Life and Estate Planning is for everyone. Let me repeat, EVERYONE. There are three major components to effective life and estate planning; protecting yourself, protecting those you love, and tax planning. This is the first installment in an ongoing series to discuss each of these components, identifying goals within each component and the tools your life and estate-planning attorney has available to help you achieve those goals.
Adults have the right to take care of themselves as they see fit. Making our own choices and decisions is one of the “perks” most people look forward to with growing up! Of course, our choices do not take place in a vacuum and they do affect those around us. Have you thought about what care and treatment you want if you are incapacitated and cannot discuss your treatment with your physician? Who will make those choices for you and how will they know what you would want or prefer? This is not a remote possible scenario. According to the Social Security Administration (Fact Sheet 2/7/13) 25 % of today’s 20-year-olds will be disabled by the time the reach retirement age. Physical disability is often accompanied by at least a period of temporary mental incapacity. The chances of mental incapacity increase with age.
Mental capacity is a sufficient understanding and memory to comprehend the situation in which on finds oneself and the nature, purpose and consequences of any act or transaction. Without sufficient mental capacity an individual cannot make care decisions for themselves.
If you are incapacitated without preparation and you are married, your spouse will likely be able to make decisions regarding your care and manage your finances. However if you have separate assets from your spouse or you are single (or considered single in your state) your family will need to petition the court to appoint a guardian and conservator to fulfill these functions. This can be an expensive and emotionally draining process at a time when energy is better focused on your care.
To avoid that situation, there are four documents every adult (age 18 and over) should have: a medical or healthcare directive (also known as a living will), a durable power of attorney for healthcare, a HIPAA authorization, and a general durable power of attorney (to cover finances).
Living Will. This document lets you state ahead of time your wishes for medical care if you are in a position where meaningful recovery is unlikely and you lack the capacity or ability to communicate your wishes. Not only does it serve to tell physicians exactly what end of life or heroic treatments you do or do not want, it eases the mind of your loved ones who may be participating in your care. They will have the comfort of know what you would want them to do.
Durable Power of Attorney for Healthcare. This document nominates a person to be your “voice” during any period of incapacity. They have the authority to receive medical information and discuss your case with your physician. They will have the ability to make decisions regarding your care and to carry out your wishes as outlined in your living will. It is designated as a “durable” power specifically so the authority begins with your incapacity and carries through until either your death or recovery.
HIPAA authorization. This document authorizes your doctors to discuss your medical condition with your designated “attorney in fact” (the person nominated in your Durable Power of Attorney). Without this, medical professionals are bound to maintain your confidentiality, despite any other documents.
General Durable Power of Attorney. This document nominates a person to be your attorney-in-fact to manage your finances, business and legal affairs during any period of incapacity.
These documents clearly express our wishes and nominate the person or people we trust to act on our behalf. In the event there is a disagreement over a decision, these documents assist our caregivers and can assist a court in making any contested determinations. These are the first steps each of us should take towards having a comprehensive life and estate plan that will protect our loved ones and ourselves.
©February 3, 2014. Kirsten Schroeder Larsen, P.A.