When many people think about putting in place an estate plan, they often only think about wills, trusts, probate administration, and passing along property and other assets. But your plan should also include putting in place provisions in case you become incapacitated and cannot manage your medical and financial decisions.
Illness and injury can happen at any age, and you should not wait until the worst happens. The following documents are urgent and necessary for everyone, regardless of health, age, or financial status.
Durable General Power of Attorney
A durable general power of attorney ensures that the person you name can act on your behalf to manage financial affairs in the event you are unable to do so yourself. Many individuals often think of this document in connection with dementia or care for the elderly, but there are many reasons why a person of any age might need this document. An illness or injury could require long-term hospital care, regardless of age. Having a durable general power of attorney document in place ensures that your financial obligations are met.
Health Care Power of Attorney
You should also have health care power of attorney, allowing another person to make health care decisions should you become incapacitated. A car accident, heart attack, or any of a number of other medical emergencies can befall you that may cause you to be unable to communicate important medical decisions on your own. At some point, someone may need to step in to make critical decisions regarding your well-being, and having a health care power of attorney in place designates that decision maker in advance, avoiding family disagreements and delays at a time when quick and crucial action may be needed. Knowing the person in charge of your medical decisions is someone you trust and have chosen can give both you and your loved ones some peace of mind.
This document is the one individuals are often most resistant to discuss. A living will or advance care directive allows you to express your wishes regarding end-of-life medical treatment. You can specify exactly what you want doctors to do in an effort to save or prolong your life. No one likes to think about these concerns, but putting off the decision only leave the burden on loved ones at a time when they are under duress. Specifying exactly what you do and don’t want done makes it easier for loved ones, taking away the responsibility of those decisions.
All of these documents can and should be updated on a regular basis. For instance, you may have very different wishes at age 35 than at 55 or 75. Be sure to revisit these documents whenever you have a life change. Having these documents ensures peace of mind, both for you and for your loved ones.
A revocable living trust can be a good strategy for you, too. While this powerful tool helps avoid probate (saving time, money, and anguish) and provides asset protection for your children in a divorce, it also can protect you if you are suddenly no longer physically or mentally capable of handling your own affairs.
Without a living trust, if you hold property in your name and become incapacitated, a court typically sets up a guardianship. The guardian would be named by the court, not by you. Many guardians draw fees for their services from your estate. Family members might vie for this position, possible creating discord among them.
Any contact a court-appointed guardian has with the court creates additional expenses, further siphoning away your resources. Guardians must file annual accountings and reports, requiring even more expenses. Judicial proceedings are generally public record, and your family might be forced to air sensitive information publically.
However, a living trust can help avoid all that. If you create a trust and name a “successor trustee” in the event of your incapacity, then you avoid having a court appointed guardian to oversee assets and stop unnecessary depletion of your estate by legal fees. You decide how to compensate the successor trustee, as well.
We hope this information is useful to you.