When planning for the future, tackling all of the paperwork and legal aspects
can seem like a daunting task. According to a study cited on Forbes.com,
less than half of Americans have prepared a will, and that’s only
one aspect of an estate plan. Staying on top of planning documents does
more than just ensure your own preferences, it can also help your family.
Having properly updated estate planning documents in place to specify
your preferences can save your family undue emotional distress and confusion
when the time comes.
To update or complete your estate plan, review these essential documents:
1. Durable Power of Attorney
One of the most important aspects of your estate planning paperwork is
the durable power of attorney. There are two different types of power
of attorney, medical and financial. Through durable power of attorney
you have the power to appoint someone, a family member or someone close
to you, the power to oversee your financial and legal matters and medical
care. The person or persons you appoint are typically referred to as “agents,”
and will be given the authority to speak for you when you are too ill
or otherwise unable to do so. This person can also oversee your financial
matters, paying bills and ensuring your financial security until you recover.
It is also advisable to appoint alternates in case the first agent is
for any reason unable to fulfill his or her duties.
You must be of a sound mind to write a durable power of attorney. For example,
someone in the advanced stages of Alzheimer’s disease may not be
considered “of sound mind” and therefore would not be able
to appoint an agent themselves.
2. Health Care Proxy
The health care proxy is essentially the medical power of attorney mentioned
above. The agent appointed is given full authority to make medical decisions
for you in the event you are unable to do so yourself. This usually occurs
in the case of severe illness, dementia or an unforeseen accident, whether
the incapacity is temporary or permanent. To avoid possible disputes,
it is strongly suggested that only one agent be granted your health care
proxy, with alternate agents specified.
You may also wish to leave health care directives, or documents expressing
your wishes in the case of a sudden accident or illness. These documents
may express where you would prefer to receive your health care, instructions
about artificial nutrition or simulated breathing, donation of organs
and tissues, funeral arrangements, etc. Discussing your preferences with
your agent, as well as preparing health care directives, will better prepare
him or her if / when they must step in for you.
3. HIPAA Release
Similar to the health care proxy, the HIPAA is a privacy authorization
form that releases your protected health information. This is especially
important in cases of emergency. If you were, for example, in an accident
and your family came to see you in the hospital, the doctors and staff
would be legally unable to release your confidential health information
to anyone previously unauthorized. To prevent this situation from happening,
you must sign a HIPAA release.
On the HIPAA, you may specify what information you allow each person access
to, and the time period they are allowed this access. The time period
may be “always” or it can be more limited, per your preference.
You may find the HIPAA and health care proxy redundant, but they each have
their own advantages. The health care proxy is “springing,”
meaning it is only effectual when the patient is declared incapacitated.
Also, whereas the health care proxy gives authority to a single person,
the HIPAA can be filled out for as many people as you wish, allowing your
family and trusted friends to communicate about your health with your doctors.
4. The Will
To start, you should appoint an executor, or personal representative, in
your will to be responsible for carrying out your wishes. A will essentially
divides your assets and declares who will receive what. The document should
specify who will receive your property and your possessions, and any stipulations
you may have. The will also states who will be named the guardian of your
children in the event something happens to you and the children’s
other parent. In your will you may also designate any charitable donations
or specific bequests.
5. Revocable Trust
Also called a living trust, a revocable trust can save time and money for
your survivors by preventing them from going through probate court. Probate
is the legal process by which the court oversees your debts and assets
after your death, ensuring they are distributed according to law. Probate
is costly, time-consuming, oftentimes seen as an invasion of privacy,
and therefore undesirable.
Similarly to a will, a revocable trust specifies what will happen to your
assets when you die, but the trust can name a successor trustee. For example,
naming your spouse as a successor trustee will allow them instant control
(handling financial affairs and paying bills) if you are otherwise unable
to act for yourself. If you recover, you can resume control. The trust,
as demonstrated, is effectual before death, whereas the will is only effectual
A trust can be handy for children of elderly parents, especially those
with dementia, who need help monitoring their financial matters. The trust
can authorize the trustee, in this case the adult child, to have a hand
in financial matters. This can help better protect the parent without
taking away the parent’s authority.
By understanding the most important aspects of managing your estate documents,
you ensure you and your family will be better taken care of. Always remember
to update documents as your situation changes and your life takes new
turns (second home purchase, grandchildren, etc.). Estate planning documents
are more than just planning for your future, they ensure that, in any
given situation, your family and loved ones remain safely provided for.
Contact Jorgensen, Brownell & Pepin, P.C. today for help with your essential documents, or
click here to learn more about estate planning.