Estate planning

         Estate planning includes lifetime planning and death planning.  Estate planning provides the “who, how, when, where, and why” when you are incapable of making your own decisions and when you die.  Most people think if they end up in the hospital that their mom or dad, or husband or wife will be able to make medical decisions for them.  Not true.  You need to sign a power of attorney in order to give someone else the authority to speak for you if you are incapacitated. 


Power of attorney

         This is a document where you name a person to speak for you, if you are incapacitated or cannot make your own decisions for some other reason.  The person you authorize to speak for you is your agent in the power of attorney.  Your agent can step into your shoes and make all of the decisions that you normally make.  Of course, if you want to limit your agent’s decision making authority, then you simply put that information into your power of attorney.  A power of attorney can only be used when you are alive.


Healthcare directive or living will

         The healthcare directive or living will makes your wishes known regarding the end of your life.  It clarifies the types, if any; of medical or mental health procedures you want.  By creating a healthcare directive, you are relieving your family and friends from guessing as to your wishes.



         A will is a document you make that says what you want to happen to your property and family when you die.  It says who you want to take care of your children, should you die when they are still young.  This is called nominating a guardian.  Your will also says how you want your property divided and distributed.  It also says who you want to take care of all of this business for you.  This person is your personal representative.  When you die, your personal representative will take your will to the court.  This is called filing your will.  The court will authorize your personal representative to act with regard to your property.  The court will also authorize the person you nominated to be guardian to take care of your children.  When your will is filed with the court, it becomes public.  Anyone can go to the court and read your will.  This means anyone can know how you want your property divided and distributed.  The process of filing your will in court, naming the guardian, and the personal representative is called probate.  Your personal representative will hire an attorney to make sure everything is done correctly.  The probate process can be lengthy and expensive.


Living trust

         A living trust is a document that sets out what you want to happen with your family and property should you become incapacitated and when you die.  During your lifetime, you will make all of the decisions just as you always have. You will put your real and personal property into the living trust.   Putting your property into the trust is called funding the trust.  The types of property that do not go into your living trust are those that have beneficiary designations, pay on death clauses, and those that are owned jointly with another person with rights of survivorship.  These may include retirement accounts, bank accounts, brokerage accounts, real property or other personal property.


         During your life you will make decisions about your property.  You will be acting as the trustee of your living trust.  When you create a living trust, you are putting your estate plan into writing.  When you are incapacitated or when you die, the person you name to make decisions will take over for you.  This person is called the successor trustee.  When you die and have a living trust, your estate does not have to go through the judicial process of probate.   Instead, your successor trustee takes over and distributes your estate the way you wanted and makes sure your family is provided for as set out in the living trust. 

         Your successor trustee will probably have to hire an attorney and accountant in order to carry out the directions in your trust.  But these transactions are private.  Living trusts do not go through probate.



         A guardianship is a court order for one individual to make medical, mental health, housing and any other decisions needed for a person who is not able to make these decisions on his/her own.  There are high legal standards involved in making someone a guardian, because a person’s decision making ability to say what medical and/or mental health treatment, and/or housing situation they want are held dear by our legal system.  Just think if someone thought you were not capable of making your own decisions, we would not want the court to easily agree you are not capable.  Instead the court has a process where an investigation takes place.  The court names an attorney to represent the individual for whom a guardian is proposed.  Plus the court names a person to investigate the situation and make a report to the court. 


         The person who takes guardianship paperwork to the court is the petitioner.  The person who is the subject of the guardianship is called the respondent.  If the court approves the guardianship, then this person becomes the ward.  Once the guardianship paperwork is placed at the court, the judge will name a person to investigate what is going on with the respondent.  This investigator is called the visitor.  Because decision making ability and notice of any court action is so important, the court will name an attorney to work with the respondent.  Part of this attorney’s job is to make sure that respondent understands this process and to find out what the respondent wants to happen. 


         If the respondent wants a guardian to make decisions on his/her behalf, and the visitor’s report supports the need for a guardian, then the judge may agree and appoint a guardian.


         If the respondent disagrees with the guardianship proposal, then the attorney for the respondent will tell the judge this information.  When this happens the petitioner will have to show the judge why the respondent needs a guardian.  The petitioner will do this by having people come to court and tell the judge about the respondent.  These people may also tell the judge whether they think the respondent needs a guardian.  These people are called witnesses.  They might include the respondent’s caregivers, doctors, teachers, social workers, employers, school mates, friends, and family.


         Once the judge has listened to the witnesses, and the petitioner and the respondent have asked the witnesses any questions they might have, then the judge will make a decision on the guardianship. 


         The judge could approve the full guardianship, where medical and mental health, and housing decisions are made for the respondent or something less.  The judge could decide just a conservatorship is needed.  A conservator would make financial decisions on behalf of the ward.


Medicaid, Medicaid income trust, and Special needs trust

         Medicaid is medical insurance for persons with little to no assets and low income.  There are two types of trusts that can be used to make an individual eligible for Medicaid.  The first is a Medicaid income trust, which is used when a person’s income is above the allowable level.  Once the trust is made, the person’s income is direct deposited into the trust, and then the allowable level of income is withdrawn on a monthly schedule.  The excess money stays in the trust and is ultimately used to repay the state of Alaska for medical services received. 


         The second type of trust is a special needs trust.  This type of trust is used when an individual has too much property or too many assets.  The property is put into the trust and used only for special needs of the individual.  These special needs are for items or services that Medicaid will not provide.  There are two kinds of special needs trusts.  The first one is where the individual’s own property is put into the special needs trust and is called a first party trust.  The second type is when someone else is making a gift to the individual.  These are called a third party trust.  For example if grandpa leaves a large inheritance to the individual on Medicaid, this might cause him/her to have too many assets.  This is not good, because it makes the individual ineligible for Medicaid services.  A legal way around this is to put the gift or inheritance into a third party special needs trust for the benefit of the individual.


         It is extremely important that the special needs trust only provide those things that Medicaid would not provide.

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