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Basic Estate Planning Documents, Including The Powers Of Attorney – The Often Overlooked Simple Planning Tools

  • By: Thomas Scifres
  • Published: January 6, 2020
Basic Estate Planning Documents, Including The Powers Of Attorney

Many clients will schedule an appointment, stating that they want to talk about setting up a will or a trust to plan for the future. They often cite the desire to make sure their “things are in order” or to make sure that “there are no problems” when they are gone. Making known your wishes and minimizing complications are appropriate and laudable goals. However, I feel compelled to point out two truths: (1) no legal document can prevent problems among heirs – no matter how simple or complex; and (2) end-of-life documents are not the only tools you should consider. In this article, I will provide a very brief overview of four simply planning documents: The Last Will and Testament, the Living Will; the General Durable Power of Attorney; and the Health Care Representative Appointment. These are “simple” documents that usually suit most people’s needs. The first two deal more with end-of-life issues, while the latter two apply while you are still alive.

The Will. Contrary to popular belief, if you die without a Will, the “State” does not get all of your belongings. Depending on how you hold them (how your assets are titled), some of your assets may pass directly to third parties upon your death. Those that don’t’ will be considered your “probate estate.” For those items that make up your probate estate, there is actually a law the sets forth what living relatives get what percentage of your estate. However, this may not be an allocation you like. (If you are married, your spouse is generally only entitled to half of your probate assets). And there are a number of people who may petition the court for the right to open the estate, hire an attorney, and carry out this allocation. By making a Will, you get to direct: (a) who should get specific assets (including charitable donations you may wish to make); (b) who gets what percentage of the rest of your assets; (c) who will be in charge of carrying out your directions; (d) who you would like to take care of your minor children. There are other things you can have a will do, but these are the major issues most people want to cover.

The Living Will. Despite its curious name, the Living Will has nothing to do with your Will, or your assets. It is a document that declares that, if certain conditions are met, you no longer wish to be kept alive artificially. Many clients express concern that they don’t want to be taken too soon. This document does not allow for that. For a Living Will to come into play, the following must be true: (1) You have a terminal illness (it is fatal); (2) There is no medical cure; (3) Your death is imminent; and (4) The use of life-preserving measures would serve only to prolong the dying process. If, and only if, these conditions are met, your medical provider is instructed not to engage artificial means to keep you alive, and to allow you to die naturally. The value of this document for most clients is that it allows you to make that decision for yourself, in advance. The result is that it relieves your loved ones from having to agonize over whether to continue costly attempts to extend your life when you would have preferred otherwise. The point of this paragraph is not to suggest that you should want this document in place. It should be noted that there is a similar document you can sign that states the opposite – that is, that you DO want all measures employed to keep you alive. The point is that either document merely serves to let your loved ones (and your medical providers) know your wishes in advance. This helps give them peace of mind and prevent second-guessing whether they made “the right decision.”

The General Durable Power of Attorney. Unlike the Will and Living Will, which deal with the end of one’s life, the power of attorney is an excellent tool for when you are alive. It is essentially appointing someone to act as your “agent” in certain matters. If you are still competent to do so, you have the option of appointing one or more persons to act on your behalf (as your agent) with respect to your assets and business dealings. (The document you sign to do this is actually called the “power of attorney,” and the person you appoint is called the “attorney-in-fact”). There are legal restrictions on the scope of powers you may delegate to your attorney-in-fact, and there is a general requirement that the person you appoint must always exercise such powers in your best interests, and never for their own interests. It should be noted that by executing a power of attorney, you do NOT give up the powers that you designate. You merely appoint one or more other persons who also can carry out those powers on your behalf.

Why is this a helpful tool? First, it is a convenient way to let someone besides yourself take care of things that need to be taken care of. If you are away for an extended period for example, a trusted relative or friend that you have made your attorney-in-fact can pay your bills while you are gone. Second, if you become incapacitated, it allows that person do take care of most of your financial affairs, and possibly avoid the need for a guardianship where your incapacity is long-term. Avoiding guardianship in such instances is more likely if you have also designated a health-care representative. Finally, if a court of law ever determines that you are legally “incapacitated” and in need of guardianship, Indiana’s power of attorney statute allows you to designate whom you would like to be appointed as your guardian. This is a significant provision that should not be overlooked when you consult your attorney.

The Health Care Representative Appointment. This document is sometimes referred to as a “health care power of attorney.” While similar to a general durable power of attorney in that it allows one to designate another person to act on their behalf, there are differences. The most obvious is that it deals with medical treatment rather than financial and related dealings. Medical care is delivered pursuant to the premise of patient consent. That is, each person is in control of, and (in the absence of an emergency) must consent to, the medical care procedures they receive. But what happens if you are incapacitated? Who makes those decisions and provides that consent to your doctors? In Indiana, there is a statute that provides a list, in order, of certain family relationships that your medical provider should consult. But the next relative listed in that statute is not always the person you would prefer to be in charge of those decisions. In such cases, you can appoint who you want to serve in that decision-making capacity. The other important distinction between this and a power of attorney is that the powers are not concurrent. You must be unable to consent to medical treatment for your appointed representative to be consulted by your providers.

These are not the only estate planning tools, and this certainly is not an exhaustive overview of them. However, it should provide you with a general understanding of what each of these documents can do and whether they are right for you.

Thomas E. Scifres

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