Financial Planning: Wills And Other Ways

Who's got the power. Lawyers advise that you give someone your durable power of attorney. It names an agent to pay your bills and handle other financial matters if you can't act for yourself. But whom should you pick? You need someone the family sees as honest, capable and fair. When there are rifts among siblings, name an outsider as your agent?a friend, an uncle, a bank trust department (to take on this role, banks usually want your account to be worth $250,000 to $500,000 or more). The same thoughts apply to choosing future trustees for a living trust.

Problems sometimes arise when a sibling takes care of an ailing parent and also holds the power of attorney. He or she may decide to take "wages" or "gifts" in return for doing the work. When the parent dies, the cash may be gone and the sibs will start using words like "embezzlement." Payment for caretaking is fair, says attorney Sebastian Grassi Jr. of Grassi & Toering in Troy, Mich., but caregivers aren't supposed to help themselves. There's a trend toward families' writing "caretaking agreements" that set a wage for the sib on the job. Otherwise, only a court can order payment.

This gallop through inheritance risks leaves out other issues that could upend your plan. My best advice is to get advice, not from a buddy but from a lawyer who specializes in estates. That's what will keep your memory on the "sainted" list.

Reporter Associate: Temma Ehrenfeld

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