For many people, estate planning is one of those tasks that is easy to put off.
It simply does not make it to the top of their To-Do lists. However, there is probably no better illustration of the old adage that ‘An ounce of prevention is worth a pound of Cure’ than estate planning. For most people, “estate planning” means obtaining a Last Will & Testament, a Power of Attorney and an advance directive for medical decisions. Compared to the time and expense required to do simple estate planning, the return on investment is dramatic.
Last Will & Testament
Here are 10 benefits of having a Last Will & Testament:
- Knowing that you have put your estate in order brings peace of mind—the most frequently mentioned benefit.
- You get to decide how your estate is distributed, rather than the distribution being determined by statute.
- You make the probate of your estate much simpler, which lightens the burden that loved one must bear during a time of grief.
- Probate is less expensive when you plan properly.
- Sometimes, you can avoid probate altogether with minimal planning.
- Good planning reduces the likelihood of conflict among your surviving family members.
- Parents of minors can express their wishes regarding custody of their children.
- Parents of minors can make provision for a testamentary (i.e. created by a Last Will & Testament) trust that determines how assets will be managed by the trustee that they have selected.
- Parents of minor can assure that their child does not received his or her inheritance in a lump sum upon turning 18, instead putting in place a plan to distribute assets according to particular milestones such as marriage, college graduation and the like.
- Parents of disabled child can direct assets to a trust in such a way that the child’s access to government healthcare benefits is preserved.
Power of Attorney
We recommend that everyone have a Power of Attorney, which is a legal instrument that grants authority to a trusted person who will make legal decisions on your behalf when you are unable to do so. Technically speaking, this person is your “attorney-in-fact.” However, because most people refer to this person as “Power of Attorney,” we will use the term POA here.
Choosing a POA is something you should do very carefully. For married people, granting your spouse POA usually makes sense. For elderly widows or widowers, it is usually beneficial to appoint an adult son or daughter who lives close enough to take care of your business affairs. We often recommend that people have more than one POA. One example of where having an additional POA can make a difference is a situation in which a married couple is involved in a serious accident. If both are incapacitated, then the additional POA can step up.
Here are 5 benefits of having a Power of Attorney:
- Your POA can do your banking and otherwise manage your financial resources.
- Having a POA makes it less likely that you will require a court-appointed guardian, which involves a jury trial and can include the complete loss of your legal decision-making authority.
- Your POA can make medical decisions for you.
- Even while you still have full legal capacity, your POA can transact business on your behalf for the sake of convenience.
- Knowing that you have chosen a person you trust to take care of your business when you can no longer do so brings peace of mind.
An “advance directive” is a legal document by which one person authorizes another to make medical decisions on his or her behalf. As people age, their ability to do so is often diminished while the level of care that they require usually increases. Although healthcare providers generally defer to the wishes of family regarding treatment of a loved one, an advance directive is the best approach to medical decision-making for those with diminished mental capacity.
Most Power of Attorney documents include language that allows the POA to make medical decisions. It is a good practice, however, to have a document that specifically addresses medical decision-making. We recommend execution of a Designation of Healthcare Surrogate, which functions as a Power of Attorney that is limited to medical decisions. A third type of advance directive, and the one most people are familiar with, is the Living Will. Most Living Wills have limited applicability in that they do not come into effect until the person has a “terminal condition.” That seems clear enough at first glance, but in practice it is sometimes rather difficult to utilize because it what constitutes a “terminal condition” may differ from one healthcare provider to another.
We strongly recommend having an advance directive. Here are 7 benefits of doing so:
- You clearly choose who will make medical decisions for you, rather than depending upon others to do so.
- You can determine in advance how you want your healthcare providers to respond to particular scenarios.
- You can avoid prolonging unnecessarily the process of dying.
- One who is designated as a healthcare surrogate has access to medical records and information that others do not.
- Having a designated medical decision-maker reduces the likelihood of family conflict over medical decisions, especially those that are required at the end of life.
- You can assure that your wishes are likely to be carried out.
- Having a healthcare surrogate brings peace of mind from the perspective of knowing that someone you trust will have the legal authority to carry out your wishes.
In addition to the Last Will & Testament/Power of Attorney/Advance Directive approach, we also prepare Revocable Living Trusts for those who wish to exercise a higher level of control over their estates. This is a very effective estate planning tool. For more information, please contact any of our offices to schedule a no-cost consultation.
If you do not have an up-to-date estate plan, we urge you to contact us so that we can help you take care of this important aspect of planning for your future.
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