvantage to a Trust is that a living Trust is limited in what application it can serve. In a Trust, you can’t arrange for the care of minor children, announce guardians for minor children, grant rights to an unmarried partner, or make funeral arrangements. These things are all handled by the Will.

Why would you recommend a trust as an effective method of estate planning?

When we recommend a Trust, it is often because it avoids probate and because it is private. Also, if you have minor children, or a child with disability, you can set aside the assets that can benefit the child in your Trust, giving you the ability to decide how that money is allocated.

If you have family members that are going to be the beneficiary of your Trust, and that family member is not adept at handling money, you can make provisions in your Trust to control how much money they will receive, how they will receive it, and what the money is for.

Trusts are also used for out of state real estate properties. If you own a property out of state, that property will have to go through probate. If that property is held by a Trust, because it doesn’t go to probate, it passes by the direction of the Trust and it doesn’t have to go through probate. For Trust purposes, it’s much easier for a Trustee to handle the finances of a Trust than it is for an executor of the estate from the Will to take control immediately upon the death of the maker. If you have complicated assets, or the distribution of your assets is very complicated, it’s much better to have outlined that in a Trust than to try and have it outlined in a Will after death.

By forming the Trust before your death, you can set up exactly how you want those procedures to be done.

For more information on Trusts In South Carolina, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 982-5930 today.

Do I Need To Have An Attorney Involved In Funding A Trust?

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Yes, we believe it’s always advisable to seek legal assistance when funding a trust, especially when you’re dealing with the nuances of what type of trust you want, what type of assets you want placed in the trust, determining the list of assets, understanding the tax-related consequences of how items will be titled if they are transferred, long-term issues like Medicaid eligibility, five-year look back periods, the effect that the trust may have on long-term care situations, penalty clauses, spouse issues involving joint trusts, etc. All of these things have their own requirements and consequences, so it’s always advisable to seek legal counsel from someone who handles estate planning and can help you through this minefield.

For more information on Attorney’s Involvement In Funding A Trust, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 982-5930 today.

Can I Add An Asset To My Trust At Any Time?

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Absolutely, you can add assets to a trust at any time. This can be done by titling the asset from your name into the trust name. The only consideration is to make sure that you’re not titling assets in a trust name that are better left to just changing a beneficiary designation.

Is there any look back period for putting assets into a trust?

Yes, the largest look back period for putting assets into a trust is with Medicaid. As people get older and are thinking about their retirement, they are thinking about Medicare, Medicaid and social security. One of the things that you have to remember is that Medicaid has a five-year look back period. In essence, that means that any asset that’s transferred into a trust in that preceding five-year period is subject to what they call a penalty. A penalty means that you cannot transfer that asset in and qualify for Medicaid until you have absorbed that amount that was transferred in the five years.

Now, if you’ve transferred any asset into your trust longer than five years before you applied for Medicaid, then this does not apply, but if you’re in that five-year window, every jurisdiction has what they call a penalty divisor. This means that they set a rate for that divisor and divide the assets that have been placed in the trust in the last five years. It is a calculation that will give you the number of months that you’re not eligible for Medicaid due to the look back period. When you are setting up a trust and considering applying for Medicaid, you want to make sure that you understand what the penalty is.

What is the process of actually funding a trust?

When you consult with an estate planning attorney, one of the things that they will do is create a comprehensive list of assets that the trust maker has. Once you’ve decided the type of trust that you want established and have the list of assets that are to be re-titled, then you use your list as a guide to begin the process of re-titling, whether that’s in the case of re-titling objects, changing a beneficiary designation on a life insurance policy, or going to the recorder of deeds and changing the ownership of real estate from your name to the trust name.

Is funding a trust a simple process or can it get complex?

The difficult part of funding a trust is identifying all of the assets, identifying what trust is best serving the client’s purposes, and deciding which assets are going to go to the trust. Once that’s done, the majority of the work is administrative.

Is real estate handled differently when funding a trust?

Yes, real estate is an asset that everybody initially thinks about when they are talking about a trust. The goal is to avoid probating the real estate. The trust is an entity that goes on after the trust-maker has passed or is deceased; therefore, by putting real estate into a trust, you are changing the owner of the real estate. Anything that you would normally have to do to change the ownership of your house would apply, because you would need to create a new deed and file it with the recorder of deeds.

There is usually a transfer tax or a stamp tax that applies. In this case, almost all states have an exemption because you’re transferring the real estate from an owner to a trust controlled by that owner.

For more information on Adding Assets To A Trust In South Carolina, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 982-5930 today.

Advantages of Avoiding Probate

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There are several important advantages that come from avoiding the probate process. First, time. If you are the owner of a small business that you intend to pass along to a family member, this can be especially important. Probate puts everything in a state of limbo, sometimes leading to long delays before important business decisions can be made. Uncertainty and a lack of legal authority can make it difficult, if not impossible, to keep a business running, which is why many business owners take steps to ensure their business passes outside the probate system.

Another advantage to avoiding probate is saving money. Probate is a court process and court costs needs to be paid. Usually the amount of money is relatively small, but complicated cases can become quite costly, especially if experts or other third parties become involved.

A final advantage of avoiding probate is the lack of public disclosure. The probate process takes place in the court system and, as such, is open to the public. That means that the person’s will, the final property allocation, and anything else related to the administration of the estate will become matters of public record, available for anyone to read. These deeply personal and financial matters are obviously sensitive and many people would prefer to keep things private.

What is Probate?

Probate is technically the legal mechanism by which title to property of a recently deceased person is transferred to his or her heirs. The goal of probate is to ensure that every possible claim against the estate and those owing to the estate has been settled and that title has been given to the rightful heirs. This can be a lengthy process in some especially complicated cases, and the goal is to ensure that when all’s said and done, an estate can be wrapped up without lingering disputes.

Does everything go through probate?

The short answer is no, not everything a person owns goes through probate. These assets pass through other avenues, such as payable-on-death accounts or beneficiary designations. Examples of assets that do not pass through the probate system include property that has been transferred into a trust, life insurance proceeds, retirement funds, money in payable-on-death bank accounts, and property that is owned with someone else as a joint tenant.

10 Steps to a Knockout Estate Plan

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Nobody likes thinking about what will happen after they’re gone. Estate planning is essential, though, especially if you want to make sure your loved ones are adequately cared for after you’ve passed away.

Even though most people agree that estate planning is important, only about 40 percent of adults in the U.S. have some kind of will or living trust in place.

Are you part of this group? If not, what’s holding you back?

If you have no idea where to begin, why not start with some estate planning basics.

Read on to learn 10 estate planning tips that will help you create the perfect estate plan for yourself and your loved ones.

1. Start with a Will

If you haven’t done any kind of estate planning yet, a will is a great place to start.

As soon as you can, make arrangements to sit down with an estate planning attorney and work with them to put together a last will and testament.

If you die without a will, the state will distribute your assets according to their inheritance laws. This is known as dying intestate.

If you want to avoid this and have control over the distribution of your assets (as most people do), you need to write out exactly how you want your beneficiaries to receive them.

2. Provide for Minor Children

The next step is to ensure you provide for your minor children. Use your will to appoint a guardian for them if you and their other parent both pass away.

Remember that your minor children will also need someone appointed who can handle their inherited property or assets.

Appoint someone you trust to handle all their financial affairs and make sure their money is taken care of. It could be the same person appointed as their guardian or someone else entirely.

3. Create a Living Will

A living will is a document that provides information about the care you want to receive in the event that you become incapacitated and cannot communicate.

This document (sometimes referred to as an advanced directive) includes instructions on whether you want doctors to use life-sustaining measures like breathing tubes and feeding tubes.

4. Create a Power of Attorney

A power of attorney (POA) gives someone the authority to make decisions for you if you’re unable.

Some people give a power of attorney for their health care and another to handle their financial matters. Others use the same person to handle everything.

5. Consider a Living Trust

If you want your assets to avoid going through probate, a living trust might be a good option to consider.

Through a living trust, your assets go into a trust during your lifetime. At the time of your death, these assets are transferred to beneficiaries that you designate by a representative you choose, known as a successor trustee.

A living trust can help your loved ones save time and money and receive what’s been left for them sooner.

6. Purchase Life Insurance

If you don’t already have life insurance, now is a good time to purchase it. This is especially important if you have minor children and/or own your home.

Life insurance can also be helpful if you anticipate having to pay a lot of debt or estate taxes. It will ensure that your beneficiaries can still receive what’s theirs without having to use a portion of their inheritance to pay off any debts you leave behind.

7. Name a Beneficiary on Your Bank Accounts

When you’re making plans for the future, it’s a good idea to name a beneficiary on your bank and retirement accounts.

If you do this, your bank can transfer those funds to the beneficiary automatically after your death. They won’t have to go through probate, which helps to save your beneficiaries time and money.

8. Handle Estate Tax Obligations

The majority of estates will not owe any kind of federal estate tax. If your estate is worth more than $11,180,000, though, it will be subject to these taxes.

Make sure your bases are covered if your estate is worth an amount close to this number (or if you suspect it will be at the time of your death).

Learn about any state taxes that you might have to pay as well (these can differ from the federal regulations.

9. Gather Paperwork and Other Important Information

Make sure you have all the paperwork associated with your estate stored in one place. Keep it in a folder or binder, then store then binder in a locked safe or another safe place.

Let the executor of your estate, as well as your power of attorney, know where they can find these documents.

Remember to store your digital information in this folder or binder as well. Write down passwords to all your online accounts so that your descendants can access them and handle them according to your instructions.

10. Leave a Personal Letter

You may also want to write a more personal letter to your loved ones before you go. Often, people want to leave behind messages that don’t necessarily belong in a will or other legal document.

Leave behind a letter that details the type of funeral arrangements you’d like or to list sentimental items that you want to leave to certain family members or loved ones.

Give this letter to someone you trust, such as a relative, a friend, or your attorney, so they can pass it along to your loved ones when the time comes.

Move Beyond Estate Planning Basics

These 10 estate planning tips ought to be sufficient when it comes to setting up an estate plan that works for you and your loved ones.

What if you need to move beyond estate planning basics, though?

If you need additional help setting up your estate or handling other matters related to your will, we can help.

Contact us today at DeBruin Law Firm to learn more about our services or to schedule an appointment for a consultation.

We’ll get back to you within one business day so you can start planning for the future as soon as possible.

What is a Living Will and Why is it Important to Have One?

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63% of American adults do not have a complete living will directive for their end of life care.

Unfortunately, the circumstances that make a living will necessary are not only confined to the older generation. This makes it important for every adult, to think about, and prepare one.

So then, what is a living will? When is it used and why is it important? Read on to find out.

What is a Living Will?

A living will is also referred to as an advance directive or a healthcare directive.
This document stipulates the kind of healthcare you would want or would not wish to receive, in the event that you are unable to communicate your wishes.

This can be as a result of a terminal illness or the aftermath of severe injuries that render you unconscious, comatose or otherwise unable to represent yourself.

Under these circumstances, hospitals consult your living testament to determine several things.

Some of these decisions include if you would want to be placed on life-sustaining treatment such as tube feeding and breathing support.

In the absence of an advance directive, doctors then consult your kin and other third parties to make medical decisions on your behalf.

These individuals may not follow the instructions you gave them verbatim. If you had not addressed the issues clearly, they might be unaware of what you would want.

Why Is a Living Will Important?

A living testament ensures that your healthcare is handled as you would wish. If for example, you would not want to be placed on life support, your living will would ensure that this does not happen.

In the event that you are terminally ill or severely injured, some decisions, though best for you might be extremely difficult for your family to make.

However, outlining these decisions makes it much easier for your family to comply, and takes the burden off their shoulders.

When Does It Come into Play?

A living will is only referred to if you are unconscious, terminally ill or suffer a severe injury which compromises your ability to articulate yourself.

Doctors do not consult it for a standard level of care that is not life-threatening.
Each state provides for the drafting of an advance directive.

Some allow you to prepare a customized, detailed will, while others give you a standard form to fill in.

Contents of Living Will

An advance directive addresses the most common medical procedures present in life-threatening situations. These include dialysis, resuscitation via electric shock and ventilation.

You can choose to forego all of these procedures or allow some and decline others. You can also refuse some life-sustaining procedures, but outline your desire to receive pain medication throughout your final days or hours.

Another thing you can include here is whether you would like to become a tissue and organ donor after death.

Most states allow people to extend their living will to address a situation where there is no brain activity.

The same applies in situations where doctors expect you to remain in a vegetative state for the rest of your life, with or without a preceding terminal illness.

Living Will vs Healthcare Proxy

While a living will covers medical decisions, a healthcare proxy is someone you give your healthcare power of attorney. A healthcare proxy has the authority to consult with doctors on issues regarding other arising medical issues.

This person can be the go-between between the doctors, family and yourself.
For this reason, the person you choose as a proxy should have a thorough understanding of what your wishes are.

Aside from this, they should be comfortable enough with your instructions to have them implemented to the letter.

Limits of a Living Will

One of the limits of a living will is that you cannot nominate a different individual to make medical decisions on your behalf.

Secondly, it cannot block doctors from providing basic healthcare as well as basic provisions of food and water.

Your medical plan will also strictly adhere to what has been outlined in the document. Anything that is not addressed will be left to your doctor to act in your best interest.

Similarly, if any clauses in your document are open to interpretation, its enforceability can be affected. This is the main reason why you need to prepare your living testament with the help of an attorney.

It is imperative to include as many details as possible, in the clearest manner possible.

Things to Address in Your Living Will

In determining your directives, think about your values and the circumstances under which your life would not be worth living anymore.

Would you want your life extended under all circumstances? Or would you want your life extended only if there was a cure? And in either case, for how long?

Your living will should address such issues in detail. Here are some of the main concerns to discuss with your doctor and to address in your living will.

• Cardiovascular resuscitation (CPR)
• Tube feeding
• Dialysis
• Mechanical ventilation
• Antibiotics or antiretroviral medication
• Organ and tissue donation
• Palliative care
• Donating your body for scientific studies

The Do Not Resuscitate or DNR order is the most common instruction when it comes to healthcare. You do not have to have this in your living will, although you can.

However, notify your doctor of this wish so they can include it in your medical records. Do this with your attending doctors each time you visit a hospital as well.

Ultimately

Hopefully, the question of, “What is a living will?” has been well answered. in this article.

When you are satisfied that your living will is representative of what you want, have a copy with your doctor and discuss it with your kin.

Again, have the original copies in a safe but accessible place as well. It will be of no good if your will cannot be located for implementation.

You may also have a wallet-sized card with you at all times stating where your advance health directives can be found, as well your primary doctor.

At De Bruin Law firm, we help people think through the process and draft clear, enforceable healthcare directives. Would you like to get started on yours? Contact us today for more information on how we can assist you.

Do I Need a Will? Who Needs a Will and When

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A recent survey revealed that 78% of millennials (ages 18-36,) and 64% of Gen X-ers (ages 37-52,) do not have a will.

By contrast, 81% of those ages 72 or older, and 58% of baby boomers (ages 53-71,) do have a document in place to ensure proper distribution of funds in the event that they pass.

In your 20s and 30s, creating a will may seem like a morbid subject that isn’t worth visiting yet. Some young people don’t believe they have enough assets to make writing a will worth it. Many live with their parents and still have student loans.

You may have asked yourself, “Do I need a will if I haven’t even reached my 40s yet?” The answer is likely “yes,” for a few important reasons. Let’s review.

Importance of an Executor

When someone dies intestate, or without a will, the estate goes into probate, with a judge deciding who should be the rightful heirs to your assets.

If you are young and single but have a positive net worth, you will want to have a document in place to manage the distribution of your assets. If you don’t own anything, however, a will is not necessary.

You may have named a beneficiary for your life insurance, retirement accounts, or property, which will ensure that they will inherit these assets or continue to benefit from them even if you are not here.

For physical assets, however, like a house, car, or electronics, you will need a will. The document will designate which individuals or organizations will own your property.

You will also want to consider your investments, 401k, life insurance, and ownership in businesses, all of which will need to be allocated.

Your executor should be someone you trust to see that your orders are carried out according to your wishes. Consider spouses, close family members, or clergymen when choosing an honest, responsible executor for your assets.

If you are an unmarried couple living together, do not assume that your will is going to be bequeathed to your partner once you are gone. It is important to put this information in writing to save your loved ones time and frustration.

Many folks choose to put a “no contest” clause in their will. This provision ensures that anyone who argues about their inheritance will not receive anything. It is a simple way to ensure that your assets are not creating a constant battle after you have gone.

If You Have Children

A will can allow you to establish a guardian for any minor children if you cannot care for them. It can also establish a custodian for any elderly or disabled family members who are unable to make financial decisions.

A will can also dictate a means for distributing property among your minor children. If you don’t put a plan in writing, they will receive their inheritance in one lump sum when they turn 18. A will allows you to set up payments at regular intervals to help adult children manage their finances more responsibly while they are young.

If you make your elderly parents the primary beneficiaries of your will, they may become ineligible for government assistance. You will want to put a key provision in that establishes monthly payments for their inheritance, rather than a lump sum.

A trust for your pet can also be established. You can choose someone to take care of them and allocate funds to meet their daily needs.

A Living Will

While a standard will provides for proper distribution of assets in the event of your death, a living will makes provisions in the event that you are alive but unable to make decisions yourself.

A Living Will allows you to establish someone as your Power of Attorney to make decisions about your medical treatment if you are terminally ill or in an ongoing vegetative state. It gives them the power to stop, give, or withhold medical treatments or procedures, including life-sustaining ones, if you put your wishes in writing beforehand.

You can select a friend or family member to act as your power of attorney by completing a fill-in-the-blank form, which many states provide for free. It will need to be signed in front of a notary for a small fee.

Preparing Your Will

Before preparing your will, you will need to collect paperwork confirming your assets, including real estate, 401K, life insurance, and vehicles. You will also want to keep a list of your debts, including mortgages, car loans, business loans, and credit card accounts.

Before you begin planning, develop a list of the names, addresses, and birthdates of your beneficiaries.

Some software, such as Quicken Willmaker Plus, can be purchased for around $50. It can help you to create a Standard Will, Living Will, Bypass Trust, or Financial Power of Attorney.

At a minimum, you should appoint a guardian for your children, designate an executor, and establish how you want your property distributed.

If you are uncomfortable with legal documents or have a complicated estate, you will want to enlist the help of an estate planning attorney. They may work alongside a CPA to develop maximum protection for your assets.

Do I Need a Will?

You may feel you are too young to ask the question “Do I need a will?” However, if you have any dependents, property, or money in savings, it is important to have the peace of mind that it will be managed appropriately.

For more information, contact us today.

What Is a Guardian vs Power of Attorney? Your End of Life Titles Guide

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We’ve all heard how important it is to have an estate plan and a will. But what about before that? How do you know your affairs will be taken care of when your mind starts to fade?

This is where a guardianship or power of attorney comes in. But what is a guardian and how is it different from a power of attorney? How do these two things help you and how do you know which one you need?

An easy way to know the difference between a guardianship and a power of attorney is this: A power of attorney is made by a person of sound mind so that a guardianship will not become necessary later on.

Now there is a bit more to these two legal documents, so we are going to go more in depth.

What Is a Guardian?

A guardian is someone appointed by the court to make decisions for someone who has been deemed incapacitated. This means that the person is mentally or physically impaired to the point where they can no longer make responsible decisions for themselves.

Limited Guardianship

The court can limit the guardian’s power to only be related to the incapacitated person’s specific needs. Not everyone needs what is called a full guardianship where the guardian has full control.

For example, the guardian may be responsible for making decisions when it related to medical care, or education, or housing. Limiting the guardian’s power allows the incapacitated person to keep some of their independence.

Conservatorship

This is similar to a guardian, but a conservator manages the incapacitated person’s estate and affairs. The court will appoint this person like they would a guardian.

Unlike a guardian though, a conservator will need to report to the court in greater detail.

What Is a Power of Attorney?

If you need someone to manage your affairs because you are not mentally or physically able to then you need to create a power of attorney. Most people will include this document as a part of their estate planning.

There are a few different types of power of attorney that you can create. The one you choose will depend on your particular need and situation.

Typical Powers Awarded

You need to create your power of attorney document when you are of sound mind. You cannot wait until you are no longer of sound mind as you cannot create contracts or enforceable legal documents while you are incapacitated or physically not available to sign it.

A power of attorney is typically used to buy or sell real estate, manage financial matters, enter into contracts, buy life insurance, or manage stocks.

Optional Powers

If there is a specific purpose you wish to use the power of attorney for, you can create that power too. Some of the optional powers include giving the ability to make gifts, manage a business, hire professionals, or manage living trusts.

Durable POA

If you want to give someone the power to act after you have become incapacitated you need to make it a durable or enduring power of attorney. Otherwise, your agent can only do what you are capable of doing.

So if you are in a coma you can’t sign a contract. Neither can your power of attorney.

You can make any type of power of attorney that we are going to discuss durable. You just need to be careful because you are giving someone else the power to act on your behalf whether you are incapacitated or not.

This means they could act on your behalf without your knowledge. You can help prevent this by adding a clause that says the power of attorney won’t come into effect until your doctor declares you incapacitated.

Non-Durable POA

If you need a power of attorney for a specific project or for a specific period of time, you need a non-durable power of attorney. As soon as the task or time period ends, so does the power of attorney

Limited or Special POA

If you want your agent to carry out a specific task because you are unable, a limited power of attorney will help. You can create the power for a specific purpose such as collecting a debt, selling a property, or borrowing money.

Springing POA

If you sign a basic power of attorney, it will become effective the moment you sign it. This may not comply with your intentions though.

Instead, a springing power of attorney will only become effective after the occurrence of a specified event. You could make the trigger a specific date, or age, or when your doctor deems you incapacitated.

Medical POA

This is a very specific power of attorney that lets someone make medical care decisions for you. If you are planning on undergoing major surgery this is a vital document you need to create.

Keep in mind that you will need to let your power of attorney know your wishes. That way they can make the decisions that you want should you become incapacitated.

Most states won’t let you give this power to a medical provider or the facility’s employees.

Financial POA

If you want a particular person to manage your financial affairs, this is the power of attorney for you. In the event that you cannot manage your own affairs, your agent will step in.

Most people choose a trusted family member or their accountant.

Seek Legal Advice

If you want to have a say in how your affairs are managed, you need to create a power of attorney while you are present and of sound mind. Choose someone that you trust.

A guardianship is your solution if someone you love is already incapacitated and needs assistance in managing some or all of their affairs. If they didn’t create a power of attorney you can ask the court to step in and assign a guardian.

Now that we have gone over their differences and the different types you should no longer be wondering what is a guardian and power of attorney. Now all you need is to find a qualified legal professional to help you create your legal documents.

Reach out to our firm today for assistance in deciding if a guardianship or power of attorney is right for your situation.

The De Bruin Law firm offers a wide range of legal services to clients in Greenville, SC and the surrounding upstate. Our experienced attorneys can help you with legal matters in the areas of business law, criminal law, estate planning, and real estate law.

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