While creating your estate plan, don’t forget to also arm your loved ones with information about how they can best care for you in the event you become incapacitated. Legal experts provide pointers for making sure friends and family understand your intentions and are prepared to step in.
Lessons Learned From the COVID-19 Crisis
As dreadful as it is to consider what will happen if we become incapacitated or face a rapid decline, it’s even worse to envision the extra stress incurred when family and friends are caught unprepared to cope with our affairs. Recently, attorney Lisa Paine of Jaburg Wilk shared this heartfelt reminder:
Because their focus is on others, many clients do not think about making sure they are cared for during their lifetimes and during any periods of incapacity. This is equally important, if not more important, then taking care of others. Too many times since COVID-19 pandemic started, I have received heart-wrenching phone calls from children whose parents have become ill. They want to know how they can help take care of their parents’ finances, who is the proper person to make medical decisions, or how do they make end of life care decisions.
What we learned during COVID-19 pandemic is that things can change in an instant. It is so important to put documents in place to give authority to those who will be decision-makers if someone becomes incapacitated. Once those documents are together, it is time for another uncomfortable yet critical step. It is vitally important to talk to the decision-makers about your wishes so, if they are needed, they can be as prepared as possible.
The Basics: A Trust, A Trustee and a Trustee Bond
Keep in mind that a will is only effective upon your death. If you become incapacitated, a will does not enable the management of your assets. Experts, including Paine, recommend making a revocable living trust the cornerstone of your estate plan. Trusts are customizable and can include instructions about how your assets are ultimate to be distributed. As you begin preparing for a Trust, these basic terms will help.
Revocable Living Trust – The trust is revocable, which means you will be able to revoke or amend the trust during your lifetime. Since you are creating your trust during your lifetime, it is a Living trust.
The Settlor, also called a Trustor, is the person(s) who created the trust and who transferred assets to the trust. You, and your spouse if a joint trust, will be the Settlors of your trust.
Trustee – The Trustee is the person(s) or institution who manages your trust assets, including making necessary decisions regarding the trust. You, and your spouse if a joint trust, will likely be the initial Trustees of your trust. You will name successors to serve in your place if you are unable to continue serving as Trustee.
The written trust agreement generally includes details about how the trustee is to manage and distribute the assets, and other essential duties to be carried out. Given the fiduciary responsibilities undertaken by trustees, the trust agreement may require to the procurement of a trustee bond. In some circumstances, courts can also require a trustee bond.
Understanding Trustee Bonds
A trustee bond is a type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. Essentially, trustee bonds guarantee the faithful performance of the trustee.
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