Life can get tough when it comes to making financial decisions and having a durable power of attorney will provide individuals and their families peace of mind. But what is a durable power of attorney? It gives designated family members the decision-making authority over an individual’s finances and also over one’s healthcare, such as a healthcare directive. The need for this document occurs when a situation arises requiring a third party to step in and manage all financial affairs such as buying or selling any stocks, completing taxes, buying or selling property, running any businesses, or distributing any state-run benefits or Social Security.

A person can customize their durable power of attorney to selectively authorize specific actions or the timing of when it goes into effect under particular conditions.

What Happens Without a Durable Power Of Attorney?

For an incapacitated individual that does not have a durable power of attorney, that person’s family is required to go to court to gain conservatorship over their loved one’s estate. This process is the same when the family needs to make medical decisions. A healthcare power of attorney indicates what a designated representative can do so on a person’s behalf, such as life support, decline pain medication, donate organs, or choose a cremation over burial.

The Purpose and Advantage of Having a Trust

When a person has established a trust, they’ve created a stand-alone entity to survive after their death that legally holds title to all assets. This document avoids the probate process and provides a smooth administration after a person’s death, especially in California, where probate is incredibly costly, time-consuming, and public. Additionally, when one has any special needs children, a trust can provide financial support while not requiring the child to lose their government benefits. Taking an extra step to create an individual trust that accommodates this situation is vital for their future. In general, setting up a trust provides the needed flexibility and control over the assets for loved ones during those difficult months after a person’s death.

What Are The Different Types of Trusts Used In Estate Planning?

For most, when someone is discussing trusts, they are referring to the most common types – revocable and irrevocable trusts. A revocable trust provides the grantor or the creator of the trust, complete control, and possession of all assets throughout their lifetime. Why is this step necessary? A revocable trust does not protect against a lawsuit or creditors as the assets are considered still in the person’s possession. However, most clients find that their needs are met by including a revocable living trust as part of their estate plan. On the other hand, an irrevocable trust decreases the control the grantor has over those specific assets but provides asset protection. With a multitude of irrevocable trusts to select from, finding one that fits the client’s needs, the best will depend on their particular situation.

For more information on Power Of Attorney in the State of California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (619) 550-3080 today.