Essential Legal Papers Every Individual Ought to Possess: A Guide by an Estate Planning Lawyer
In life, it's essential to have control over our affairs, especially when we are unable to make decisions due to incapacitation. A comprehensive estate plan, which includes a health care proxy and durable power of attorney, offers critical benefits that ensure your medical wishes are honoured and your financial and health decisions are handled by trusted agents according to your wishes.
Key benefits and importance include:
- Control over asset distribution: A comprehensive plan, including a will and trusts, lets you specify exactly who inherits your property, avoiding default state laws and reducing probate costs and delays.
- Avoiding probate and reducing taxes: Trusts included in estate plans can help your family avoid probate court, protect assets from creditors, and potentially lower estate taxes. Trusts also provide privacy, unlike wills, which become public record.
- Medical decisions via health care proxy: A health care proxy or medical power of attorney appoints a trusted person to make health care decisions if you cannot do so yourself, ensuring your treatment preferences and end-of-life wishes are followed, which can relieve your loved ones from difficult decision-making burdens.
- Durable power of attorney for financial and legal matters: This document allows a designated person to manage your finances and legal affairs even if you become mentally or physically incapacitated, providing continuity and avoiding court involvement.
- Prevention of family disputes: Clearly naming agents for financial and health decisions in advance helps prevent conflicts among family members during crises.
- Successor agents: Durable POAs can name successors to step in if the first agent is unable or unwilling to serve, ensuring ongoing management of affairs without gaps.
- Customizable powers: You can specify the extent and duration of the powers granted, including "springing" powers that activate only upon incapacity, giving you tailored control over your affairs.
It's worth noting that choosing one's attorney-in-fact for financial matters depends on personal circumstances, and one can name multiple people to serve. Similarly, who serves as one's health care agent often depends on one's personal circumstances. An individual does not need to be an "attorney at law" to serve as an attorney-in-fact.
If one does not have a health care proxy, a medical emergency could result in a prolonged court battle over one's wishes. In such cases, it is recommended to work with an estate planning attorney to create these documents. The health care proxy allows one to express their wishes through their health care agent when incapacitated. It can include living will provisions specifying types of medicines and treatments, as well as religious considerations regarding resuscitation and life prolongation.
A durable power of attorney appoints an "attorney-in-fact" responsible for making financial and business decisions. This document typically goes into effect when executed, but some prefer a "springing" durable power of attorney, which requires a medical doctor to declare one incompetent before taking effect.
In conclusion, a comprehensive estate plan including a health care proxy and durable power of attorney ensures your financial and health-related decisions are handled by trusted agents according to your wishes, provides peace of mind for you and your family, avoids costly and time-consuming court interventions, and protects your legacy. If you haven't already, consider discussing your estate plan with a qualified estate planning attorney to ensure your wishes are carried out in the event of incapacitation.
[1] Estate Planning: What You Need to Know. (2021). AARP. https://www.aarp.org/money/estate-planning/info-2019/estate-planning-basics.html [2] Durable Power of Attorney. (2021). National Academy of Elder Law Attorneys. https://www.naela.org/public-education/estate-planning-public-education/durable-power-of-attorney [3] Health Care Proxy. (2021). National Academy of Elder Law Attorneys. https://www.naela.org/public-education/estate-planning-public-education/health-care-proxy [4] Estate Planning: A Guide for Adults. (2021). American Bar Association. https://www.americanbar.org/groups/young_lawyers/publications/the-young-lawyer/2017-2018/january-february-2017/estate-planning-a-guide-for-adults/ [5] Health Care Directives. (2021). American Bar Association. https://www.americanbar.org/groups/public_education/resources/law_issues_for_consumers/health_care_directives/
- Leveraging a comprehensive estate plan with both a health care proxy and durable power of attorney ensures that your health-and-wellness preferences and financial decisions will be managed according to your wishes, even in situations where you are unable to make decisions.
- Embarking on a health-and-wellness journey with a well-structured estate plan, contingent on the guidance of an estate planning attorney, allows you to express and preserve your wishes for medical care and financial management, for the benefit of both you and your loved ones.
