Having a Will is Only the Beginning

by Richard E. Boston

For any number of people, estate planning consists solely of executing a will and making sure that they have adequate life insurance to provide for their burial. Granted, these are important and critical steps in anyone’s planning. But with a will and life insurance, you have dealt only with what happens at the time of your death.

What plans have you made to provide for those unexpected events that occur during one’s life, particularly as health issues become more of a probability than just a possibility? Instead of thinking only about providing for your spouse and family at your death, you should also consider doing what you can, while you can, to ease the emotional and financial burdens of those you care most about should your health fail, leaving you incompetent to execute legal documents.

In counseling new clients and when reviewing and updating the estate plans of existing clients, I strongly encourage the use of four documents as an essential beginning point for any estate plan, irregardless of the size of the estate. Those documents consist of a will, a durable power of attorney, a health care representative appointment, and a living will. The last three provide for the client’s needs while living.

DURABLE POWER OF ATTORNEY – this document provides for the ongoing conduct of the client’s financial and business affairs should he or she either not be able or not be available to carry out these functions. Most people name their spouse as the person to act on their behalf when they cannot. If the spouse should no longer be available, a successor is named in the document. Generally, this is one or more family members or a close friend. The power of attorney can either be made effective immediately upon its execution or it can be drafted so that it becomes effective only upon the client’s physician’s certifying that the patient is incompetent to manage his or her financial affairs.

This document is customarily very broad in the powers that it bestows on the person appointed to act, but such powers can be limited to a person’s specific needs. Some examples of what a power of attorney can provide for are the following: banking functions, including check writing; the execution of deeds, notes, mortgages and other documents dealing with real estate; the filing of income tax returns; estate planning functions; the operation of a business; or the handling of all types of insurance matters.

You may ask why this is important. In many instances it prevents the spouse or children from having to go to court to have a person declared incapacitated and to then have a guardian appointed to handle that person’s business and financial affairs as well as their day-to-day care. When the court becomes involved, an inventory of assets must be filed. This is a matter of public record. The family loses its financial privacy. A formal accounting must be filed with the court at least every two years by the guardian. This means accounting for all income and all monies spent. Too, any extraordinary expenditures may require court approval. With proper planning, all of this can usually be avoided, leaving such decisions to the family and not to the court’s discretion.

Another common scenario is where a house is owned jointly between a husband and wife. One spouse becomes incapacitated and at some point the house needs to be sold, whether that be because it’s too large, or money is needed for long-term nursing care, or for any number of reasons. The sale and transfer would require the signature of both husband and wife. With a power of attorney, this problem would be solved. Without a power of attorney, a court-appointed guardian would most likely be necessary in order to have someone with the legal right to sign the incapacitated spouse’s name to the deed.

HEALTH CARE REPRESENT-ATIVE APPOINTMENT – This document functions much like a power of attorney, but relates to a person’s health care needs rather than to business and financial affairs. Again, the spouse is usually named as the first choice with a family member or close friend being named as a successor.

The named health care representative is authorized to make health care decisions for you when you cannot do so. This power may need to be exercised only for a short period. Once you are again able to make your own health care decisions, you do so.

With this document, the attending medical personnel have someone with the legal authority that can make critical health care decisions as necessary. This could be as a result of an accident, or a general health-related problem such as an incapacitating stroke.

LIVING WILL – Most clients have strong feelings as to whether or not they wish to be kept alive if they have no chance of recovering and living a quality life. Should this circumstance arise, it is important that you leave a directive as to whether or not you wish to be placed on, or kept on, a life support system and if you are taken off of life support, whether or not you wish to continue to receive nutrition and hydration.

A living will provides a written statement of your wishes in this regard. This does two things. It provides the medical personnel with information they need. More importantly, it relieves your spouse or family from being left with the responsibility of trying to decide what you might want in this situation, yet being reluctant to make a decision that will end your life. This is an onerous decision to leave to your spouse and family. However, this is a decision that you can make by using a living will and thereby avoid placing those you care most about through this trauma and possibly having a decision made that you yourself would never have made.

Begin your estate plan with an appropriate will that carries out your wishes while meeting the needs of your survivors. But do not stop there. Make plans for your living as well as for your dying by incorporating the above planning tools into your basic estate plan. Should the need ever arise for their use, I can assure you that your family members’ lives will have been made abundantly easier as a result of your forethought.