As an elder law attorney in Marietta, I find that certain questions are asked of me over and over again. One area that sometimes requires explanation is the difference between guardianships and powers of attorney.
Guardianships for Elders
Guardianships come into play when an adult experiences some sort of issue that leads to a mental disability. Elder lawyers see this type of situation in regards to the onset of dementia, for example, but there are other causes, such as a brain injury. If the elder adult is unable to make responsible decisions for himself or herself, the courts can appoint someone to make them instead. “Guardian” is a common term for this position, but it may also be referred to as a “conservator.” The person for whom the decisions are now being made is often called the “ward.”
A guardian is typically authorized to make most of the important decisions for the ward regarding things like health care, finances, and legal proceedings. There are times, however, when the guardian may need to obtain court approval before their decisions become final. Additionally, it is possible for there to be a “conservator” in charge of finances and a “guardian” in charge of other types of decisions.
Guardianships are not something that are handed out lightly. Having one’s independence handed over to another is profound, and therefore elder lawyers work with the family to exhaust other options first.
Powers of Attorney for Elders
A senior will often find that they have more freedom when they choose to give someone power of attorney. The power of attorney is similar in that it gives another person the right to make decisions in case of incapacitation, but it is more restrictive. For example, the elder lawyer may be directed to draft the power of attorney to only allow the “agent” to have control over certain types of decisions. (Again, healthcare, finances, and legal are some of the more common areas covered.)
Powers of attorney can be limited, too. For example, if a client is going to be out of town while a legal transaction is taking place, they might direct their elder lawyer to give a third party the power of attorney to represent them. Or, they may only give the agent power of attorney for certain activities, such as signing checks to pay monthly bills.
Comparing the Two
One of the biggest differences between the two is that the agent with a power of attorney is chosen by the individual, whereas a guardian is appointed by the courts. When a senior works with a Cobb County elder lawyer to draw up the power of attorney, they are able to choose someone they trust to have their best interests in mind. On the other hand, when the courts choose a guardian, they will be using legal precedence rather than considering what the senior would prefer.
If you have other questions about estate planning, probate or elder law issues, please call us at 770-425-6060.
Atlanta trust lawyers are abuzz following a recent US Supreme Court decision that will have big implications for clients. The fact that these professionals keep up-to-date on legislation and court decisions that affect their clients is one of the most important reasons not only to hire an estate planning lawyer in the first place, but also to check in with the attorney at least annually to see if any changes need to be made to a previous plan in light of new information.
While a person’s own IRA can be protected in the case of bankruptcy, the court has determined that an inherited IRA cannot. While that is big news for those who have already inherited an IRA, it is a call to action for those planning to leave one behind. Being aware of the consequences of the Court’s decision can drastically change the approach to planning in order to protect heirs from this new development.
It is common for estate planning lawyers in Atlanta to see clients who have much of their wealth in the form of an IRA or 401(k). During the planning process, they determine how that money should be used after their death. It often makes up a large part of the estate they intend to leave behind. As of recently, this was commonly done by placing it into a Revocable Living Trust. Now, however, if the heir declares bankruptcy, that money can be taken away.
A Real-Life Example of Savings and Loss
The possibility of losing an inherited retirement account in this manner is more common than you might expect. Take for example the case of Joan and Robert. Robert worked hard to save for retirement, accumulating $450,000 in his 401(k). Unfortunately he was also diagnosed with a serious medical condition and accumulated over $300,000 in medical debt before he passed away.
After his death, his wife transferred the funds of the retirement account into an “inherited” IRA so that she could access the money without having to pay a 10% penalty before age 59 ½ . That money was her lifeline.
However, the medical bills spiraled out of control and were eventually turned over to a collection agency. Unable to pay back the balance, Joan was forced into bankruptcy. Little did she know that the money in her “inherited” IRA could now be seized by creditors during the bankruptcy proceedings. Had Robert planned for this possibility, the funds would have stayed protected.
Protecting Wealth In An IRA For Beneficiaries
In order to protect money in an inherited retirement account, many estate planning lawyers in Atlanta are now recommending that their clients consider setting up a Standalone Retirement Trust. This type of trust can protect against other threats, too. Basically, it makes the money inaccessible to any future creditors of the trust’s beneficiary because the trust was not established or funded by the beneficiary. By naming an independent trustee rather than having the beneficiary play this role, there are even more protections in place. An Atlanta trust lawyer can offer a variety of suggestions on how to choose the appropriate trustee.
There are some fairly stringent guidelines that need to be followed to make sure the trust works as intended. A trust lawyer in Atlanta will need to make sure these regulations are adhered to so that the trust can qualify. When done properly, the trust’s distributions can be made similarly to how they would have from the IRA without the risk from the beneficiary’s creditors.
Whether you are just beginning the planning process or you have already created an estate plan, this big decision by the US Supreme Court can affect you and those you leave behind. Make sure to contact your trust lawyer in Atlanta to ensure that your IRA is protected for the next generation.