Proactive Planning

It’s not pleasant thinking ahead about what happens if we become incapacitated or die, but since one day we all will take our final breath, and some will need long term care, it’s wise to take a few moments to think ahead about being proactive.

Planning for death is usually simpler than planning for incapacity. It means you should have a will, or trust or both in place to hold your assets and transfer them to your heirs at a time in their lives you think appropriate. Obviously even young adults who do not have enough life experience to handle a sudden large lump sum of money need someone else to manage that windfall for them until they get more experience in life. That person may be an older relative, or a bank that handles trusts, or an attorney experienced in handling trusts. The goal is to take care of the children until they gain more experience in life and get over that first love, or desire for that too expensive car they always wanted. If the trustee is going to be a relative, that person should have good judgment, but most of all, the inner strength to say no if the child wants to spend it on something that makes no sense.

Planning for your own incapacity is sometimes more difficult because choosing a family member, other than your spouse, means thinking about that person’s experience handling money and investments, but using their knowledge of your children’s strengths and needs to make wise distributions until the time you specify to transfer whatever is left of their share to them. The larger the inheritance, the longer time you may want to have a trustee handle the money to benefit your children. When they reach the ages you specify, a percentage of the amount remaining can be directed to be given to them. In the meantime, the trustee can use those funds for them for any reasonable reason.

One reason that some people do not take steps to protect assets upon their death is that thinking about dying is not a pleasant thing to do. But since anyone with children must think about caring for children, including into adulthood, it makes great sense to structure your plans so that they will be taken care of until they reach an age where the chance of them making mistakes with money is lessened.

Trusts do not only work for planning after death. There are trusts that can protect assets if one or both spouses need long term care. These are not needed for everyone, because most assets can be protected for a healthy spouse if the other spouse needs long term care. To do that, however, it is often necessary to have a durable power of attorney in place that specifically allows transfer of assets, including the home, from the sick spouse to the healthy one. It often feels like boring repetition to keep saying that a properly drafted power of attorney with gifting powers between spouses could be the most important document for anyone. As the years go by, and you and your children age, and your assets hopefully grow, it makes sense to review not only the changes in your family and wealth, but the changes in Connecticut and federal laws that may affect your family situation. That old saying that “an ounce of prevention is worth a pound of cure” is still true.

Attorney Stephen O. Allaire is Of Counsel and Attorney Halley C. Allaire is principal in the law firm of Allaire Elder Law, members of the National Academy of Elder Law Attorneys, Inc., with offices at 271 Farmington Avenue, Bristol, (860) 259-1500, or on the web at www.allaireelderlaw.com. If you have a question, send a written note to either attorney at Allaire Elder Law, LLC, 271 Farmington Avenue, Bristol, CT 06010, and they may use your question in a future column.