I can guarantee you that if I asked 10 people what the purpose or what the benefit of estate planning is, 9 out of those 10 would say something along the lines of “To make sure my things go where I want when I die” or “To take care of my family when I die.” While those answers are true, I believe the most important part of estate planning is the preparation of certain documents that actually affect you while you’re living. I call this “incapacity planning” and it should be a part of every good estate plan because, statistically speaking, we will all experience a period of incapacity (even if it’s short term) before we actually pass away. During that time of incapacity, we are often unable to handle our day to day affairs and that’s where incapacity planning comes into play.
So what documents should everyone have? First, you’ll need a Durable Financial Power of Attorney. This critical document allows you to choose an Agent (and backups) who, upon your incapacity, will be authorized to act on your behalf with regard to financial matters, such as banking, paying your mortgage, paying utilities, etc. My suggestion is to make the power broad enough that your agent can do virtually everything that you would do for yourself, financially speaking.
Second, you’ll need a Health Care Power of Attorney. Similar to a Financial Power of Attorney, the health care version allows you to name an Agent (and backups) to help make medical care decisions for you, in the even that you are unable to make or express your own wishes. Of course whomever you nominate for this role should ideally be someone that lives nearby, someone that you trust, and someone that is familiar with your medical concerns/wishes.
Third, you’ll need a Living Will (also called an Advanced Directive). In addition to naming health care agents in this document, a Living Will allows you to make declaration regarding medical care in the event that you are terminally ill, injured, or are permanently unconscious. While the questions are difficult to think about and answer, ultimately, you are doing it while you are of sound mind and have had time to carefully think about your decisions and so, if that situation presents itself, your family members will not have to worry or fight about making those decisions for you.
Without an incapacity plan in place, not only will your wishes not be known, but no one in your life (even a spouse or a child) will have the legal authority to act on your behalf. Their only option after you become incapacitated would be to seek out a Guardianship and/or Conservatorship from the Probate Court. This process almost always requires the use of a probate attorney, which can be costly, but it is a lengthy and often emotional endeavor.
To learn more about estate planning and planning for incapacity, contact Davis, Davis & Associates today to schedule a consultation.