| As the baby-boom
generation ages, the problems faced
by this segment of the population
will become more acute. One such
problem is the decline in one's
ability to make financial decisions.
As the problem worsens, the person
may be unable to manage their money
at all and may be liable to
dissipate it. To prevent such an
occurrence, the court can be asked
to formally declare the person
incompetent and appoint a guardian
to handle the incapacitated person's
finances. Since such guardianship
proceedings are unpleasant for all
concerned, they should be viewed as
a last option. Before resorting to
the guardianship, those faced with
such problems should consider the
following alternatives.
One popular technique to assist
the elderly with money management
is the multiple party or joint
bank account. This will allow
either of the co-owners to access
the funds in the account. The key
here is to choose a trustworthy
co-owner as they have the ability
to withdraw all of the money. If
they use it for their own benefit,
getting it back may be difficult.
Also, if the co-owner dies before
the original depositor, the
original depositor will end up
paying Pennsylvania inheritance
tax on their own money.
If the incapacitated person has
only limited sources of income, it
may be possible to establish
direct deposit relationships with
respect to pension, annuity and
social security payments. With
direct deposit, a check is not
issued, but rather the money is
electronically credited to a bank
account in the recipient's name.
While this takes care of receiving
money, paying bills must be dealt
with by other means.
The power of attorney is probably
the most widely used tool for
dealing with the disability
problem. The power of attorney is
simply a written document where
you give someone else the power
and authority to act on your
behalf. The main consideration
here is that it must be signed
while you are still competent.
Therefore, as a precautionary
measure, many sign powers of
attorney far in advance of any
anticipated incapacity.
Trusts are another vehicle that
are often used to confront
disability problems. Trusts are
perhaps the ideal arrangements if
the estate is large enough to
warrant the extra complexity
involved with drafting the trust
and transferring assets to the
trust. To eliminate this burden,
you should consider a bank as the
trustee. The bank can supply
standard trust forms and they will
handle the transfer of most of the
assets to the trust.
The Social Security
Administration and other federal
agencies do allow the appointment
of a so-called "representative
payee" who is authorized to
receive and handle the benefits.
The representative payee is
appointed when the agency
determines that it's in the
beneficiary's best interests. The
representative payee relationship,
however, extends only to those
benefits and not to any other
moneys.
The above options are
alternatives to the more drastic
guardianship procedure. Moreover,
these choices deal solely with the
financial aspects and not the
mental, physical or health related
problems of the elderly.
Confronting these problems
requires other considerations. The
key with all aspects of the
problem is to do some planning
before the guardianship becomes
your only alternative.
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