Who Should I Choose to Be My Power of Attorney?

power of attorney, Wheaton estate planning lawyerHave you ever thought about who should handle your affairs if you became physically or mentally capacitated? Sadly, unexpected accidents and illnesses can affect even individuals who are otherwise young and healthy. A power of attorney is a type of advance directive that allows a person to designate a representative or “agent” to speak on his or her behalf in the event of a catastrophic illness or injury. The term “power of attorney” is used to refer to the estate planning tool as well as the individual who is chosen to act as the agent. This is a heavy responsibility, so it is important to choose someone who is capable of handling the role.

Financial Power of Attorney and Power of Attorney for Healthcare

A power of attorney for healthcare, also called a medical power of attorney, allows you to choose a representative to make medical decisions on your behalf should you become unable to express your own medical wishes. For example, if complications arise during surgery and you are under anesthesia, your power of attorney for healthcare may need to make decisions on your behalf about how to proceed.

A financial power of attorney allows you to choose a representative to make financial decisions on your behalf if you become incapacitated. Your agent will be responsible for paying your bills and handling other monetary or real estate matters.  Some individuals choose to assign both medical and financial responsibilities to the same person, while others choose to assign these roles to two different people.

Considerations When Assigning Powers of Attorney

Choosing the person who will take on the huge responsibility of being your agent is often a difficult task. You may be conflicted about who you should assign as your financial or medical power or attorney. When choosing an agent, it is essential to choose someone who you can trust. You must also ask yourself whether or not this person can handle the duties for which he or she will be responsible.

For example, you may be extremely close with your adult son, but he might struggle to pay his bills or file his taxes on time. Although you may love him dearly, he may not be the best choice for managing your financial affairs. You should also consider how a potential agent would handle a decision that other family members or friends may disagree with. For example, perhaps you explain in advance to your medical power of attorney that you do not want to be kept alive via artificial ventilation if you are close to death. If you later become fatally sick or injured and the question of artificial ventilation arises, will he or she be strong enough to follow your wishes even if other loved ones disagree?

Contact a Wheaton, Illinois Estate Planning Lawyer

For estate planning guidance from a seasoned DuPage County estate planning attorney, contact Stock, Carlson & Duff LLC. Call our office today at 630-665-2500 and schedule a confidential consultation to discuss your needs.

Sources:

https://www.investopedia.com/articles/managing-wealth/042216/medical-vs-financial-power-attorney-reasons-separate-them.asp

https://www.verywellhealth.com/characteristics-for-choosing-power-of-attorney-4134991

Obamacare and Estate Planning in Illinois

The Affordable Care Act has recently dominated news across the country.  Regardless of what you think of the law, it is going to have an impact on your estate planning in the very near future.  Two authors recently wrote a helpful piece in the latest Illinois State Bar Association Trusts and Estates newsletter giving an overview of what to expect.

It is important to understand if and how the Affordable Care Act may affect your estate planning.  Some of the provisions may have a relatively uncomplicated impact on your future.  For example, non-medical withdrawals from health savings accounts will be taxed at 20%.  Additionally, using pre-tax flexible spending accounts on nonprescription medications will be prohibited.  Other parts of the ACA's provisions, though, are exceedingly complex. Careful planning and advice will be necessary to ensure that you can reduce your overall tax liability.  One of the largest effects to your estate comes from the investment income surtax of 3.8%, which applies to the lesser of the investment income or the amount that income exceeds over the threshold.

Put more simply, there are some tax increases and tax reductions, and all of that means it is time to look at Obamacare-driven estate planning opportunities if you haven’t already done so.

Other taxes that may have an effect on you include:

  • A 10% excise tax on tanning salons

  • Beginning in 2013, the maximum contribution to a pre-tax healthcare flexible spending account set at $2,500

  • Beginning in 2013, medical expenses are taxed only to the extent they exceed 10% of adjusted gross income (the 7.5% limit still applies to people over 65 until 2016)

  • Taxes on individuals not complying with the mandate, which may range from $0 to $4,500, and

  • Beginning in 2018, a 40% tax on "Cadillac" health plans.

We view clients as part of our family, so we view it as our duty to ensure that you are as fully prepared and informed as possible throughout the estate planning process.  Part of this duty entails keeping up to date with new laws, regulations, and taxes that can have an effect on your estate.  The Affordable Care Act is major change that will cause reverberations throughout many aspects of our society – from elderly care, to small businesses, to those without health insurance.  As the Affordable Care Act continues its roll-out, our attorneys will provide you with holistic and cost effective strategies to respond to these changes.  Please feel free to contact us if you have any questions.