If you are preparing for, or are currently incarcerated, the future may be uncertain right now. Proper estate planning may ease some of the worries you are facing. Below are some guidelines to help you develop a plan that will protect you and your family for many years to come.
How will my bills get paid while I am away?
A helpful tool to manage your money and property, regardless of the reason, is a durable financial power of attorney that is effective upon execution. A financial power of attorney allows you to choose a trusted person (an agent) to handle your financial matters for you. Your agent can handle a wide variety of transactions, from signing checks to opening a new bank account, depending on the authority you give that person. Because it is an immediate power of attorney, your agent will have the authority to act on your behalf as soon as you sign the document (or the agent signs an acceptance form acknowledging their responsibilities, if your state requires it). Although your agent can immediately act on your behalf, you will still have the ability to conduct your own business—you just have the benefit of an additional person being able to act for you. Lastly, by making your financial power of attorney durable, your agent's authority will continue even if you become incapacitated (unable to communicate or make decisions for yourself).
A revocable living trust (RLT) can also be a helpful solution to manage your money and property while you are away. An RLT is a trust you create during your lifetime that can be changed until your incapacity or death. This planning tool enables you to name yourself as the current trustee (the person or entity charged with managing, investing, and handing out the money and property) and to designate a co-trustee or alternate trustee if you are unable, for whatever reason, to act as the trustee. An RLT also allows you to continue enjoying the money and property during your lifetime, as well as designate what will happen to that money and property upon your death, protecting it for your chosen recipients.
An added benefit of an RLT is that any accounts and property owned by the trust will not have to go through the probate process. Probate is the court-supervised process that must take place to distribute accounts and property you own at your death to your loved ones. By avoiding probate, you can keep your private family matters out of court and save your loved ones' time and money.
If you have a minor child, an RLT may be especially useful for you. You can include provisions in an RLT that specify when and how the funds should be used for your minor child's benefit while you are present. You can also provide instructions to your alternate trustee for certain expenses to be paid while you are away to ensure that your minor child is provided for in the same way you would have. Similar provisions can also be included for other individuals in your family who may depend upon you for care.
Should you pass away without proper planning, any money or property that would go to your minor child according to state law will be managed by a court-appointed individual (i.e., a guardian), who could be a stranger. Also, once your minor child reaches the age of majority (which is 18 in Illinois), the court will give your child the remainder of the money and property in one lump sum. This means your newly-minted adult child could spend everything on a wild weekend in Vegas or be taken advantage of by someone wanting your child's money.
One caveat, however: This type of trust will not protect your money and property from your creditors, including fines, costs, restitution, and other charges associated with your incarceration.
Who will take care of my minor child?
Another critical concern during incarceration is the care of any minor children you may have. If your minor child's other legal parent is still alive and able to provide care, that parent will continue to provide, or will assume, caregiver responsibilities. Nevertheless, it is a good idea to plan for what will happen if both of you are unable to care for the minor child, just in case. If you are the only living parent or the other legal parent is unfit to care for your child, however, you must make the proper arrangements. While most people are familiar with the idea of naming a guardian for a minor child in a Last Will and Testament, this document does not become effective until your death. Therefore, to properly plan for your minor child's care during your absence, you must name a guardian in a separate writing that meets state law requirements. We can discuss the planning options available to you under our specific state law.
Failing to plan can have dire consequences for your minor child. Without instruction from you, the court will use its discretion in deciding who is best suited to care for or make decisions for your child should you be unable. We all know of individuals who appear one way in public but are completely different in private. Because you know your family best, you need to be the one making this decision, not a judge.
Why do I need other estate planning documents?
The above-mentioned estate planning documents can offer you and your family critical support during this time of transition. However, to make sure that you and your loved ones are protected to the fullest extent, there are a few other documents that are worth mentioning.
Medical Power of Attorney
This document allows you to name a trusted decision-maker to communicate your health care wishes if you cannot do so. Regardless of where you may be, someone must be able to make these decisions for you if you cannot. If you do not formally choose a medical decision-maker, your loved ones will face going to court to have someone appointed by a judge to make these medical decisions. This person may not be the one you would have chosen. Additionally, this court process takes additional time and money during an already stressful time.
Living Will or Advanced Directive
Known by either name depending on your state, this document allows you to convey your wishes regarding end-of-life decisions. Because these can be very sensitive topics, it is important that you carefully consider your wishes. This may take some soul-searching, but you must know what you want to happen in certain situations so that your wishes can be properly documented and communicated to your chosen medical decision-maker. Absent specific instructions from you, your medical decision-maker will be left trying to figure out what you would have wanted. Not only can this cause additional grief in a difficult situation, but it could also breed disagreements among your loved ones if there is a differing opinion on how to best care for you.
HIPAA Authorization Form
This form allows you to grant specific individuals access to your medical information (e.g., to get a status update on your condition or receive your test results) without giving those individuals the authority to make decisions on your behalf. By at least providing medical information to your loved ones, you can help quiet the anxieties and uncertainties that often arise during times of emergency. This can also help alleviate tensions between your medical decision-maker and the rest of your loved ones. Although only one person will be making medical decisions, the rest of your loved ones will at least understand why those decisions were made.
Last Will and Testament
A Last Will and Testament, also referred to as a will, is a document where you can name a personal representative or executor (the person in charge of collecting all of your accounts and property, paying your outstanding debts, and distributing your money and property to those you have named), specify who will receive your accounts and property, and name a guardian for your minor child, if necessary. Although this document is only useful at your death, it provides a way for you to officially express your wishes. If you fail to have a will, the probate court will determine who gets your money and property according to state law.
Let us help you
We understand that you may be going through a difficult time, but we want you to know that we are here to help. Protecting you and your family is our priority. If you have any questions or would like to discuss ways we can best serve you and your family, please give us a call today. We are available for in-person and virtual consultations, whichever is most convenient for you.