An estate attorney is probably the last attorney you will ever need, but you can’t predict exactly when you will need them. This precisely why it is a good idea to make an estate plan ahead of time, so that if something does happen you are prepared.
According to a survey conducted by Harris Interactive, only 39% of adult Americans have a Will in place, only 29% of adult Americans have a Power of Attorney in place, and only 18% of adult Americans have a Trust in place.
It is never too early to start your estate plan, but often times it is too late. Many people assume your estate plan only consists only of your “Will” more formally known as the “Last Will and Testament” or “Last Will,” but for most individuals the Last Will is simply one of four main documents needed in order to form a proper estate plan. Those documents are as follows:
- Durable Power of Attorney
- Healthcare Power of Attorney
- Living Will
- The Last Will and Testament
These four documents will sufficiently cover a majority of individuals in the event something would happen to them regardless of whether that incident is minor or major.
Powers of Attorney
A Durable Power of Attorney will help someone else take care of your business matters such as paying bills, managing investments, controlling finances, managing retirement plans, etc. whereas a Healthcare Power of Attorney will allow an individual to take care of your healthcare decisions and issues related thereto. These documents need to be created before you become incapacitated so that your family can avoid filing an action for guardianship. Proper planning also gives you the ability to choose the individual making important decisions about your well-being.
Why separate the two?
We take a separate approach to these documents for three particular reasons.
#1.) For the Medical Care Providers. In today’s litigious world doctors want to see a separate document that covers their specific needs. Our Healthcare Power of Attorney only grants the powers set forth in I.C. §§30-5-5-16 and 30-5-5-17, dealing specifically with health care, religious tenets, funeral planning declarations, and consent/refusal of healthcare services.
#2.) For the individual. Not every person is going to be competent to complete both tasks. One of your family members may excel in handling expenses, but is not so patient in dealing with doctors/hospitals. Many people also have family or friends with expertise in the medical field, but do not want to give them power of their bank account.
#3.) Concurrent vs. Incapacity. We allow our clients to setup each document as either concurrent or upon incapacitation. If setup to be concurrent that appointed “attorney” will be able to act on the individual’s behalf immediately. This is perfect for instances where a family member has taken over business transactions for their elderly parents. For example my mother has a concurrent power of attorney over my grandmother because my mother handles my grandmother’s bills, but my grandmother also wants to be able to take care of things for herself if needed. This is a positive outcome for a durable power of attorney, but not very common in a healthcare power of attorney. Most individuals want to maintain the ability to make direct decisions about their own health so long as they are not incapacitated which requires separate documents.
The Living Will deals specifically with end of life decisions. It comes into effect in the event an individual has an incurable injury, disease, or illness and the use of life-prolonging procedures would only artificially prolong the dying process. This document allows you to elect whether you would like to be kept alive artificially in the event death is imminent. This document takes the decision out of your family members’ hands, alleviating stress from your family and ensuring the right decision has been made by you before that time arises.
The Last Will and Testament
This is the last document in the basic estate plan and the one most people are somewhat familiar with, but many people do not know the complexities set forth in a Last Will. In addition to indicating how you would like to dispose of your property, including specific and general devises, you also elect a personal representative to carry out the probate process, decide whether the estate administration should be supervised, and choose the guardian of your children. Each Last Will greatly varies and can include future born children clauses, exclusion clauses, disinheritance clauses, and most importantly testamentary trusts. Testamentary trusts are trusts created upon the death of the individual and help limit beneficiaries from squandering inheritance by narrowing what the beneficiaries can spend until certain requirements are met. These testamentary trusts can be created to match your and your beneficiaries’ individual needs.
The worst time to review an estate plan (and unfortunately the most common) is after having an incident, so it is imperative that your documents stay up to date as your life changes. Often younger families need more complicated estate plans with testamentary trusts which become simpler as those children grow up. We recommend you evaluate your estate plan with your attorney every three years or at any major life-changing event (e.g. divorce or a death in the immediate family). If you would like to discuss any or all of the foregoing or have any questions about the estate planning process, please feel free to contact us.