When you decide to start educating yourself about estate planning, you are invariably going to come into contact with some unfamiliar terms. This is fully understandable, and in this post, we will look at five terms that you may come across and provide some basic definitions.
The majority of senior citizens will need help with their activities of daily living eventually. They will never recover from the underlying cause of the limitations. For example, a person may have severe arthritis, and this may make it difficult for them to handle all their own day-to-day needs.
Arthritis is just one example, but there are many other conditions that can prevent completely independent living. If a person is receiving long-term care with no hope of any improvement that would make the assistance unnecessary, it is considered to be custodial care.
Why is this relevant? That’s a good question, and the answer is that Medicare does not pay for custodial care. It will pay for some of the convalescent care that you may receive after an injury or illness when recovery is expected, but it does not cover in-home custodial care or a stay in an assisted living facility or a nursing home.
A trustee acts as the administrator of a trust. If you were to establish a revocable living trust, you could serve as the trustee while you are alive and well.
In the trust declaration, you would name a successor trustee to take over the role after you pass away. Any willing adult that is of sound mind can legally act as a trustee. As a result, you could name someone that you know personally to be a successor trustee.
However, there is another option and many people will prefer.
It is possible to engage a professional fiduciary such as a trust company or the trust department of a bank to serve as the successor trustee. There are significant costs involved if you go this route, but under some circumstances, it can be a good choice.
Advance Directives for Health Care
When you are planning your estate, it is wise to address eventualities that you may face during the very end of your life. This is done through the inclusion of an incapacity planning component within your broader legacy plan.
Advance directives for health care are part of this equation.
One advance directive that everyone should have is a living will. This type of will has nothing to do with money or property. With a living will, you state your preferences with regard to the utilization of life-sustaining measures like artificial respiration, nutrition, and hydration.
The other advance directive that should be part of the plan is a health care proxy, which is a document that is sometimes called a durable medical power of attorney. This would empower someone of your choosing to make health care decisions on your behalf if you become unable to make them yourself.
These would be medical scenarios that are not covered in the living will.
Probate can be succinctly defined as the court-supervised process of estate administration. Some types of asset transfers are not subject to probate, but in many cases, the probate court will provide supervision when an estate is being administered. This court also presides over guardianship matters for incapacitated adults and children.
If you were to pass away without any estate planning documents at all, the condition of intestacy would exist. When this scenario unfolds, the aforementioned probate court would step in to name a personal representative to administer the estate.
After the completion of all required tasks, the court would order the representative to distribute the assets in accordance with the intestate succession rules of the state of Hawaii.
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