Estate Planning

Your estate includes the property you own at your death. Your estate plan is a blueprint of how you want your financial and personal affairs handled while you are alive.

If you fail to plan for your estate, a plan will be made for you. There are "default" plans for making decisions during your life when you are no longer able to do so and for making decisions about how your estate will be distributed at your death.

Elements of Estate Planning include: Wills, Trusts, Durable Powers of Attorney, Health Care Powers of Attorney, and Living Wills.

Wills

Trusts

A Trust is a legal arrangement in which the grantor transfers legal title of property to a trustee to hold and manage for the benefit of the beneficiaries. If the grantor is concerned that he or she may lose the ability to handle his or her finances, the grantor may set up a trust and transfer legal title to a trustee of the grantor's choice. The grantor is a beneficiary of the Trust. The trustee has the legal right to deal with the property, regardless of the competency of the grantor.

A Trust has many potential benefits. It can address unique family problems, provide tax benefits, and preserve assets for subsequent beneficiaries. Another advantage of a Trust, particularly as compared with a Guardianship, is its flexibility. Most importantly, it can provide peace of mind.

Some disadvantages of a Trust, as compared with a Durable Power of Attorney, include expense, complexity, and higher tax rates for some trusts. Trusts are not beneficial for everyone.

Basically, there are two types of trusts: Living Trusts and Testamentary Trusts. A Living Trust is set up while you are living. If revocable, you can change it. If irrevocable, you cannot change it. A Testamentary Trust is set up in your will. These are revocable and can change before your death. The Trust becomes irrevocable upon your death.

Durable Power or Attorney

A Power of Attorney is a document in which you give someone the legal authority to act for you. That person is called your "attorney-in-fact" or your "agent." You are called the "principal." A Durable Power of Attorney remains or becomes effective after the principal becomes incompetent.

The advantages of a Durable Power of Attorney include its flexibility, moderate cost and simplicity. There is no transfer of legal title or loss of legal rights. If drafted properly, the document can provide for flexibility to deal with future situations.

The disadvantages of a Durable Power of Attorney include the potential for the agent to abuse his or her power and the reluctance of third parties to deal with the agent. This can be alleviated if the Power of Attorney is drafted properly.

Advance Medical Directives

Advance Medical Directives allow you to make certain medical decisions in advance. These include Health Care Powers of Attorney and Living Wills.

Health Care Power Of Attorney

A Health Care Power of Attorney is a Durable Power of Attorney in which you appoint someone to make medical decisions if you should become unable to make them. This person is called your "health care agent." You are called the "principal."

You must be of sound mind, at least 18 years old, and able to make and communicate health care decisions to execute a Health Care Power of Attorney. Your Health Care Power of Attorney must be properly signed, witnessed and notarized.

Your health care agent must also be of sound mind and at least 18 years old. Your health care agent cannot be providing medical care to you for reimbursement. He or she should be someone you trust with your life.

You should always name one or more alternate Health Care Agents in case your first choice for your health agent is unable, unavailable or unwilling to make your health care decisions for you.

It's important that there are no questions about the validity of your Health Care Power of Attorney. You must sign in the presence of two witnesses who are not related to you or your spouse, will not inherit property from you, are not your doctor or employees of your doctor, hospital, nursing home, or group-care home, or will not have a claim against your estate. The document must be notarized.

Your Health Care Agent's Power is not automatic. Your doctor must state in writing that you lack the capacity to understand, make or communicate your health care decisions. You may choose the doctor who makes this determination. If the doctor you choose is unavailable, your attending physician may make this determination.

You may give your health care agent the right to make any medical decision that you could make, including the right to consent to the withholding or withdrawal of life-sustaining measures. You may limit your health care agent's power by putting restrictions on what he or she may authorize.

To revoke a Health Care Agent's authority, you may provide a written statement revoking it, execute another Health Care Power of Attorney, communicate in any way your intent to revoke, appoint a guardian of the person, or enter a decree of divorce or separation between the agent and the principal.

Living Will

A Living Will is a statement that you want to die a natural death. You do not want your life prolonged by artificial means if there is no reasonable hope of recovery. The technical name for a Living Will in North Carolina is "Declaration of a Desire for a Natural Death."

You must ensure that your Living Will meets all requirements to be upheld. Your Living Will should contain specific statements and must be properly signed, witnessed and notarized. North Carolina law requires these two statements:

"You desire that your life not be prolonged by extraordinary means or by artificial nutrition or hydration if your condition is determined to be terminal and incurable or if you are in a persistent vegetative state, and;"

"You are aware that your Living Will authorizes your doctor to withhold or discontinue the extraordinary means or artificial nutrition or hydration."

You must be at least 18 years old and of sound mind when the document is executed. You must sign your Living Will in the presence of two witnesses who are not related to you or your spouse, will not inherit property from you, are not your doctor or employees of your doctor, hospital, nursing home or group-care home, or will not have a claim against your estate. The document must be notarized.

Your doctor must determine that your condition is terminal and incurable or that you are in a persistent vegetative state for a Living Will to take effect. Once another doctor agrees with this diagnosis, extraordinary means or feeding tubes may be withheld or discontinued.

Extraordinary means is defined as medical procedure that only postpones artificially the moment of death by sustaining, restoring or supplanting a vital function. A person is in a persistent vegetative state when he or she is suffering from a sustained complete loss of self-aware cognition and, without the use of extraordinary means or feeding tubes, will die within a short period of time.

If there is no Living Will, someone else makes the vital decision. If your doctor determines that your condition is terminal and incurable, or you are in a persistent vegetative state and another doctor agrees with this diagnosis, extraordinary means or feeding tubes may be withheld or discontinued with the permission of your guardian, health care agent, spouse or a majority of your family.

If you have a Living Will and a Health Care Power of Attorney, the Living Will controls if there is a conflict between the two documents. If you do not have a Living Will, your Health Care Agent named in your Health Care Power of Attorney can make the decision to terminate life support systems as set forth in your health care power of attorney.

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