Most people worry, for good reason, about the trouble of getting a court-ordered guardianship if necessary. The truth is that much of the pain can be avoided by having a Living Trust.
If you were to be incapacitated, your financial business and assets can be taken care of in three ways. The three ways are:
· With a Living Trust
· Selecting someone to have a Durable Power of Attorney, or
· Court proceeding for Legal Guardianship
We will begin with the final method. If nothing is done and you don't designate anyone to handle your finances formally and you are incapacitated, one or more family members will have to file with the court and go through public incompetency hearing. In order for your finances to be handled, a guardian or conservator will be named. This is frequently referred to as a Guardianship or Conservatorship Proceeding. It is often difficult, time-consuming; full of stress and expensive. Because there is often disagreement and considerable confusion among family members, it can be especially difficult on families as a whole.
Once you are no longer able to speak for yourself, it becomes guesswork for anyone else to determine what you would have wanted from handling your finances to who you would have wanted as your guardian. Even the simplest decisions become difficult when someone else has to make them. To complicate matters further, until the court has declared you incompetent and assigned a guardian or conservator, nothing at all can be done with your property.
If you do nothing and basically force a competency hearing to appoint a guardian or conservator, you ipso facto choose the worst of the options. This should only be considered as an option if you don't have someone you really trust with your financial and other matters in the event you become incapacitated. In that situation, it is probably best to have court supervision of your affairs.
Putting what you want in writing is the best thing you can do for yourself and even more so for your family. Giving someone you trust a document that gives him or her the authority to take care of your affairs if you are not able to take care of them yourself is something you really should give considerable importance. This could be by way of a durable power of attorney or a living trust.
Giving a friend or family member you trust a durable power of attorney that becomes effective once you are no longer able to handle your own matters is the most common method. More often than not, this works very well. However, anyone who has attempted to make decisions with only the authority of the power of attorney knows is can be very difficult. This becomes more and more so as modern society takes stronger security precautions. If you needed to access a family member's savings account with only the power of attorney to prove your authority to do so, it can prove to be a difficult task. It is not only a problem for you but for the bank personnel, too, as they have regulations they must follow.
For this reason, putting your assets in a Living Trust along with instructions as to how the trust should be managed if you should be rendered incapable of managing it is often the best way to go. You would be the primary trustee and would name a successor to take over management should you be incapacitated.
The person you name to succeed you as trustee should have very little difficulty with the management of the funds in your living trust while you are incapacitated. This is because the assets are in the name of the trust and not your name. If you should be unable to manage the trust yourself, your successor becomes the trustee. Of course, you will need to "fund" the trust so that the assets are re-titled in the name of the trust.
The bottom line is that virtually everyone needs a Durable Power of Attorney and should at least consider the advantages of a living trust as well.
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